Amazon, Alphabet and Netflix in 2020 figured out how to generate more revenue while spending less on advertising. Facebook, meanwhile, doubled down on its ad spending.
Amazon has prospered in the pandemic, with worldwide net sales rocketing 38% last year to $386 billion. But Amazon trimmed ad and promotion spending by 1% to $10.9 billion (see chart, below).
With strong demand for online shopping from homebound consumers, Amazon delivered the goods with “lower spending on marketing channels as a result of COVID-19,” according to the company’s annual regulatory filing.
Last year marked only the fourth time Amazon cut spending, according to Ad Age Datacenter’s analysis. The retailer previously reduced spending in 2001, 2002 and 2003 in the wake of the dot-com bubble. Amazon had double-digit percentage increases in ad and promotion spending every year from 2004 through 2019.
Amazon’s spending as a percent of sales dropped to 2.8% in 2020, the lowest spending rate since 2010.