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The Rise of a New Online Ad Revenue Giant

Google and Facebook were long considered invincible in the online ad revenue industry. A few years ago, when Amazon announced it would allow companies to advertise on its platform, few thought of how it would disrupt the industry. 

Recent data collected about the U.S. ad revenue in 2019 and 2020 reveal a shrinking market share for both Google and Facebook, with Amazon the main beneficiary of this decline. The overall numbers still favor the old guard (Google and Facebook), but Amazon’s growth rate surely puts things into a different perspective.

The Pandemic Threatening Google and Facebook’s Online Revenues

The business model appears to change for the online advertising industry. The biggest advantage for Amazon is the strong performance it had and still has during the pandemic.

As people were forced to stay home, they turned to online shopping, with Amazon the desired choice. The more the traffic increased, the more exposure people get to the advertisement run by Amazon – a targeted advertisement for products similar to the consumer’s purchasing behavior. The model is not new and Amazon runs it well before the coronavirus crisis, only that now the gap in revenues will shrink further.

In comparison, Google and Facebook have a different business model. They both let their customers target other people’s interests, by advertising to them on various metrics – geographical location, demographics, and so on. But not shopping behavior – at least not to the same extent as Amazon.

One new trend emerged during the pandemic. Several large corporations in the United States are stopping advertising on Facebook either until the end of July or to the end of the year. If the pandemic continues, Facebook ads revenues will suffer a big decline.

Below is the top ten advertisers’ list in the US on Facebook – with Disney topping the list. About half a billion dollars were spent on Facebook ads in total by the names on the list, from January through June 2020.

Coca-Cola, Starbucks, The North Face – are just a few names of companies that are pulling ads from Facebook. While their actions are in response to fighting Facebook on hate speech, they may set a trend that may change how online advertising is done in the years ahead.

There is one company eager to take a big bite out of those juicy ad revenues. Amazon.

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