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Amazon has ramped up its advertising strategy in recent years, and the site is reaping the benefits. In figures from eMarketer's new estimates on Amazon ad revenues—the first time eMarketer has ever forecast Amazon’s advertising revenues—the ecommerce giant took in nearly $610 million last year worldwide in net ad revenues.
That figure was up 45.5% over 2011, and Amazon’s worldwide ad revenues after traffic acquisition costs (TAC) will increase a further 36.9% this year to $835.05 million.
eMarketer estimates the bulk of Amazon’s ad revenues come from ads placed in or near search results that appear when a person searches Amazon for a product. The company also earns substantial revenues from display ads served on Amazon-owned sites and through its ad network.
Overall, eMarketer expects strong and consistent growth in Amazon’s ad revenues as it continues to develop its strategy. Key to further growth will be the plethora of consumer purchasing data Amazon gathers through its core business, retail sales. Ad-selling competitors such as Google and Facebook lack such data—and therefore its targeting potential.
Amazon has already developed its targeting technology, along with creating its own demand-side platform (DSP) to improve targeting of Amazon buyers on other web properties and devices like Kindles—something that may help position them as a more attractive site for both brand and direct response advertisers.
The bulk of those revenues are from the US, where eMarketer estimates Amazon took in $450 million in ad revenues last year. In 2013, Amazon will net $660 million in US ad revenues, rising to $1.1 billion by 2015.
eMarketer bases its estimates of Amazon’s ad revenues on information in company reports and an earnings breakdown model that accounts for advertising and usage trends worldwide, as well as developments and assumptions about the company’s advertising strategy and interviews with people familiar with Amazon’s business.
eMarketer made several assumptions about Amazon’s advertising revenues to build our model:
Key variables in the outlook for Amazon ad revenues include the following:
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