Amazon could pull in nearly $8 billion in ad revenue by
2019, Morgan Stanley expects.
But that
doesn't mean that Amazon is much of a threat to Google and
Facebook.
Instead of digital media spending, it is focused
on promotions and couponing, effectively expanding the
advertising market significantly.
Meanwhile, Morgan Stanley has lowered its spending
growth estimates for web video, as companies like YouTube
wrestle with brand safety challenges.
Amazon advertising business is
growing fast. It's so fast that some people in the
advertising world have wondered if it will emerge as a serious
threat to the Facebook-Google duopoly that dominates Internet
advertising.
Morgan Stanley says anyone hoping for this shouldn't hold their
breath because Amazon is competing in a different space. The
e-commerce giant is fueling its ad revenue surge from the
world of trade
promotion – like in-store promotions, coupons, and
samples – rather than pulling money from traditional media
spending or from digital ad budgets that are commanded by the
duopoly.
The financial services giant has upped its previous estimate for
Amazon's ad business, betting that the e-commerce giant will pull
in $8 billion from ads globally by 2019, according to
a Morgan Stanley report on the state of advertising in
2018.
Interestingly, Morgan Stanley said that the massive uptick in
Amazon spending isn't going to come from TV ads or even targeted
banner ads – seemingly a huge opportunity for Amazon's – given
the rich consumer data it possesses.
Instead, based on Morgan Stanley's research, Amazon is set to
steal budgets from trade promotion, a lower profile but
surprisingly large slice of the marketing world. Nielsen reported
in 2015 that globally
$500 billion was spent on trade promotion.
The report says that Morgan Stanley has found that in the
U.S. trade spend market is a whopping $178 billion category.
Essentially, as more people shop on the web, and
increasingly from mobile devices, product ads on Amazon.com
are replacing all the levers consumer product companies have
traditionally used to try to close the deal with shoppers – such
as coupons in the mail, in-store kiosks and promotional signs on
store shelves.
The effect of that shift has the potential to radically broaden
the advertising market. Here are a few nuggets from the report:
Instead of having to steal share from existing players,
Amazon could essentially make the total
digital advertising spending pie 50% bigger.
Amazon's ad business is
surging
Morgan
Stanley
TV's ad spending is holding strong, but there are signs
of vulnerability.
Particularly, ratings for the National Football League – once
seen as nearly invulnerable – are slipping.
Morgan
Stanley has reduced its previous forecasts for TV and video ad
growth
Morgan
Stanley
Meanwhile, web video ad spending continues to grow, but Morgan
Stanley has reduced its previous growth estimates for the
category. The overall challenge of brand safety seems to have
prevented platforms like YouTube from stealing bigger chunks of
budgets.
Facebook Watch is seen as a wildcard for 2018. If successful, it
could snag more TV budgets.
Facebook and Google's dominance is only becoming more
powerful
Morgan Stanley
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