Amazon’s ads push will threaten Google and Facebook’s duopoly

27 Sep 2018912 Views

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Wolfgang Digital CEO Alan Coleman. Image: Conor McCabe Photography

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Expect seismic shifts in the digital world as Jeff Bezos’ Amazon beast figures out how to get ahead in advertising.

The digital marketing and e-commerce world is currently dominated by a Facebook-Google duopoly, but it faces a new threat, predicts Wolfgang Digital CEO and founder Alan Coleman.

Speaking to Siliconrepublic.com following the publication of a study by Wolfgang Digital of websites with €500m of revenue to find out what drives today’s consumer to click and buy, Coleman said that the current order of things may change by next year.

‘The giants enjoy monopolistic positions in their neck of the internet’
– ALAN COLEMAN

“If we divide digital marketing up into demand and brand, we can better understand the might of the duopoly. Google Search is the dominant player when it comes to demand. Facebook, and by extension Instagram, have being thundering along on the brand side of digital.

“If a digital marketer can work the Google properties (Search and YouTube) and the Facebook properties (Facebook and Instagram) to their advantage, they are 90pc of the way to online success.

“Expect Amazon advertising to be the major threat to the two in 2019, however.”

He has a point. Despite the plethora of sites out there selling stuff, the sway that Facebook and Google have is immense in terms of overall buying patterns. But, with e-commerce juggernaut Amazon entering the fray as an advertising rival to the duopoly, the rich seam of data they hold in terms of the signals and conversion data, which capture customer buying signals and turning them into sales, will be hard to ignore.

With a haul of $2.2bn in advertising revenue in Q2 2018, Amazon is beginning to offer stiff competition to the incumbent digital advertising giants, Facebook and Google, according to Ad Age.

What makes a user click and buy?

Wolfgang Digital’s latest study, which delved into Google Analytics and for the first time Facebook’s new analytics tool, revealed some interesting dimensions. For example, it found that e-commerce websites are averaging 1.5 visits over 12 months.

Most notably, however, it appears that social has the upper hand against standard web. Facebook analytics reveal that a social media engager is twice as likely to buy from a brand on social media than a website visit (a 4.4pc conversion versus 1.8pc). Messenger was notable for having a very high conversion rate of 9.9pc. Not only that, but the research indicates that 48pc of people are more likely to buy from a brand that they see a friend or family member interact with.

Other interesting reveals are that hotel websites convert three times the number of customers than package holiday websites (1.99pc versus 0.68pc) and that revenues for purchases on mobile devices have grown 23pc to account for 32pc of all e-commerce revenues.

Trust will define the future of the web

In recent weeks, we spoke with Google’s ads chief, Sridhar Ramaswamy, who warned that trust is one of the biggest issues facing the web today and that the rise of ad blockers threatens the overall online advertising ecosystem, especially smaller publishers and online retailers.

Coleman believes the duopoly of Facebook and Google can outrun the threat of ad blockers but agrees smaller sites will face an existential threat. “Given their technological resources, Google and Facebook can out-innovate the ad blockers for the most part. Where they can’t out-innovate them, they have been paying to be unblocked.

“The fact that the duo is growing annual revenues by 26pc and 42pc, respectively, suggests that ad blockers are far from decimating their businesses. The ad-blocking problem is more acute for smaller online publishers who are dependent on display ad revenues to survive and don’t have surplus funds to pay to be unblocked.”

Responding to the trust issue after a year of seemingly never-ending data scandals, Coleman said that the giants still have users in an iron grip. “In March, #DeleteFacebook trended on social and spiked as a search trend on Google. So, I think it’s clear people do trust the internet giants less.

“The curious thing is that decline in trust doesn’t seem to have impacted usage. This is because the giants enjoy monopolistic positions in their neck of the internet. Google dominates search in the western world and it’s hard to escape Facebook, Instagram and WhatsApp if you want to communicate with friends and family online.

“It certainly seems like people are fleeing Facebook, but the majority of them land in Instagram, which is of course another Zuckerberg property.

“It’s interesting that Facebook recently stopped reporting on Facebook daily users to Wall Street and are now looking at unique users across their portfolio of platforms, masking any decline in Facebook usage,” Coleman noted.

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com