Amazon Sends a Happy New Year Greeting to Google
December 28, 2017
I read “Amazon Is Planning a Push into Digital Advertising in 2018, Challenging Google and Facebook.” Let’s assume that this is “real” news, just for kicks.
The write up asserts:
The company [the Bezos machine called Amazon] is also looking to sell advertising beyond Amazon sites and products. For example, a source with knowledge about the situation says it is working with third-party mobile advertising companies such as Kargo to pair advertising on television and on mobile screens.
That seems clear.
Who cares?
I would suggest that Google may notice this New Year’s greeting.
I learned:
Although Amazon doesn’t break out revenues from its advertising business, eMarketer estimates Amazon was the fifth-largest digital advertiser in the U.S. in terms of revenue this year. Still, it makes up a little more than 2 percent of the market. It’s leagues below industry leaders Google and Facebook, which take home more than 70 percent combined, according to a recent estimate from analysts at Pivotal.
Because Amazon is a small advertising fish compared to the Facebook and Google whales, ramping up its ad sales will generate some cash for the Bezos machine.
Facebook will be on the watch, but my view is that the Google will be riveted to Amazon’s progress.
Why?
Google is largely dependent on online advertising. As Steve Ballmer observed before buying the thrills of a pro basketball team, “Google is a one trick pony.”
Mobile is not Google’s best trick. With desktop search declining, those ad revenues require Herculean strength to keep hoisted high. If the Amazon play is successful, Google may develop a Greek god scale headache from:
- Loss of ad revenue to Amazon with no easy way to pump up the volume if Facebook stays the course while Amazon does some price cutting
- The shift to the mobile search model makes it more difficult for Googzilla to burn off the fat in excess ad inventory
- The Google search machine has lost product search to Amazon. Although the specific impact is tough to determine, catching up to the juggernaut in Seattle adds to the burden of the Internet’s go to search engine. Alphabet Google has to outperform and out maneuver Facebook and Amazon.
Life for the GOOG in 2018 will be tough enough because of anti monopoly hassles in Europe, struggles with wonky hardware trying to leapfrog Amazon’s home devices, and user grunts and snorts about search results relevance deteriorating.
Not even Google’s slick PR team can make Amazon’s New Year’s greeting into good news. The new year will be, as Google once said, “interesting.”
Yes, interesting if the story is almost like “real” news.
Stephen E Arnold, December 28, 2018
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