Amazon Focuses on $88 Billion Online Ad Market

Electronic commerce giant Amazon has already remolded and took over the online landscape and is now quick to dive into a new, highly profitable field: online advertising, where it is promptly rising as a major competitor against Google and Facebook.

According to a CNBC report, the move by Amazon means consumers -- even those who are subscribed to Prime, paying $119 a year to access free shipping and stream music, video, and discounts --  are likely to be bombarded with ads in places where they didn't exist before.

Many analysts were intrigued by category labeled "other" in the company's most recent financial results. The category consists of revenue from selling banner, display, and keyword search-driven ads or "sponsored products." The "other" category rose by about 130 percent to 42.2 billion in the first quarter, compared to the same period in 2017.

The numbers are small for Google and Facebook, which make up most of the $88 billion digital ad market. However, they are accompanied by hefty and concerning implication for the two tech giants.

Most online advertisements are dependent on imprecise algorithms that overlook where marketing messages pop up, and what kind of effect they have on actual sales. This is where Amazon has a big advantage over other digital ad players. Because of its abundance of data and analytics on consumer shopping habits, Amazon can place ads in front of clients when they are possibly looking for specific products and accept them as suggestions instead of intrusions.

The online retailer is gaining in advertising when Google and Facebook's public perception has turned peevish. Moreover, some advertisers haven't made a comeback to YouTube, a rising ad channel for Google, after brands like AT&T appeared in videos that promoted racism and terrorism.

"Google and Facebook have been slow to create the standards that advertisers want to see," said Collin Colburn, an analyst at the research and advisory firm Forrester. "They are concerned about what sort of content their ads are going to be placed next to."

He further said that Amazon is different due to the company's "more controlled environment on its e-commerce site" and the reach of the company to the rest of the World Wide Web is "pretty small."