Amazon ad revenues boom

6 June 2013
NEW YORK: Amazon is steadily generating significant advertising revenues, predicted to be worth $835m in 2013, and has just launched an online marketplace in India.

Insights provider eMarketer based its estimates of Amazon's ad revenues on information in company reports and an earnings breakdown model that accounted for advertising and usage trends worldwide, as well as developments and assumptions about the company's advertising strategy.

It concluded that net ad revenues at the online retailer had increased 51.9% to $410m in 2011 and a further 45.5% to $610m in 2012. It expected 2013 would see a smaller double-digit rise of 36.9% to reach $835m.

"Whilst they have been quiet, they have an incredible advantage over many of their competitors with the vast stockpile of customer data they have from their core business," Clark Fredricksen of eMarketer told the Financial Times.

One expert said this data enabled Amazon to offer a "unique proposition" to advertisers with information on shopping habits and the facility to complete a sale.

"They can close the loop on the purchase right there," said Chris Vollmer, a media authority at the consultancy Booz & Co. "That's a big advantage for marketers. They don't lose the consumer between the point where the impression is created and where the sale happens."

Most of Amazon's ad revenues are thought to come from ads placed in or near search results that appear when a person is looking on the site for a product. Additional revenues come from display ads served on Amazon-owned sites and through its ad network.

Around 74% of ad revenues come from the US, an amount totalling $450m in 2012 but which is expected to more than double to $1.1bn by 2015.

Meanwhile, the online retailer has launched an online marketplace in India, whose fast-growing ecommerce sector is predicted to be worth $76bn by 2021.

This had been expected for some time but the actual date had not been announced and there was "no fanfare", said Livemint.

Data sourced from eMarketer, Financial Times, Livemint; additional content by Warc staff
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