Amazon's advertising business is gaining ground on its other technology rivals, Google and Meta, and has been the fastest growing over the past three years.
In 2022, this segment reached an annual rate of almost $40 billion, ten times more than five years ago. In fact, in the economic balance of the last tranche of 2022, the chapter on these advertising services stands out in particular.
The results published by Amazon show that during the fourth quarter, it generated almost 11.6 billion dollars, 19% more than the 9.7 billion dollars recorded a year earlier. The figure is also a considerable improvement on previous months.
While Amazon's advertising unit still makes up a small fraction of the $149.2 billion in revenue that the Jeff Bezos-founded company posted in the fourth quarter of 2022, it represents a fast-growing area that analysts believe could be a "pivotal player" in the digital advertising market and one in which Retail Media plays a key role.
According to Insider Intelligence's forecast, Amazon accounts for less U.S. advertising share than Google and Meta; however, while the duopoly's share is declining, Amazon's is increasing. Specifically, Amazon will see $33.96 billion in U.S. ad spending this year.
Amazon continues its plan to dominate the digital landscape. To do so, it wants to lead the three fundamental pillars: media, advertising, and e-commerce.
And more is needed for the company founded by Jeff Bezos to lead e-commerce alone. "They are moving into physical retail, which is still 85% of retail sales today. Amazon Fresh is the big ambition there because this is where the big national consumer brands will be bought," notes analyst Andrew Lipsman.
According to data from Insider Intelligence, Amazon's e-commerce channel advertising revenues, which are included in Retail Media spending, will approach 30 billion dollars this year, representing 76.2% of all e-commerce channel advertising spending in the United States.
According to the aforementioned media, Meta will account for 75% of total advertising spending on social networks and 14.5% of total media advertising spending in the U.S. this year. But, an advertising recession and Apple's privacy changes caused the Facebook and Instagram parent's U.S. ad revenue to contract by 1.1% last year, and this year's revenue will grow by only 2.7%.
Google, meanwhile, has shifted to media through YouTube, which currently accounts for just 2.1% of total U.S. media ad spending, but will grow by double digits in 2024 and 2025. "Google built the first truly revolutionary digital ad machine," declares Lipsman, who also stresses that Meta is "a real performance ad machine."
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