Those categories are also relatively likely to be shopped for on Amazon. Early on in the pandemic, consumers came to count on “the everything store” so much that it was forced to become the “essential items only” store and turn off its own search advertising on Google for a time to dampen demand.
Even so, Amazon reported strong growth in its “other” revenues—the category under which the company’s advertising revenues fall in its earnings reports—in Q1 and Q2 of this year. This led us to revise our forecast for Amazon’s net search ad revenue growth in the US upward to 43.0% this year—an acceleration compared with 2019. Amazon then reported an acceleration of growth in its “other” revenues to 49% in Q3—higher than we expected and faster than the segment has grown since 2018, when a change in accounting had sent growth rates artificially high.
We also revised upward our expectations for US net search ad revenues at Google after better-than-expected results in Q2. Google executives reported consumer queries trending in a more commercial direction and relatively strong spending by ecommerce advertisers, and our October forecast showed flat growth for Google search. In late October, Google reported better-than-expected results again, including 6.5% year-over-year (YoY) growth in search ad revenues in Q3.