Amazon’s advertising business continues to grow at a rapid pace, and this year US brands are spending enough on the platform to make it the No. 3 digital ad seller in the country. In its meteoric rise, Amazon continues to fuel speculation about whether the digital retail powerhouse is a genuine rival to the biggest ad publishers in the world.
How much will brands spend on Amazon advertising this year?
We estimate that US advertisers will spend $4.61 billion using Amazon’s platform this year, a 144.5% increase from last year (with some of the growth due to an accounting change made by Amazon this year). That will give Amazon a 4.1% share of the US digital ad market—leapfrogging Microsoft and Oath to make the etailer the No. 3 digital ad firm in the country this year.
What’s driving increased advertiser spending on Amazon?
Advertisers know the Amazon audience is huge and primed to buy, and that Amazon’s platform will allow them to target based on real shopping and buying data—not just demographics and interests. Organic growth is the main driver in 2018, as brands get more sophisticated about Amazon and more ad budgets for the platform are coming from digital advertising buckets rather than ecommerce.
Will Amazon make a dent in the Facebook-Google duopoly?
In the short term, no. But Amazon has the ingredients for a truly powerhouse digital ad business, the key to which is doing more than just selling ad impressions. It’s impossible to say exactly how much of Amazon’s business comes from selling ads on its own properties vs. facilitating ad transactions across the web. But with the ad tech tax accounting for a significant share of all display spending, there’s no way for a digital ad seller—not even Facebook or Google—to crack the highest earnings rankings without benefiting from those revenue streams as well.
What’s coming to Amazon’s advertising business in the short term?
Amazon is maturing its advertising business slowly, even as revenues continue to soar. Complaints from a year ago about clunky interfaces have not gone away and mostly incremental improvements have been made to product offerings. That seems to be changing. In early September, Amazon consolidated its various divisions and products under a single umbrella for all buying and reporting, called “Amazon Advertising.” Agencies are still de rigueur for big brands buying on both the search and display sides of the business.
WHAT’S IN THIS REPORT? This report explains our latest estimates of Amazon’s digital advertising revenues and analyzes current and future trends in the company’s ad business.
KEY STAT: US advertisers will spend $4.61 billion on Amazon ads this year, more than at any other firm besides Facebook and Google, after a growth spike from a significant reclassification of revenue this year. By 2020, Amazon will earn 7.0% of all US digital ad dollars.