Takeaways
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How did Amazon's ad revenue change in 2021?
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Amazon trumps YouTube's advertising business for the first time
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Are TV and audio ads the future in advertising?
Development of revenues from advertising
In Amazon's quarterly report for the fourth quarter of 2021, revenues from advertising services were explicitly listed for the first time. These include the sale of advertising services to sellers, vendors, publishers, authors and other sellers through sponsored ads, display and video advertising.
“Given the extraordinary growth we saw in 2020 when customers predominantly stayed home, and the fact that we’ve continued to grow on top of that in 2021, [...] there’s a lot to look forward to in the months and years ahead.”
Andy Jassy, Amazon CEO
In previous quarterly reports, advertising revenues were listed under the item "Others". According to Amazon, this item primarily included sales of advertising services, but also sales in connection with other service offerings. For this reason, the figures for "Others" also differ slightly from the advertising revenues now disclosed and are somewhat higher.
Advertising revenues (in millions)
Nevertheless, a very clear trend can be seen. Advertising revenues have risen continuously over the last few years and have increased almost tenfold from 2016 to 2021. This illustrates the immense importance of ads - both for Amazon itself and for sellers on Amazon. In the meantime, it is almost impossible to sell successfully in the long term without placing ads on Amazon.
Amazon beats YouTube's advertising business
The immense importance and power that Amazon has gained in recent years becomes clear when comparing it to other major platforms such as Google, Facebook and YouTube.
A small sensation: Amazon's advertising business beat YouTube's advertising business for the first time in 2021. While YouTube was able to earn around 28.85 billion US dollars from advertising in 2021, Amazon's figure was 31.16 billion US dollars.
Google is still the current leader with advertising revenue of $209.5 billion in 2021, followed by Meta (formerly Facebook) with $115 billion. However, the immense revenue increases that Amazon has been able to record in recent years indicate that this gap between Amazon and the other platforms will narrow significantly in the future.
Another indication of this is the development of advertising formats on Amazon and, above all, the new formats that Amazon has introduced in recent years.
History and development of advertising formats
The increasing relevance of advertisements is also reflected in the development of advertising formats. Currently, there are three advertising formats on Amazon: Sponsored Product Ads, Sponsored Brands and Sponsored Display Ads. In addition, there is the Amazon Demand Side Platform (DSP), through which advertisers can place targeted programmatic ads both on Amazon and on external sites. The DSP offer is aimed at customers who sell their products via Amazon, as well as all other companies such as car manufacturers or financial service providers who want to use exclusive Amazon Audiences.
The advertising formats have changed a lot over time and have been extended with additional functions.
In 2012, the following 2 advertising formats were introduced:
- Product Ads (now Sponsored Products Ads)
- eCommerce Ads (formerly Product Display Ads, now Sponsored Display Ads)
In 2015, the so-called Headline Search Ads (today Sponsored Brands) were also added. Sponsored Brands (SB) consist of three different ad formats. In addition to the Product Collections and Store Spotlight Ads, the SB Video Ads were introduced in 2020.
The demand-side platform has also changed significantly over the years. In 2012, it was released under the name Amazon Advertising Platform (AAP). Here, brands could target their customers on and off Amazon with display and video ads. In 2014, Amazon introduced a self-service solution that allows advertisers to manage their own AAP ads.
In 2018, Amazon AAP was then renamed Amazon Demand-Side Platform (DSP). The Amazon DSP offers both an Amazon Managed Service and a self-service option for advertisers.
Fire TV Ads
Amazon also announced in its quarterly report that the company has sold more than 150 million Fire TV devices worldwide since its launch in 2014.
This development is particularly interesting for advertisers who want to place ads on the Fire TV. Ads on the Fire TV are self-service ads that allow you to advertise movies, apps, and series to different audiences through Sponsored Display Ads on the Fire TV (source: Amazon). Customers can be directed to product detail pages for physical products or digital products (videos and apps) through these ads. Landing pages for videos, landing pages of Fire TV, Prime Video channel pages, integrated landing pages or deep links can also be stored as target pages.
There are already four ad formats within the Fire TV ads. These are Inline Banner, Feature Rotator, Sponsored Screensaver and Sponsored Tiles. The probability that the ad format will also be expanded further and gain in importance is high.
Audio Ads
Audio ads can be used in the free, ad-supported version of Amazon Music on Alexa-enabled devices, including Echo and Fire TV, as well as mobile devices and desktops. The ads are served during playback pauses and spread brand messages even when viewers are not looking at their screens. Audio ads are only available in the U.S., Germany and the U.K. at this time. This type of advertising also offers exciting opportunities for some sellers and will likely be expanded in the future.
Prospect
The graph represents the share of digital advertising revenue in the USA of Facebook, Google and Amazon. It is clear to see that Amazon's share has risen continuously from 2019 to 2021 and is expected to continue to rise in the coming years. While Facebook's share has virtually stagnated, Google's share is actually dropping significantly.
Due to the growth of Amazon's advertising revenues, it can be assumed that the potential of advertising is far from exhausted. In the coming years, Amazon's advertising business could even overtake that of Google and Facebook.
To sell successfully on Amazon in the long run, running ads is essential. PPC tools like BidX can help enormously with the efficient design of these ads. BidX continuously analyzes the performance of your ads and adjusts bids and keywords accordingly to achieve the best possible result for you. 
