Amazon's advertising revenue growth, while logical, has come as a surprise to most.
Amazon is one of the world's largest retailers, with significant presence in the U.S.The company's retail business has been dominated by its e-commerce site, where GMVs have consistently risen.While the likes of Google and Facebook used to be primarily used for discovery of products, Amazon was fulfilling those searches.Capitalizing on the need to help discovery of products on its e-platforms, Amazon had been able to almost double its advertising income in every quarter of 2018.Amazon's access to an enviable trove of customer transaction data, one of the world's largest spread of SKUs and a large customer base is likely to help the company continue growing its advertising business.Considering the levers that Amazon has, we estimate that Amazon's U.S. advertising business could potentially reach $60 billion by 2024.
Estimating Amazon's advertising revenue from the U.S.
Amazon Ad revenue from the U.S.
Amazon's revenue from the U.S. have been increasing steadily. We expect this contribution to continue growing over the next few years, leading to advertising revenues from the U.S. to potentially reach $60 billion by 2024.
Estimating the U.S. online advertising market
Total U.S. online advertising revenue
% change in Total U.S. online advertising revenue
Based on data from IAB, eMarketer and our analysis, we created a dashboard highlighting growth in the U.S. online advertising market.
Using the forecast for Amazon's U.S. advertising revenues above, this implies that the company can potentially grab a 23% share of the U.S. online advertising market - up from just 6.5% now.
Estimating Amazon's Other revenue (primarily Advertising)
Total others revenue, mainly advertising
Others (Advertising) revenue as a % of total revenue
We note that Amazon does not break out its advertising revenue. However, the company's 'Others' segment has been disclosed to contain mostly advertising revenues. We thus project the Others revenue for Amazon to express our expectations of growth based on the growth of the company's consumer businesses.