Amazon's Ad Business May Be Growing Faster Than Thought
February 20 2019 - 6:29AM
Dow Jones News
By Alexandra Bruell
Amazon.com Inc.'s ad business is again outstripping earlier
projections.
Last September, the research firm eMarketer said Amazon would
finish 2018 as the third-largest digital ad seller in the U.S.,
with a larger market share than eMarketer expected just six months
earlier, partly due to accounting changes by the e-commerce
giant.
EMarketer has again revised upward its estimates for Amazon's
U.S. ad revenue for both past and future years. This time the boost
is due partly to third-party data indicating that advertising
provides more of Amazon's revenue than was thought, said Monica
Peart, senior forecasting director at eMarketer.
EMarketer now estimates that Amazon's ad revenue in 2017 totaled
$3.3 billion, for example, up from its estimate of $1.9 billion in
September.
Amazon generates advertising revenue from various business
units, including its e-commerce site, the live-streaming
video-gaming site Twitch, film site IMDb and its advertising
technology division.
Amazon's ad revenue is expected to increase to $15 billion in
2020, or just under 10% of the digital ad market share in the U.S.,
from $11.3 billion in 2019 and an 8.8% share, according to the
latest forecast.
Alphabet Inc.'s Google and Facebook Inc. will continue to
dominate the digital ad pie, with a combined $89 billion in ad
revenue in the U.S. in 2020, according to eMarketer's predictions.
But Amazon's accelerating rise is giving marketers hope of an
alternative to the so-called digital duopoly, although some fear
Amazon's growing power.
EMarketer increased its estimate for Facebook's U.S. ad revenue
for 2019 by about $1 billion, due to strong growth from Instagram
as advertisers increase investments in the platform, said Ms.
Peart.
Reports are more consistent for Google and Facebook, where
advertising accounts for the bulk of revenue and both companies
report their advertising revenues directly. Amazon reports a
revenue category that includes advertising, but not the advertising
dollars themselves.
As marketers allocate more dollars to digital video and social
platforms to reach consumers, digital ad spending is usurping
traditional ad spending in mediums like television, radio, print
and outdoor, Ms. Peart said.
Digital ad spending in the U.S. is expected to grow 19% to
$129.3 billion this year, according to eMarketer, accounting for
54.2% of total U.S. ad spending and surpassing traditional ad
spending for the first time.
Write to Alexandra Bruell at alexandra.bruell@wsj.com
(END) Dow Jones Newswires
February 20, 2019 06:14 ET (11:14 GMT)
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