Is Amazon Becoming The New Google?

by Dave Furness, on June 14, 2018

In this guest post, Dave Furness of eSellerCafe discusses two major players in paid search: Google and Amazon.

Google’s dominance in search is undisputed. For January 2018, Statista using comScore data estimated that Google generated 63.4 percent of all searches and a whopping 93 percent of all searches on mobile.

The company maintains a website called Google Trends that goes into the most searched terms and trends. For this past January, dogs were the most searched animal and the Ford Mustang was the most searched car. Google Trends doesn’t show the most searched product, but it does note that the top three most searched retail companies were Amazon, Walmart, and Target Corporation.

While Google is not an online retailer, it does maintain a Google Shopping search page that visually appears very similar to a typical eCommerce site. Products are categorized, include images and descriptions, consumer reviews, specifications and all the data typically found when searching a product on many online retailer websites.

Unlike a dedicated eCommerce site, Google does not offer a checkout, but instead sends shoppers to an online retailer to purchase the goods. Obviously, Google monetizes this shopping search site by allowing merchants to promote products within the results, similar to regular searches on Google show ads and sponsored results. Google Shopping results are also displayed on many searches from the main search page.

As a market leader in search and integration of a specific shopping section that mimics a typical online retailer design, Google would seem to hold a significant lead in product search...but that's not quite the case.

Product Searches Increasingly Start on Amazon

According to a study by marketing technology company Kenshoo, nearly three fourths of all shoppers (72 percent) go to Amazon.com, Inc. ("Amazon") to learn more about a product before making a buying decision. Over 26 percent of shoppers browsing in retail stores admitted to using Amazon in the store to research products, reviews and pricing about items they were interested to purchase. And over 56 percent of Amazon users said they would start product search first on the shopping platform.

The study does note that Google still ranks at 85 percent for product search, but with Amazon at 72 percent, the gap is very narrow considering that one is a dedicated search platform while the other is a global eCommerce retailer.

Kenshoo studied shopping behavior of online and offline consumers. But in another study by Bloomberg in 2016, Amazon appears to be beating Google in product search among online shoppers. Bloomberg found that 55 percent of US online shoppers search Amazon first and 9 out of 10 online shoppers will check Amazon even if they plan to purchase on another retailer’s website.

Considering the findings of these two recent studies, it is very clear that Google’s stranglehold on search does not include product search. Amazon as an online retailer has accumulated so much data, that many shoppers, on and off-line, consider the retailer a go-to source for product information. And that provides another revenue opportunity for Amazon.

Amazon Cashing in on Search

Investors that follow Amazon’s business already know that the company’s main source of profit is not from retail sales, but from operating the world’s largest cloud computing network AWS (Amazon Web Service). In size, AWS is actually the fifth largest business software company in the world. The cloud division has over 1 million customers, including major names such as Netflix, Unilever and BMW.

Amazon actually powers a lot of frontend and backend computing infrastructure for major corporations and is on track to become the third largest digital marketing platform after Google and Facebook.

In 2017, Google’s search division generated $61 billion in ad revenue, Facebook came in second at $27 billion, and Twitter held on to third place with $3.26 billion in ad revenue. But the third place slot is under fire from Amazon. According to estimates from JPMorgan analyst Doug Anmuth, Amazon sold about $2.8 billion in advertising in 2017 and is expected to pass Twitter in 2018 with an estimated $4.5 billion and $6.6 billion in 2019 in ad revenue. David Spitz, CEO of ChannelAdvisor, a leading eCommerce software solutions provider, reaffirmed the Amazon ad revenue predictions at the company’s recent Catalyst Europe conference.

Amazon itself does not break out digital ad revenue. But in its 2017 Q4 earnings call, it stated that it had a 62 percent increase in “other income,” which the company acknowledged comes from mostly advertising. The interesting part of Amazon’s advertising strategy is that it is not confined to serving ads for products only sold on its platform. On the company’s advertising page, Amazon states that its ad platform can be used to sell more products, increase book sales, drive traffic off Amazon for products and services not sold on Amazon and increase app downloads.

Similar to Google, Amazon sells sponsored ads based on search results on its platform, and those show up at the top of product search results in a sponsored section. But the company also sells standard banner ad-size positions. Sometimes these positions include ads to Amazon products and services and brand products sold on Amazon, as well as products and services not sold on the marketplace.

More Ads, More Money

A detailed look at the link structure of the banner ads suggests the company is still using some ads served through the Doubleclick ad network, which is owned by Google. Presumably, Amazon is filling unsold ad impressions with Google’s ad network to gain a little revenue for its traffic. As Amazon’s own ad network becomes better known and used by digital marketers, these ad slots still served from Doubleclick’s inventory should become filled through its own network, which results in even more ad revenue to Amazon.

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