Amazon is already doing more than $1 Billion in ad revenues and quietly threatening Google’s core search business. As long as consumers continue to start their product searches at Google, there is no worry for the Goliath search engine monster. Up to now, Google hasn’t really been concerned about which merchandiser sells the product ultimately because they will get paid either way.
The biggest threat to Google’s core business (searches) is the possibility that Amazon could become the starting point for more and more searches and take with it the revenue Google has been enjoying. Google makes the majority of its revenue from searches for specific products. However, for the last ten years, Amazon has been expanding its web site to sell its own merchandise, the merchandise of third party partners and advertising and links to other third party merchants with whom they don’t even have a connection or relationship.
Currently, Amazon places ads and links at the bottom of product pages and they better targeted and noticeable compared to Google search results and Google ads. The other key thing is that they appear in detail on pages being viewed by consumers during a highly relevant shopping search. Amazon is now hiring aggressively to strengthen its ad business, now doing over a billion dollars in ad revenue yearly.
Compared to Google’s $40 billion, Amazon’s ad revenues may seem small, but Amazon is growing very fast and has the enviable position of being the top global e-commerce site. Over the past year, Google has become more and more worried about the threat from competitor, Amazon. Any amount of ad spending captured by Amazon is a potential loss in revenue for Google.