The holidays are looking like a happy time for digital ads — and for Google, Amazon, and even Facebook (AMZN, FB, GOOGL)

Sundar Pichai

Digital advertising spending appears to be growing at a healthy rate this holiday season, Colin Sebastian, an analyst with Baird Equity Research, said in a new report.
Ad spending on Google is growing faster than it did in the third quarter, he said, citing data from Merkle, which tracks the digital ad industry.
Amazon is benefitting from marketers shifting their budgets to online ads from offline traditional ones, he said.
Advertisers seem to be sticking with Facebook, according to the report.

This holiday season could be a happy one for the big players in the digital advertising business.

Google and Amazon are seeing a notable uptick in ad sales, Colin Sebastian, a financial analyst with Baird Equity Research, said in a new report, citing data from Merkle, a marketing firm that tracks the digital advertising industry. Meanwhile, all indications are that advertisers are continuing to support and spend their money on Facebook, despite the string of scandals and fiascos the company has endured this year.

"Spending growth remains generally steady/healthy across the leading platforms," Sebastian said in the report.

So far this quarter, ad spending on Google is growing at a 19% annual clip, according to the Merkle data cited by Sebastian. That's up from the 18% growth rate the company saw in the third quarter.

While advertisers continue to invest in Google, they are shifting some of their dollars, Sebastian said. In particular, their moving some of their budgets from text-based search ads to Google Shopping, the company's comparison shopping service that allows marketers to tout their products with photographs and to link to places to buy them. Thus far this quarter, ad spending on Google Shopping is up 40% year-over-year, according to the Merkle data.

Google's "shopping ads [are] still cannibalizing other formats," Sebastian said.

Amazon is stealing ad sales from offline players, not from Google

Ad spending on Amazon is up 150% from early November, according to Merkle. That rise is in-line with the surge seen at more established digital ad companies, Sebastian noted. That's yet another sign that the e-commerce giant is becoming a significant player in the industry.

Mark Zuckerberg At least so far, Amazon doesn't appear to be stealing ad spending away from Google, according to the report. Instead, marketers are redirecting money they would have traditionally spent on offline advertising to the e-commerce site, Sebastian said, citing Merkle.

Amazon's "ad growth appears largely incremental," he said. The e-commerce giant is "not taking share from Google search, despite headlines and concerns to the contrary," he continued.

As for Facebook, ad spending appears steady, according to the report. The company has been hit with multiple privacy and security scandals this year, including the leak of data on millions of users to Cambridge Analytica. But advertisers don't seem to be moving their budgets from it to other outlets, Sebastian said, citing Merkle.

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While Facebook's advertising revenue growth has been slowing, that's largely due to the way the company is changing its main service and shifting the emphasis to its Story format from the News Feed, Sebastian said.

"There is no evidence of a backlash related to recent Facebook privacy concerns," he said, paraphrasing Merkle's analysis.

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