Ad-supported sites face an unlikely new rival for revenue: Amazon

Swole Jeff

News sites and other digital publishers are already in a death match with Google and Facebook for ad sales. Now another tech giant, Amazon, may be joining the fray, according to the Wall Street Journal.

In a story Monday, WSJ tech reporter Chris Mims writes:

Amazon doesn’t break out advertising as a separate business, but according to a new report by J.P. Morgan analyst Doug Anmuth, the company racked up an estimated $2.8 billion in 2017 ad revenue. That’s small compared with his estimate for Google’s ad revenue in 2017: $73 billion. Yet in 2019, he expects Amazon’s revenue to more than double to $6.6 billion.

Mims points out that, as the internet’s major retailer by far, Amazon has the richest data on what people actually buy online. By comparison, their competitors mostly try to triangulate guesses about what you might buy through observing user behavior online, demographics, and other data about you.

That makes for a massive strategic advantage for Amazon.

To boot, the many merchants who list their goods for sale on Amazon are all jockeying for prime position when users search Amazon for, say, a pair of socks. Amazon sells top placement in those results, much like Google sells ad space atop its search results. Hence its increasing revenue opportunities.

A possible knock-on effect of this, of course, is that publishers who are already reeling from flagging ad sales may have yet another headache coming down the pike if Amazon’s ad sales grow as expected over the next few years. And the journalism that is a key lifeblood of Western democracy may get even harder for those publishers to fund.