Why is Amazon the 300 lb. Gorilla that Google and Facebook Should Fear?

August 2nd, 2018

The answer is fairly simple. The Amazon environment is closer to product purchase than either Google or Facebook, and this proximity provides them more access to a variety of revenue streams. Apparently this phenomenon is causing Zuckerberg and Pinchai to reach for the Just for Men.

Then there’s the ultimate irony, that aside from stealing share from both, Amazon has cancelled their own hefty ad budget on Google. Ouch.

Pundits are quick to blame Google’s drop in share from 37.6% to 37.2% and Facebook’s drop from 19.9% to 19.6% from 2017 to 2018 on the Amazonion assault, which saw the Amazon ad market rise by a full percentage point in the same timeperiod. And Amazon is just getting started.

The key really all boils down to Amazon’s proximity to product purchase. George Manas of Resolution Media points out in a recent article on MarketWatch, that “Amazon is about the purchase graph … Google is all about the intent graph and Facebook’s advantage is the social graph.” This propensity to make a purchase when a customer is in a “buying mode” is nothing new. Retailers have known for years that point-of-purchase is a key buying motivator, and Amazon’s overnight success is proving that again.

In addition to reaching customers when they’re geared toward purchase, Amazon has the added advantage of double dipping. As highlighted in an article by RetailDive, they get paid when someone clicks on the ad on Amazon, and if the buyer makes their purchase on Amazon, they score on that as well. And that’s just one example of the multiple ways Amazon can benefit from people looking to buy stuff. If you add to that the fact that their multiple revenue streams allow them to offer deeper discounts, Google and Facebook don’t seem to stand a chance.

And if that isn’t enough, we can’t ignore the fact that the 100M+ Amazon prime accounts gives the retail battering ram a highly targeted pool of prospects just sitting in their database waiting to be mined.

Sure, Google and Facebook have access to targeted audiences themselves, but not in the best environment – the one already in the purchase funnel.

So, what should Google and Facebook do about this oncoming cyclone? What can they do? Figure out how to get on board, or get out of the way.