If you are a merchant who sells shoes, and you have $10,000 to spend on advertising, which platform would you deploy that fund? If you have a website and you decide to go with Google, you will get traffic, including those not in the spirit of buying any shoes. But if you have conditioned to build on top of Amazon, and you also have some funds to advertise, there is a high likelihood that you will convert real shoppers since most people in Amazon are there to spend money.
This was how I captured this redesign in 2017 as this was being built: “I was on Amazon today working on gifting items when I noticed something: Amazon now runs a serious advertising business. And there are many companies putting money in that ecosystem. If companies think that advertising on Amazon is a better deal than promoting their websites on Google, it simply means that Google has a major problem in its hands. Facebook has walled off the partying and events communities, and if Amazon takes care of the merchandise, I do not know what will remain for Google.”
That Amazon business has grown significantly: in the first quarter of 2024, Amazon’s advertising revenue was $11.82 billion, which was a 24% increase from the previous year…In 2023, Amazon’s worldwide advertising revenue was $46.9 billion, which was a 24% increase from the previous year. Amazon has executed a double play strategy.
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Sure, this is nothing to Google’s ad revenue of $237.86 billion (2023 figure). Yet, in the product category advertising, that is lost revenue for Google since without Amazon, most of those merchants would have spent the funds in Google.
Where am I going? There are many pockets of opportunities in this world. We just have to figure out ways to capture value. Facebook has walled its universe from the “open” web and is milking via adverts. Amazon has executed its own playbook also. And Google continues to rake the billions. In all these models, each found its own path, and that is the lesson.
Of course, many will continue to see Microsoft Bing as a major competitor to Google on advertising, after Meta. For Google, though, Amazon is the one growing faster in this business category, well ahead of Bing which reported $12.2 billion in search and news advertising revenue for the 2023 fiscal year, at 5.26% increase from the previous year. In other words, Amazon makes more money and is also growing faster. (We expect OpenAI partnership to help Microsoft Bing in the next coming quarters).
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Where you put money depends on the sort of audience you are after. Google is the best if you are targeting those who never shopped online before and are not even in the shopping mode. Google’s targeted ads embedded across millions of websites can get non traditional online shoppers to pay attention. Again, spending ads money on Amazon or Facebook does not mean that Google is losing money, rather brands are increasing their ads budgets, to capture potential customers wherever they are. If other channels don’t exist, ads budgets will simply scale down, not that everything would go to Google.
There is enough science and art in between, depending on what is chasing you or what you are chasing.
The same the sky covers everywhere, so also are enough opportunities for everyone that wants to make money. If you fail, it cannot be anyone’s fault but yours.