Amazon Ad Revenues Beginning to Pile Up

In 2016, Amazon.com Inc. (NASDAQ: AMZN | AMZN Price Prediction) posted estimated advertising revenues of about $500 million. Retail analytics firm eMarketer estimated at the time that by 2019 the online shopping behemoth would post about $2.4 billion in ad revenues in 2019.

That estimate may be off by a factor of nearly five.

eMarketer now expects total U.S. digital ad spending in 2019 to rise by 19.1% to $129.34 billion, about $20 billion more than ad spending on traditional TV and print. The two giants in digital advertising, Alphabet Inc. (NASDAQ: GOOGL) and Facebook Inc. (NASDAQ: FB), are forecast to take 37.2% and 22.1%, respectively, of those digital ad dollars.

Google’s estimated share of the 2019 ad market is 1% below its 2018 share of 38.2%, while Facebook’s share is slightly higher than its 2018 share of 21.8%. Third-ranked Amazon’s share of digital ad spending will rise by more than 50% this year to nab an estimated 8.8% (around $11.4 billion) of digital ad spending.

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Monica Peart, eMarketer’s forecasting director, said:

Amazon has a major benefit to advertisers, especially consumer packaged goods and direct-to-consumer brands. The platform is rich with shoppers’ behavioral data for targeting and provides access to purchase data in real-time. This type of access was once only available through the retail partner, to share at their discretion.  But with Amazon’s suite of sponsored ads, marketers have unprecedented access to the ‘shelves’ where consumers are shopping.

Total U.S. ad spending will ring in at around $240 billion in 2019, and digital’s $129.34 billion share represents just over 54% of that spending. The remaining 46%, about $110 billion, will be divvied up between print and television.

Traditional TV ad spending is forecast to drop by 2.2% this year to around $71 billion, and traditional print (newspapers and magazines not including digital editions) is expected to drop by nearly 18% year over year. Yellow Pages-type printed directories take the biggest hit of all, down 19%. The dip in TV ad revenues is due largely the lack of a big event (Olympics, elections) this year. eMarketer expects 2020 to see a rise in TV ad spending.

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