As the pandemic drove consumers to move their spending online in 2020, Amazon benefitted in a big way. But it wasn’t just its ecommerce business that grew by double digits. Its advertising business grew by 52.5% last year, pushing Amazon’s share of the US digital ad market past 10% for the first time. This has only strengthened its position as the No. 3 ad publisher in the US.
Amazon’s US ad revenues last year grew to $15.73 billion, increasing its market share from 7.8% in 2019 to 10.3% in 2020. Growth was driven by search revenues from Sponsored Products and Sponsored Brands, while video ad revenues on properties including Amazon Fire TV, Twitch, and IMDb TV grew significantly as well.
“For advertisers with goods to sell in the marketplace, Amazon ads were a key performance lever throughout 2020, especially with the cheap ad opportunities available in Q2, when many sellers suffered out-of-stocks and dropped out of the auctions,” said Nicole Perrin, eMarketer principal analyst at Insider Intelligence. “Amazon advertising has long been a must for marketplace participants, and that hasn’t really changed—though more brands and retailers are considering Amazon from an ecommerce perspective due to the pandemic.”
This year, we expect Amazon’s US ad business to grow another 30.1%, surpassing $20 billion for the first time, higher than our Q4 2020 forecast. That puts it on track to surge past $30 billion by 2023.
“As consumers shift more spend online, trade spending and shopper marketing will rapidly follow, with the bulk flowing to Amazon,” said Eric Haggstrom, eMarketer senior forecasting analyst at Insider Intelligence. “Its investments in NFL rights and its ad-supported video properties will drive significant growth as well.”