Amazon Gives Google A Run For Its Search Ad Money

On the latest episode of the E-Commerce Retail Briefing podcast:

Google has been the powerhouse in search ads for years, but a new forecast predicts Amazon will continue to chip away at its dominance. The retail giant has continued to optimize its ad functions and has experienced major growth in the past few years.

  • DoorDash has gone beyond online delivery and opened its first brick-and-mortar space. The company’s first shared kitchen, called DoorDash Kitchens, provides a cooking space for 4 of its restaurant partners. The kitchen, located in Redwood City, California, also allows the restaurants the ability to offer food delivery to 7 Bay Area cities and pick up to 13 cities. The company’s head of new business verticals said that, “To date, DoorDash has been primarily focused on helping partners grow existing restaurants, so this is a really natural extension of what we built our business on.”
  • Men’s activewear brand, Hill City, is looking to ramp up its growth. The direct-to-consumer company launched by Gap Inc. a year ago has opened a store in San Francisco. The 12-month pop-up features a curated selection of best sellers. Hill City is also trying something new for a Gap Inc brand: entering into wholesale partnerships. Select items will be available at Neighborhood Goods, Need Supply, and A Runner’s Mind. Gap’s Athleta brand will also feature the Hill City collection in 7 of its locations. The expansion of Hill City, which has been referred to as a male version of Athleta, comes as Lululemon is growing its menswear business, whose comparable sales grew 27% in the last year. 
  • Madewell and ThredUp have teamed up for a program called the Madewell Archive. Select Madewell stores are now offering secondhand jeans for $50 dollars a pair. The used denim is sold only at Madewell stores in Austin, Chicago, Nashville, and New York City. At the moment, customers aren’t able to drop off clothes to sell or pick up items they’ve bought through the site, but a spokesperson said the partnership is ongoing and there could be changes later on. The partnership puts Madewell on a growing list of retailers who are breaking into the resale market. A spokesperson from ThredUp said that, “Madewell wanted to take their sustainability efforts to the next level and expand their denim recycling program — we are so excited to power this new resale experience for them and continue to promote a more circular fashion future.” For ThredUp, the partnership comes not long after announcing their consignment clothes would have featured sections in select Macy’s and JCPenney stores. 

Amazon’s Search Ad Market Share Forecasted To Grow

Google by far holds the highest share of search ad revenue in the U.S., but according to a new eMarketer forecast, Amazon is expected to chip away at that dominance over the next few years. The retail giant has made moves to upgrade its ad offerings. Last year, they simplified their advertising functions branding and came together as Amazon Advertising. In May, the company agreed to buy an ad server and a dynamic creative optimization unit that would help advertisers place ads and measure effectiveness. And in early October, Amazon held an event called AdCon to showcase its growing list of ad products, drawing in about 400 people in Seattle for the event. 

Advertising is critical for Google, making up about 84% of Google parent company Alphabet’s revenue last quarter, with search ads a major component. The study said the U.S. search ad market is expected to grow nearly 18% this year to reach $55.17 billion. Google holds a 73.1% share of that, equaling $40.3 billion. Amazon’s ad business has seen huge growth in recent years, climbing 37% to $3 billion in the second quarter. In February, eMarketer said Amazon was projected to claim 8.8% of U.S. digital ad spending in 2019, up from 6.8% in 2018. Amazon also passed Microsoft last year to become the second-largest ad platform for search in the U.S.