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Advertisers moving 50% of their search budget to Amazon?

CNBC this week quoted executives at “multiple media companies” as saying that Amazon’s ad business is booming, with some advertisers reportedly moving as much as half their budget (amounting to hundreds of millions of dollars), normally spent with Google search, to Amazon’s ads instead. CNBC writes that this could pose a rare threat to Alphabet (Google’s parent company) which generated $95.4bn in ad revenues last year (c. 86% of total revenue). Google is currently the dominant US digital advertising platform and will take in an estimated 37% of digital ad budgets in 2018. While Alphabet does not disclose the breakdown of its ad revenue, estimates calculate that the vast majority comes from search ads — c. 83% YTD (eMarketer data). Now Amazon appears to be emerging as Google’s most credible threat since Facebook conquered mobile advertising shortly after its 2012 US listing.

However, not all brand categories are moving advertising spend to Amazon — most of this comes from consumer-packaged goods. Also, while Google search may be flattening, the report notes that Google is pushing, and advertisers are moving, parts of their ad spend from other media to different Google properties, particularly video ads on YouTube. The report also quotes an anonymous Google ad sales manager as saying that he isn’t seeing clients shift search budgets to Amazon but is instead seeing clients come up with separate brands to sell only on Amazon. He says leadership is “concerned” but it isn’t a huge threat at the moment. Another ad agency executive, reportedly said Amazon budgets among its clients had grown by 300% to 400% YoY. The report quotes an executive from Reprise Media, a leading global search marketing agency, as noting that Amazon is growing overall, while Google budgets have remained “flat”.

Nevertheless, despite Amazon’s impressive growth, Google is still maintaining a strong hold on digital advertising budgets overall, and has shown accelerating ad revenue growth in 1H18. In 2Q18, Google also reported its ad business was up 23.8% YoY – an acceleration from 2Q17, when ad revenues rose only 18.4% YoY. In addition, not everything is sold on Amazon – large advertising categories such as auto, travel and some entertainment, including ticketed events (movies, sporting events etc.) are not currently conducting direct sales on Amazon and thus not having a reason to advertise there, while Google search still drives a lot of their direct sales.



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Anchor CEO and Co-CIO Peter Armitage will host the webinar, provide an introduction to current global and local market conditions and give his thoughts on offshore equities. Together with Head of Fixed Income and Co-CIO Nolan Wapenaar, Pete will also discuss Anchor’s strategy and asset allocation for 2Q24, focusing on global equities and bonds. In addition, Fund Manager Liam Hechter will provide insights into local equities, highlighting some investment ideas; Global Equities Analyst James Bennet will discuss Ferrari and give an update on Tesla, and finally, Analyst Thomas Hendricks will participate in a Q&A with Peter, explaining the 10-year US Treasury to attendees.