Online Advertising to Grow 70% by 2021, Forrester Says

Online Advertising to Grow 70% by 2021, Forrester Says

Market research company Forrester projected that between 2017 and 2021 online advertising in the US will grow by nearly 70%.

According to Forrester, the growth of online advertising will be driven by the rapid expansion of social media advertising and mobile advertising. Here are some of the key findings of Forrester:

• Amazon will take a portion – specifically more than $2.5 billion in 2021 – of the market share of the online advertising business from Google and Facebook.

• Mobile advertising, in particular, in-app video ads will represent the majority of the online advertising investments, with in-app video ads increasing twofold over the next 5 years.

• Social media advertising, group together with mobile advertising, will reach $40 billion by 2021, with bulk of the growth accruing to Facebook.

Amazon’s Ad Business & What It Means for Your Business

Forrester forecasted that Amazon’s ad business will reach over $2.5 billion by 2021. The market research company may have undervalued Amazon’s ad business.

According to eMarketer, the total online advertising spending in the US is expected to grow from $72 billion in 2016 to $113 billion by 2020. In the US alone, eMarketer said Amazon is projected to generate $1.65 billion in ad revenue in 2017 and $2.35 billion in 2018.

The $2.35 billion estimated earnings of Amazon in the US market in 2018 is just a fraction of the $22 billion that Facebook and $40 billion that Google are estimated to earn in the US in 2018.

In the article "For Amazon, Online Advertising Can Drive Revenues" published by Forbes, Trefis Team wrote that if Amazon’s ad business is able to take hold of 20% share of this market by 2020, it could generate ad revenues of more than $20 billion.

“Amazon has a strong edge in this space given its relationship with brands and a huge data base of the shopping preferences of its customers,” Trefis Team wrote. “If Amazon focuses on online advertisements, this segment can become a profitable revenue stream for the company in the long term.”

Search Advertising for Amazon.ca Vendors

In October this year, Amazon launched Amazon Marketing Services (AMS) – the company’s search advertising solution for vendors on Amazon in the Canada marketplace.

Amazon reported that 76% of Amazon website visitors use the search bar to find an item. According to measurement and analytics company comScore, Amazon.ca alone attracts over 15 million unique visitors each month – equivalent to close to half of Canada’s total digital population.

Given that the search on Amazon.ca is predominantly used by shoppers to find products, advertising on Amazon is worth exploring today or in the near future. Similar to Google search, search advertising on Amazon can make your product stand out among the competition – driving consideration at a crucial time when a customer needs to decide.

Amazon currently offers the following 3 advertising solutions to Canadian sellers:

1. Sponsored Products

This advertising solution allows businesses to organically promote on top and within Amazon search results. Ads under the Sponsored Products are targeted using keywords to correspond to the search terms used by customers, giving exposure to your product and helping customers in their decision journey. Below is a sample of an ad under Sponsored Products.

Image by Amazon

2. Headline Search Ads

This ad solution uses targeted keywords to help drive brand awareness. It features 3 products and a brand logo within a prime spot which is at the top of search results. Below is an example of Amazon’s Headline Search Ad.

Image by Amazon

Using Amazon’s Headline Search Ads can direct shoppers to Amazon Store. An Amazon Store is a do-it-yourself solution that allows you to create your own business store within the Amazon.com platform, giving your customers an easy way to visualize your products. Amazon Store is free and completely self-service for any Amazon seller who is also a brand owner.

3. Product Display Ads

In Product Display Ads, Amazon sellers are allowed to advertise listings via surrounding media on product detail pages. This reaches shoppers when they’re about to buy – the time when they add an item to their shopping cart.

This ad solution is targeted to individual products, product categories or shopper interests. Below is an example of Amazon’s Product Display Ad.

Image by Amazon

You can manage your Amazon Marketing Services advertising budget in 3 ways:

1. Pay Per Click

In pay per click, you decide how much to bid on an ad click. You won’t be charged more than that amount per click.

2. Pay Per day

In pay per day, you decide how you’ll spend for a day. You won’t be charged more than your daily budget. Once your daily budget is reached, your ads will simply stop running for the day.

3. Pay Per Campaign

In pay per campaign, you have the option to set budget at a campaign level for Headline Search Ads and Product Display Ads. Once the campaign budget is reached, your ads will stop running.

What About Ads via Amazon Alexa Voice?

To date, Amazon doesn’t allow third-party developers to make money from their Alexa apps, through the use of VoiceLab’s “Sponsored Messages” – brief ads that were designed to be interactive.

VoiceLabs CEO Adam Marchick, in a blog post described interactive voice ad this way: "For example, a consumer would be asked if they were going to watch the NBA finals game airing that day. If the user said yes, it would let them know to tune in for the 6pm start time. If not, the Sponsored Message would let them which channel to tune into at 10pm for all the highlights.”

Amazon shut down VoiceLab’s Sponsored Messages project with its May 21st policy change. Amazon, however, allows the following ads in Alexa Voice:

1. Streaming music, streaming radio, podcast, and flash briefing skills may include audio advertisements as long as (a) the advertisements do not use Alexa’s voice or a similar voice, refer to Alexa, or imitate Alexa interactions and (b) the skill does not include more or materially different advertising than is included when the same or similar content is made available outside of Alexa.

2. Skills that allow customers to order products or services may include audio messaging promoting those products or services.

3. Skills may include audio messaging informing customers of promotional offers or deals in response to specific requests from customers.

4. Skills that are specifically designed to promote a product or service may include audio messaging promoting that product or service.