Amazon's advertising business has grown faster than Google and Facebook in every quarter for the past three years, according to recent data from Marketplace Pulse. Though it is still smaller, Amazon is not competing with retailers for advertising revenue - it is going after Google and Facebook.
Amazon’s ad business grew 25% to $9.5 billion in the third quarter. Google’s advertising revenue, including all Google properties and YouTube, rose just 2.5% to reach $54.4 billion. Facebook’s advertising, including Instagram, shrunk for the second consecutive quarter, down -3.7% year-over-year at $27.2 billion.
The data shows that Amazon's advertising also grew faster than social networking platforms such as Pinterest, Snapchat and Twitter (which didn’t report Q3 results because it is no longer a public company) in the third quarter. Even combined, those three are dwarfed by advertising dollars spent on Amazon, but historically they have been growing faster. The only other recent quarter when Amazon outgrew them was the second quarter of 2020.
TikTok is missing from the comparison because it’s not a public company yet; thus, its financials are unavailable. TikTok’s advertising network is likely larger than Twitter, Pinterest, and Snapchat. It is undoubtedly growing the fastest among social networks.
While the bulk of its business comes from e-commerce and cloud computing, Amazon has quietly built an online ad juggernaut in the background by getting brands to pay to promote their products on the company’s website and app.
Amazon has a distinct advantage over other major social media platforms that have struggled amid a global economic downturn, privacy changes and shifting consumer behaviour.
Amazon advertising is growing not because Amazon is stuffing more ads in more places on Amazon. And not because ad prices continue to increase. (Nonetheless, both of those are part of the story.) Amazon advertising’s growth is due to the whole network reaching further, especially off Amazon, and in more ways than bottom-of-the-funnel ads. For example, it recently announced the ability for brands that don’t sell on Amazon, like restaurants or hotels, to advertise on its live-streaming platform Twitch, which sits on the same advertising network.
A few years ago, Amazon’s advertising business was a retailer adding sponsored listings to search. That is the stage Amazon’s retail competitors, like Walmart, are at in their advertising business development. Amazon’s advertising ambition is competition with Google and Facebook.
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