Amazon, The Sleeping Giant Of Advertising, Is Now Wide Awake

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Amazon Has Introduced The Luna Cloud Gaming Service In The U. S.
Amazon Has Introduced The Luna Cloud Gaming Service In The U. S.

Amazon has long been touted as the sleeping giant most likely to disrupt the digital advertising duopoly of Google and Meta (previously Facebook). But, until this week, its progress in catching up on the “big two” was a matter of guesswork, with the tech behemoth keeping schtum about the size of its ad business.

 

The release of Amazon’s fourth-quarter and full-year financial results for 2021 has changed all that. Alexa, how much advertising revenue did Amazon collect in 2021? She might not tell you, but the answer is $31 billion (€27 billion).

 

This still pales compared with the take of the biggest advertising king of them all, Google parent company Alphabet, which raked in almost twice that sum ($61 billion) in the fourth quarter alone.

 

But Amazon’s effort is similar to the footprint of Google’s never knowingly ad-shy YouTube. Indeed, its yearly total exceeds YouTube’s 2021 haul, which came in at about $29 billion. The Jeff Bezos-founded company’s ad revenues also top last year’s estimated $29.5 billion in worldwide newspaper advertising.

 

Amazon has casually become an ad magnet. It sells display ads that appear on the screens of its tablet devices when users wake them up, it sells audio ads that are sandwiched between songs on the free version of Amazon Music and, most lucratively of all, it serves ecommerce users ads from the companies trading on its marketplace.

 

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Upward trajectory

All of these activities are creating a sharp upward trajectory in revenues. In the fourth quarter, its ad revenue was $9.7 billion, up 32 per cent on the $7.35 billion it earned in the same period in 2020. The capacity to expand further is obvious, and the incentive is there: at present, only 7 per cent of its total revenue comes from advertising. While Meta is dependent on advertising for revenue and Google is largely dependent on it, Amazon has a long way to go before that exposure is even a concern.

 

Analysts at Insider Intelligence are now forecasting that Amazon’s global ad business will surge 36.5 per cent this year, reaching $43.05 billion, and giving it a 7.5 per cent share of the global digital ad market. Combined, Google, Meta and Amazon controlled about three-quarters of digital ad spend in 2021 and almost half of all ad spend, with Amazon far ahead of other tech players like Microsoft and Snap.

 

So it’s goodbye to the duopoly, hello to the troika – and the best of luck to everyone else.