Amazon ad revenue leaps 60% in Q4 to hit $1.7B
- In its Q4 earnings presentation last week, Amazon said that its "other" revenue — referring to advertising combined with co-branded credit card agreements — increased 60% year-over-year to $1.7 billion during the quarter, Digiday reported. In Q3, Amazon's other revenue increased 58% year-over-year to $1.12 billion.
- Amazon Marketing Services, the company's search marketing platform, has also seen growth. Ad spend on sponsored product ads increased 64% and 75% for headline search ads quarter-over-quarter for the period of October to December, according to Merkle data cited by Digiday.
- Citi analysts predict Amazon's ad sales will reach $10.2 billion this year, per Digiday, and forecast revenue could grow to $50.6 billion by 2028. Other projections are lower, however; JPMorgan Chase estimates that Amazon ad revenue will be $4.5 billion this year.
Amazon has been making improvements to its Amazon Marketing Services platform over the past several months, which has helped the company significantly grow its ad revenue. While the Seattle-base giant's share of the digital advertising market is still small compared to the duopoly of Google and Facebook, it's becoming more clear that that could change quickly in the coming years, especially as Amazon builds out bigger footprints in e-commerce, brick-and-mortar retail and even industries like healthcare.
Facebook and Google are also more vulnerable now than they've been in the past. Google's parent company Alphabet last week reported only a 24% increase year-over-year in overall revenue, per Digiday, with ad revenue reaching $27.3 billion in Q4, while its total traffic acquisitions costs saw a steep hike. Facebook ad revenue increased 48% from last year but people are also spending less time on the platform, which is additionally in the midst of a major algorithm change that will diminish the organic reach of brand and publishers posts.
For marketers, Amazon offers a bonus over its competitors: a growing trove of consumer behavioral and purchasing data that helps brand better target and tailor their campaigns. About 55% of consumers start their product searches and online shopping trips on Amazon, according to a BloomReach survey, and about 90% say they compare product specs and prices from other sites to Amazon.
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