While Google and Facebook still have a virtual duopoly on digital advertising revenue, Amazon's business is growing faster than expected, cementing it as a third, increasingly competitive player, according to eMarketer.
Investors are taking notice.
Aside from tech stocks' general clobbering, J.P. Morgan analyst Doug Anmuth attributes Google's recent slump to "increasing concerns of direct competition with Amazon's fast-growing advertising business." In a note to investors ahead of earnings, he also cites broader ad industry data privacy concerns and increased regulatory scrutiny as factors.
As more people start product searches on Amazon than Google, Amazon's advertising business has grown to a multibillion-dollar business. Executives at multiple media agencies recently told CNBC that some consumer packaged goods advertisers are moving more than half of the budget they normally spend with Google search to Amazon ads instead, amounting to hundreds of millions of dollars.
"Amazon is becoming a hugely attractive partner next to Google and Facebook in times of increased pressure to prove advertising ROI," Marco Rimini, chief development officer at WPP's Mindshare, told CNBC.