Google is still by far the dominant player in search advertising, but Amazon is quickly stealing share as it grows in the number two spot.
Amazon’s search business will grow 30% in 2019 to $7 billion, making up 13% of the total US search market, according to a forecast released Tuesday by eMarketer.
That’s peanuts compared to Google, whose 2019 search revenue is $40 billion and 73% of the US search market.
But jump to 2021, and Amazon’s search share will grow from 13% this year to 16% at $11.7 billion, while Google’s will shrink to 70.5%.
“We are seeing Google losing share as Amazon gains share,” said Nicole Perrin, principal analyst at eMarketer and author of the report.
Amazon’s search business is mostly growing thanks to product searches. While product listing ads on Google are still doing well, most product searches now begin on Amazon, according to eMarketer polling. eMarketer's forecasts are based on quantitative and qualitative analysis of data from research firms, government agencies, media firms and public company data as well as interviews with executives at publishers and agencies.
Amazon is the only search engine whose share of ad budgets will grow through 2021, since it’s the only scaled offering besides Google and Microsoft Bing. But other retailers – Walmart, Pinterest, eBay and Target – have search engines that while aren’t as scaled, consumers are nonetheless using to find products at Google’s and Bing’s expense (but not Amazon’s).
“The long tail is gaining share, and everyone else is losing,” Perrin said.
Overall, the US search advertising market will grow 18% in 2019 to $55 billion. Microsoft will command 6.5% market share, followed by Verizon Media at 2% and Yelp at 1.8%.
A fly on the elephant’s back
Amazon’s rapid gains in search aren’t yet a real threat to Google’s search business, which is still growing. But Amazon could ultimately steal ad budgets that would’ve previously gone to Google.
“Amazon does have important differentiation in being a retail destination and being that much more commerce-oriented than Google,” Perrin said.
While Amazon still has runway to grow in search, which is its biggest driver of ad revenue, it’s also building out its display business to attract more brand advertising.
“Amazon is developing its overall ad business sort of along the lines of what Google’s looks like,” Perrin said.=
While Amazon isn’t nearly as large as Google in search, growing competition is good for marketers. Google has dominated search for so long that new entrants will spark innovation.
“A little competition is healthy,” Perrin said. “Maybe they will consider this [as] making things interesting for them.”
Updated with a note on eMarketer methodology.