Checking in on Amazon’s Online Ad Business

Amazon’s Ad Revenue Surges

Amazon’s power in the ecommerce space is translating into advertising. Amazon made about $13.5 billion from advertising during the first three quarters of 2020, which is up from $9.3 billion during the same period a year earlier. This is small compared to Amazon’s revenue from retail sales and Amazon Web Services, but it is still an important and growing branch of Amazon’s business.

Marketers have slashed their ad budgets during the pandemic—especially for more traditional forms of advertising, like billboards and radio. But ecommerce advertising spending has boomed.

Staying Ahead of the Competition

As ecommerce advertising grows, Amazon is eager to stay ahead of more traditional retailers like Walmart (WMT) and CVS (CVS), which are also vying for attention from advertisers as they build their ecommerce operations.

To maintain its ecommerce ad dominance, Amazon has begun to offer advertisers a variety of tools. It recently launched a service that allows brands to easily create their own video content to be used in ads. There are also a number of third-party companies which help marketers navigate Amazon using data and other tools.

Pandemic Trends May Be Here to Stay

Amazon also owns Twitch, a live streaming service which was originally focused on video games but has expanded to reach other audiences during the pandemic. Online advertising on Twitch has seen significant growth. Twitch gives Amazon a channel to reach younger consumers who might not see ads on its main site.

Analysts predict that online shopping habits andthe ecommerce ad trends which have developed during the pandemic may be here to stay, even as more people receive COVID-19 vaccines and can return to brick-and-mortar stores. Amazon will need to keep innovating as other companies strive to gain market share in this growing industry.

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