According to a research prepared by eMarketer.com, in 2019 Google lost 1% of market share in the US digital advertising business. 1% isn’t bad. I doubt that business analysts at Google are worried about it, especially that on paper everything looks great. Digital advertising keeps growing and Google still made more money in 2019 than the year before. Who would care about the silly 1 percent?
Well, if I were them I would. Because this market share went somewhere else. And it didn’t go to Facebook, the second largest player in this sector. It went to Amazon.
What’s more important is that it seems that it will keep going there in the future and both Google and Facebook should pay attention to it because companies start to realize that what Amazon offers is an instant access to people who are ready to buy things right now while Facebook and Google require implementing complex sales funnels and attribution from other sources… and still can’t even compare their conversion rates to rates known from Amazon.
It is estimated that in 2019 digital ad spending exceeded the level of USD 300 billion for the first time. In 2020 it should be more than USD 341 billion. With growth like this Google doesn’t need to worry about its slightly lower market share. Their profit keeps getting larger and larger. But what is interesting for us, as Digital Marketers and should be worrying for Google, is the trend itself. Because Amazon isn’t going anywhere and has all the time in the world to take what it wants piece by piece.
In the US almost 1 in every 2 ecommerce transactions takes place on Amazon. There are more than 300 million products available and just about the same number of people willing to shop there. These are the facts and thousands of people that sell online ask themselves: how to be a part of this community and monetize this unbelievable potential.
Why maintain an expensive website, take care of social media, pay for SEO, Google Ads, creating content and everything else if I could just join Amazon and sell my items there? Just pay a fee and focus on customer service while Amazon takes care of the rest?
And this is the question that business owners working in ecommerce started asking a few years back, not just right now. With Amazon’s growing influence, now more people than ever realize that it’s worth a try.
And this is why Alphabet, responsible for Google and most of its products, lost 6.5% of the market share in digital advertising over the last 6 years. But at the same time its profits kept growing. Due to new advertising solutions, more companies compete with new keywords, while skyrocketing their CPCs and a lot of other factors. But the fact is that in 2012 Google controlled a half of digital advertising globally and in 2018 it was barely above 43%.
I’ve been personally working with the Google advertising ecosystem since my first part-time job in early 2010s. It has changed a lot since then. It has a ton of new features and it’s unbelievable what we can accomplish with it now, but my opinion is that Google stopped being innovative a long time ago. It always needs a strong push (or a threat if you will) to take some new steps.
Several years ago it was Facebook and its ability to target people who are interested in specific things. It has proven that PPC display advertising can work and does so well while the performance of GDN campaigns was acceptable at best at the time.
Google’s strongest asset has always been advertising in search engine. Facebook proved that display can be powerful and because of that in the past years we’ve got great targeting options from Google, based on the purchase intent, what people have been searching for online and a lot of other things that we’ve seen before on Facebook or inspired by what Facebook does.
Google had to accept the fact that it has to give a large chunk of the cake to the social media giant. Their attempts at Google+ were just embarrassing and proved absolutely nothing. Now history seems to repeat itself, but this time it’s Amazon that wants to sit with the big boys of the digital advertising world.
And who can blame entrepreneurs and business owners that they don’t feel like investing a lot of money in expensive keywords for a search engine to benefit people who are often not ready to buy something? Google Shopping is a direct competitor to Amazon advertising services, but let’s keep in mind that Google was never an environment for buying. It reaches people that research products and services. Conversion Rate is incomparable to what Amazon offers. Google’s campaigns need to be supported by GDN remarketing campaigns or Facebook campaigns. This is complex, it requires a lot of work and it costs money. And advertising on all platforms keeps getting more and more expensive each year.
At the same time, Amazon gives us people who are already familiar with this particular shopping environment, they research products, but they are also willing to buy them right there and then and the process is fast and easy. They already have the credit card saved on Amazon account, all the details are also there. Just click “buy now” and expect delivery really soon.
It’s really that easy. There’s a reason why Amazon PPC campaigns provide a 10% conversion rate. It just reaches the right people at the right time. And Google Shopping? It’s disappointing, but it’s less than 2%.
If for the same amount of money you can have more sales – why not focus on a medium that gives you the highest ROI?
And don’t get me wrong. I don’t hate Google. I have a job thanks to Google, but I don’t think there’s anything Alphabet can do to change this course. They successfully covered how people search for things online, they were able to teach us how to watch videos, but they failed miserably at understanding the power of social media a decade ago and now they also pay for ignoring shopping online. It’s too late to fix that since Amazon is too large and provides the complete shopping experience, but one thing is certain: there will be more companies trying to disrupt the way we do things online and there is no way to know whether Google will do a better job at identifying the potential and whether they will take advantage of their billions to fight for their spot in the online world.