• by Cory Treffiletti , Featured Contributor, September 26, 2018

Last week, Amazon quietly became the third largest digital ad platform in the U.S., behind Google and Facebook.  This is big news in an industry that continues to see massive consolidation.  Amazon has fundamentally disrupted every category it has set its eyes on, from books to servers, and now it has set its eyes squarely on the ad industry.  

I’m a fan of Amazon, but I think this is one category where it won’t top the list. At best, Amazon can hope to be number two in advertising.

Google is the Goliath in advertising and Facebook has become a strong number two, but Amazon’s mostly poses a challenge for Facebook rather than Google.  

Google is well diversified in the ad business between both search and display, plus it owns many of the back-end systems used by advertisers to reach their consumers.  Google owns the inventory and the data and the services, and in many cases Amazon actually relies on Google to drive people to its site.  

Once users are on Amazon, Amazon has just as much insight into them and what they look for and purchase.  

Google and Amazon are the dominant players in digital commerce, while Facebook leans more toward being a publisher than a platform.  It does own the inventory, but most of the commerce takes place off its pages, and so is considered a second party in most of those relationships.

Another thing to consider is that Amazon tends to disrupt traditional businesses by playing the digital game better than they do — but nobody plays digital better than Google. Google is in a unique position because it is so ubiquitous.

What Google did by taking over search and expanding into other areas of consumer life, even becoming a verb along the way could not have even been imagined back in the day by the folks at Lycos, Excite and Infoseek.  Google has far exceeded the expectations anyone might have had, except the folks at Google themselves.  

Amazon is cut from the same cloth — and neither companies are stagnant. Both are continuing to expand into new areas on a weekly and monthly basis.  As they are driving innovation they also consolidate the space around them, providing tools and services that make it easier for advertisers to focus on a few key partnerships, with Google, Facebook and Amazon at the top of that list.

If I were Facebook, I would be more worried about Amazon than Google should be.  Facebook owns a lot of data, but Amazon owns more, clearly tied to consumption and purchase behavior.  Amazon also owns a media empire now with Amazon Prime, and has access to other data through AWS.  These various categories of business may have seemed disconnected, but they actually provide a deeper level of connection than Facebook can.  

Plus, Amazon rarely if ever gets sucked into the conversation around “fake news” or privacy as Facebook does.  Facebook has become a far brighter controversy lightning rod than Amazon — which simply continues to hum along, quietly selling everything you need and delivering it right to your door, even putting it in your house when they have the keys.  What other digital company literally has the keys to your house?

Amazon is making big strides and disrupting all sorts of industries, but it will be interesting to see if Google stands tall in its path toward ultimate world domination.