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Amazon's Ad Revenue Crossed $609 Million in 2012

Emarketer Estimates E-Commerce Giant to Net $835 Million This Year

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Amazon has spent the past six years parlaying its users' product browsing and purchase data into an advertising business that many consider having the potential to rival Google, Facebook and Yahoo for brands' digital dollars. Amazon has kept the shades drawn on how ads contribute to the e-commerce company's bottom line, but research firm eMarketer has a compiled a peek.

Amazon's global advertising revenue rose by 45.5% last year to top $609.9 million, according to estimates released on Tuesday. EMarketer said ads tied to Amazon.com search results make up the majority of its ad revenue with display ads running on Amazon-owned sites like IMDb.com and Zappos.com contributing a substantial remainder.

Amazon Worldwide Net Ad Revenue '11-13
Amazon Worldwide Net Ad Revenue '11-13

"They have built a business that's growing relatively quickly compared to the overall market and, should that growth continue on the same trajectory, Amazon stands to be a regular player in the budgets of many major marketers," said eMarketer's VP-communications Clark Fredricksen.

EMarketer isn't the first firm to estimate Amazon's ad revenues and took into account several other companies' projections in calculating its figures, specifically citing Barclays' $550 million estimate for revenue in 2012 from global advertising and co-branded credit cards and Jefferies' $235 million estimate.

To get an idea of how Amazon's ad business compares with some of today's biggest players, here are the full-year 2012 ad revenues for Google, Facebook, Yahoo, AOL and Twitter:

  • Google: $43.7 billion
  • Facebook: $4.28 billion
  • Yahoo: $4.03 billion
  • AOL: $1.42 billion
  • Twitter: $288.2 million (per eMarketer estimates)

Aside from Twitter, Amazon has some catching up to do, but "Amazon has many things going for them that most major ad publishers do not have," Mr. Fredricksen said.

For one thing Amazon has scale through its network of owned properties that positions it in the realm of major publishers. Amazon's sites spanned 164 million people in the U.S. in March, compared with Google's 237 million people, Yahoo's 223 million and Facebook's 187 million, according to comScore.

But perhaps even more important than the number of people Amazon reaches is the information it's able to collect from those consumers. Amazon has the kind of data direct-response advertisers love -- which specific products people are searching for, looking at and buying -- and lots of it, and is able to connect that data to specific registered user accounts.

For example, Amazon can bundle people who have checked out or bought pregnancy books and cribs into anonymized audience segments for brands that want to market to expectant parents. Put another way, Amazon combines the reach of portals like Yahoo and AOL with intent-laden data that could trump Google's search signals. Put another way, Amazon can trump Google's intent-laden search data because of the transaction information and can rival the reach of portals Yahoo and AOL.

Buoyed by its scale and data, this year the company will reap $835.05 million, and by 2015, U.S. ad revenue alone -- a $450 million dollar business last year -- will stream $1.1 billion, per eMarketer. Those marks would pit Amazon closer on par with Facebook and Yahoo, yet the company would remain a far cry from Google's juggernaut.

Amazon has begun to toe the deep end of online advertising's pool, building a self-serve platform for advertisers to target consumers with ads on non-Amazon sites based on the company's user data. That could significantly catalyze its ad revenue growth beyond even current projections. However the question remains, does Amazon want to compete with digital advertising's top earners?

"The company has a vast stockpile of data and significant audience and clearly advertiser interest. But it's unclear at this point how aggressive they plan to be about advertising," Mr. Fredricksen said.

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