Amazon Forecast to Be No. 3 Digital Advertising Player in 2018

By Alexandra Bruell 

Amazon is expected to move up the rankings of the top U.S. digital ad sellers in 2018 to take the No. 3 slot, thanks to an acceleration in ad revenue growth and accounting changes by the company, according to the latest forecast from research firm eMarketer.

The tech giant is expected to generate $4.6 billion in U.S. ad revenue, surpassing Verizon Communications Inc.'s Oath and Microsoft Corp. in eMarketer's ranking, while still significantly trailing the industry heavyweights, Alphabet Inc.'s Google and Facebook Inc., according to eMarketer.

EMarketer estimated Amazon will have a market share of 4.15%, up from its earlier estimate in March that the company's share would be 2.7%. The research firm cited Amazon's "strong organic growth in ad revenues" for the adjusted forecast, along with accounting changes at Amazon.

The accounting changes, that have to do with reclassifying some advertising services from cost-of-sales to revenue, were responsible for the bulk of eMarketer's adjustment. On growth alone, the forecaster would still increase its prediction for Amazon's market share and move the company to the fourth slot, behind Microsoft.

Amazon is attractive to advertisers looking for insight into the impact of their ad buys on purchases. Amazon, unlike Google and Facebook, has that purchase data, said Monica Peart, eMarketer's senior director of forecasting.

Google and Facebook are still far ahead of Amazon and the rest of the pack. This year, Google and Facebook will control 58% of U.S. digital ad market, bringing in a combined $64 billion, according to eMarketer.

Amazon's increased search traffic from consumers looking for products on its site has also boosted its ad business, giving third-party sellers a reason to spend more on Amazon keywords, said Ms. Peart.

Amazon has also made it easier, through new technology systems, for advertisers who aren't selling products on Amazon to buy ads. "We're seeing a broader appeal to advertisers than we might have expected," she said. "That's a major reason that we might have underestimated what kind of growth would come through by the first half of the year."

Revenue in Amazon's "other" category, which primarily consists of advertising sales, more than doubled in the June quarter from a year earlier to $2.19 billion.

Existing Amazon merchants and brands are among the customers buying ads on the site, as well as authors and other advertisers targeting Amazon customers.

EMarketer also projects that Amazon will increase its mobile ad revenues 242% to $1.61 billion in 2018, giving it a 2.1% share of the mobile ad market.

Write to Alexandra Bruell at [e-mail]

(END) Dow Jones Newswires

September 19, 2018 06:14 ET (10:14 GMT)

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