Brands jostle to get Amazon Prime customers’ attention
Last month, Amazon (AMZN) and Google (GOOGL) reached some sort of truce, ending their boycott of each other’s products. Google, which withdrew its YouTube service from Amazon devices, agreed to return it to those platforms, and Amazon agreed to bring its Prime Video service to Google’s Chromecast devices and Android television sets.
Despite this truce, the companies are likely to maintain their rivalry in advertising, which has become a major focus for Amazon as its audience base expands and brands jostle to win its high-value Prime customers’ attention. During Amazon’s first-quarter earnings call last month, executives said the company will continue investing in expanding and strengthening its advertising business.
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Amazon’s advertising wing generated $2.7 billion in revenue
In the first quarter, revenue in the business segment that houses Amazon’s advertising business rose 34% YoY (year-over-year) to $2.7 billion. Meanwhile, Twitter (TWTR) generated $679 million in advertising revenue in the first quarter, and Yelp (YELP) generated $227 million.
Although Google and Facebook (FB) generated more advertising revenue in the first quarter, of $30.7 billion and $14.9 billion, respectively, Amazon is threatening to shake their dominance in the lucrative market. Amazon captured 6.8% of the US digital advertising market last year, estimates eMarketer, and that share is forecast to grow to 8.8% this year. In contrast, Google’s share of the market is forecast to shrink YoY to 37.2% this year from 38.2%, whereas Facebook’s is expected to grow slightly YoY to 22.1% from 21.8%. Microsoft’s (MSFT) share of the market is also expected to shrink YoY this year, to 3.8% from 4.1%.