What Advertisers Can Do to Prepare for the Coming Triopoly

New study suggests a 3-year plan

A 2019, 2020 and 2021 calendar with the Amazon, Google and Facebook logos with a YouTube logo on the side
In 2020, brands should look to customer behavior to guide the channels they use.
Illustration: Trent Joaquin; Sources: Getty Images, Amazon, Facebook, Google

We’ve been hearing about a potential triopoly in the digital marketing industry for several years now as Amazon Advertising grows. And according to research firm Forrester, the time for advertisers to start preparing is now.

In a recent study, Forrester said media and advertising agencies have a lot to gain from a third major player in online advertising, but it will require amendments to their strategies.

Meanwhile, Amazon still has a way to go to catch up with the Duopoly—Figures from market research company eMarketer show Google will control 37.2% of online ad spend in the U.S. this year, followed by Facebook with 22.1%. Amazon is expected to end the year with just 8.8%, but it is growing.

Naturally, this shift will affect how marketers allocate their media budgets and acquire new customers.

“We recommend that b-to-c marketers take a long-term view of the advertising landscape and take a gradual approach to changing their ad investments over the next three years,” Forrester analyst Collin Colburn wrote in the report.

To start, 2019 should be the year brands test on Amazon, according to Forrester.

“Almost every brand we speak with gripes about the challenges of working with Amazon and many endemic advertisers already overindex their Amazon spend without enough diversification,” the report states. “Some brands will look to build out their own direct-to-consumer (DTC) channels or build brand-safe ecommerce partnerships. But those that don’t must not spend all their ecommerce ad dollars in Amazon and should wait for retailers like Walmart and Target to offer more robust self-serve ad tools by the end of 2019.”

John Roswech, executive vice president of retail media at advertising platform Criteo, told Forrester brands will give Amazon too much control if they don’t support other retail partners.

Then in 2020, brands should look to customer behavior to decide what channels they use. For example, they should consider integrating a more holistic search strategy that includes Amazon, as consumers use the ecommerce platform as a search engine, along with Google, Bing and others.

“Today, marketers align their investments in the duopoly to specific stages in the customer lifecycle,” according to the report. “But 2020 will be the year for marketers to stop thinking of Amazon’s search ad product and DSP as separate from their search marketing or programmatic advertising strategies.”

In 2021, Forrester said the market should brace for a contraction within the triopoly.

The firm predicts a very different ad market then as marketers slow investment in channels like Facebook where they cannot confidently measure sales or leads and governments intervene to break up one or all of the triopoly enterprises to encourage greater competition within digital advertising.

“Be ready to invest in emerging channels—like Pinterest, addressable TV and podcasts—that are not controlled by the triopoly,” the report states.

Agencies in particular will need Amazon for growth and viability in the future, Forrester said.

To ensure they are well-positioned, they will first have to remember what makes Amazon different.

According to Forrester, traditional media agencies have had a tendency to apply more of a classic media buying approach to Amazon, but they should instead study how Amazon’s core ecommerce business works with its advertising offering.

Agencies must also fight off Amazon-specific agencies and additional in-housing.

Forrester says Amazon-specific agencies like Flywheel have emerged because marketers cannot count on legacy agencies to help them navigate Amazon advertising as some agencies have been slow to embrace Amazon as an advertising channel.

In addition, agencies are right to worry about in-housing as Amazon’s corporate strategy has always been to remove the middleman and reduce inefficiency. And now it has self-serve ad tools, including Sizmek’s ad server.

But agencies are not helpless—they can build out offerings around retail media networks and allow clients to manage Amazon Advertising in-house.

“For example, agencies that have been slow to build out an Amazon ad practice could jumpstart their efforts by building consultative offerings for ecommerce advertising in general,” according to the report.

Recommended articles