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Amazon ad revenue alone ($2.2 billion) for Q2 was already around 15% of Facebook's total Q2 revenue ($13 billion). That is nuts, if they have any room to grow t

by cm2012 8y ago

Amazon ad revenue alone ($2.2 billion) for Q2 was already around 15% of Facebook's total Q2 revenue ($13 billion). That is nuts, if they have any room to grow that further, since ads isn't even Amazon's specialty. For reference, Snapchat did $290 million in the same timeframe, Twitter $660 million.

scoggs 8y ago
If it wasn't obvious already: > For reference, Snapchat did $290 million in the same timeframe, Twitter $660 million. Just goes to show how much potential Amazon has in the Ad Market. Does anyone else think Amazon could overtake one or both of Amazon's biggest competitors in the market (Facebook or Google)?
- josephjrobison 8y ago
  Amazon is most like Facebook in that the ads are only displayed on its own property rather than all across the whole internet on any site that displays 3rd party ads. That, combined with the fact that Amazon also has a ton of data on its users just like Facebook makes them very alike (not that Google doesn't as well). What separates Google from Amazon is that their paid ads can be displayed on any 3rd party site that they don't own, through DoubleClick. And of course the whole search engine monopoly makes that impenetrable for now. Of course, it's all up for grabs, Amazon could go out and buy an ad network like Mediavine and go head-to-head with DoubleClick.
  - whitepoplar 8y ago
    FB, Instagram, and WhatsApp may as well be the whole internet for too many people.
  - nattaylor 8y ago
    Amazon and Facebook already have integrations with third parties
  - noer 8y ago
    Facebook has a display network similar to DoubleClick, called Audience Network. In my experience it pays publishers a lot better than DoubleClick. For advertisers, they're able to target on more demographic categories (for now, the CA scandal has done a lot to reduce targeting options).
    - qeternity 8y ago
      Also people tend to forget that advertising on Google’s own properties represents the vast majority of its ad revenue.
      - Retric 8y ago
        A significant chunk of that ~4 Billion or ~5% of total global online advertising is because Google also owns YouTube, which captures a large chunk total advertising spending independent of search.
        Scoundreller 8y ago
        Which is almost all revenue that Google has to share with YT publishers. 50% anyway.
    - propogandist 8y ago
      in my experience FB's audience network was junk
      - nandreev 8y ago
        The first thing I look at when optimizing a Facebook ad campaign is to look at performance by placement. In many cases, turning off the Audience Network will do wonders for your CPA.
        wastedhours 8y ago
        Seconded - one of my default actions when setting up a campaign is to switch that off.
  - badwolf 8y ago
    Amazon is starting to roll out their ad network - we're currently getting ready to roll out an update to my $dayjob's app with Amazon ads in it.
  - logiclabs 8y ago
    We've been displaying Amazon CPM display ads on a site for over 2 years now. This is an ad network for affiliates, but paid by CPM. It's mostly a mix of large brand adverts and Amazon remarketing ads (normally for products you've looked at). The service is about to be shutdown though at the end of this month, and their suggestion is that we apply to their larger header bidding network (Unified Ad Marketplace), but not sure we'll qualify for that.
  - hndamien 8y ago
    More importantly, almost all of Amazons searches are commercial in nature, whereas I think for Google it is only about 30%, the other categories being navigational and educational. This means that their data is much more monetisable.
- LemonAndroid 8y ago
  Amazon will overtake everyone once they overcome working conditions problem.
  - oblio 8y ago
    Isn't that like an immutable problem and what their business model is based on? Push employees to the limits to have very high performance for a short time and then throw them out when they burn out?
    - LemonAndroid 8y ago
      Robots will solve that.
- adventured 8y ago
  An analyst with Piper Jaffray recently projected their ad business will rapidly exceed AWS when it comes to being their profit center. By 2021 sometime they're forecasting $16b in operating income just for ads. That would make Amazon's ad business one of the few dozen most profitable businesses anywhere. > The analyst estimates Amazon's ad business operating income will grow to $16 billion in 2021 versus $15 billion for Amazon Web Services that year. He believes Amazon already has product search market share "well above" 50 percent. Olson noted the "Other" segment, where Amazon's ad business resides, grew sales 72 percent in the second quarter. https://www.cnbc.com/2018/08/13/amazons-advertising-profits-will-surpass-its-aws-income-by-2021-pipe.html https://www.cnbc.com/2018/08/13/amazons-advertising-profits-...
RaceWon 8y ago
The problem with Amazon is that it is a race to the Absolute lowest possible price point. Now don't get me wrong, I'm not saying that boatloads of vendors don't make money advertising there (and people on Amazon are for Sure in the market), but wouldn't you rather get people to your own website via say YouTube, which is only going to get more and more popular, and then convince them to buy from you Now... I would if I was currently selling online. It simply makes more "cents."
- ikeboy 8y ago
  Problem is it's much harder to get sales elsewhere. On Amazon, you can sell a $25 item and maybe spend $5-10 in ads per sale. On your own site, you might pay $25 per sale, which means you need a compelling offer at $70+ or so. This is because conversion is worse and bids are only going up as people get better funnels and can afford to throw a ton of cash on ads.
  - RaceWon 8y ago
    I have to say your comment sounds like an opinion, that may or may not be true; furthermore you are assuming there is $5-10 profit margin on a $25 item on Amazon... this does not seem very likely or rather an exception not the norm in the cutthroat and competitive selling arena that is Amazon. How about AdWords; can Amazon get 50 bucks a click on a search? Nope they can't, but Google does. I don't see Amazon dethroning Google anytime soon for ad revenue. They could, but I think they'd need a high end site that caters to quality and not peeps looking to save $1.96 on a set of Tupperware.
    - ikeboy 8y ago
      I'm in the industry, I hear people talk about ads all the time. The $25 per action is from a talk I was at 2 weeks ago from someone doing 8 figures a year on shopify and a ton on amazon as well who made this point specifically. Generally private label on Amazon has high margins but high competition, in the good niches at least. Everything eventually dies and gets commoditized. People spend 10-30% ACoS all day long, people give away hundreds or thousands of units. Typically people will buy amazon ads at breakeven or worse in order to gain sales rank to get more organic sales. >can Amazon get 50 bucks a click on a search? Google is only getting that on cars or enterprise software or other things with high purchase prices. If Amazon sold cars, I'm sure they'd be able to get people to pay 50 bucks a click.
carlsborg 8y ago
Total revenues for 2017 Alphabet = $110B (about 85% comes from advertising) Facebook = $40B If Amazon is doing ~$8B and the others about $4B annually.. how does this square with the $88B market size in this article headline?
- Arnt 8y ago
  $88B is probably the US or North American market, where Facebook's revenue is $20B, not $40B.
  - ksec 8y ago
    Christ I wish they could state that. When you are reporting companies like Apple, Facebook and Google which has an worldwide operation, we expect those figures to be world wide and not a specific market. Edit: I just look up the worldwide total for Digital Ads are $228.44 billion in 2017. Total Ads market worldwide including TV, Print Ads etc are 500+ Billion per year.
wastedhours 8y ago
Amazon has one of the perfect data mixes - like Google, it has all the infrastructure for true intent based advertising (sponsored listings on result pages, based on specific searches or product info), as well as comprehensive end-to-end customer journey information for your more passive advertising as well. The latter will probably earn them decent scratch, even if it's perhaps not long-term sustainable with data issues and adblocking (Facebook can work for passive advertising because the user intent is snacks of procrastination, passive ads can be snacks of procrastination too if done well, though will always be low rent). The former though, now they're in pretty much every vertical, is where the winning happens. As in the article, even if companies don't sell through Amazon, there'll still be an Amazon Tax if they want to get into the search results like with AdWords. I wouldn't be at all surprised to see Amazon leapfrog Facebook, once their attribution pixel gets some traction in the wild.
- tim333 8y ago
  Also when you are on Amazon you are usually there to buy stuff so its a good time to show stuff to buy. On Facebook not so much.
  - wastedhours 8y ago
    Pretty much the TL;DR of my point ;)
goatherders 8y ago
That is startling.

by cm2012 8y ago

scoggs 8y ago

If it wasn't obvious already: > For reference, Snapchat did $290 million in the same timeframe, Twitter $660 million. Just goes to show how much potential Amazon has in the Ad Market. Does anyone else think Amazon could overtake one or both of Amazon's biggest competitors in the market (Facebook or Google)?

josephjrobison 8y ago
Amazon is most like Facebook in that the ads are only displayed on its own property rather than all across the whole internet on any site that displays 3rd party ads. That, combined with the fact that Amazon also has a ton of data on its users just like Facebook makes them very alike (not that Google doesn't as well). What separates Google from Amazon is that their paid ads can be displayed on any 3rd party site that they don't own, through DoubleClick. And of course the whole search engine monopoly makes that impenetrable for now. Of course, it's all up for grabs, Amazon could go out and buy an ad network like Mediavine and go head-to-head with DoubleClick.
- whitepoplar 8y ago
  FB, Instagram, and WhatsApp may as well be the whole internet for too many people.
- nattaylor 8y ago
  Amazon and Facebook already have integrations with third parties
- noer 8y ago
  Facebook has a display network similar to DoubleClick, called Audience Network. In my experience it pays publishers a lot better than DoubleClick. For advertisers, they're able to target on more demographic categories (for now, the CA scandal has done a lot to reduce targeting options).
  - qeternity 8y ago
    Also people tend to forget that advertising on Google’s own properties represents the vast majority of its ad revenue.
    - Retric 8y ago
      A significant chunk of that ~4 Billion or ~5% of total global online advertising is because Google also owns YouTube, which captures a large chunk total advertising spending independent of search.
      - Scoundreller 8y ago
        Which is almost all revenue that Google has to share with YT publishers. 50% anyway.
  - propogandist 8y ago
    in my experience FB's audience network was junk
    - nandreev 8y ago
      The first thing I look at when optimizing a Facebook ad campaign is to look at performance by placement. In many cases, turning off the Audience Network will do wonders for your CPA.
      - wastedhours 8y ago
        Seconded - one of my default actions when setting up a campaign is to switch that off.
- badwolf 8y ago
  Amazon is starting to roll out their ad network - we're currently getting ready to roll out an update to my $dayjob's app with Amazon ads in it.
- logiclabs 8y ago
  We've been displaying Amazon CPM display ads on a site for over 2 years now. This is an ad network for affiliates, but paid by CPM. It's mostly a mix of large brand adverts and Amazon remarketing ads (normally for products you've looked at). The service is about to be shutdown though at the end of this month, and their suggestion is that we apply to their larger header bidding network (Unified Ad Marketplace), but not sure we'll qualify for that.
- hndamien 8y ago
  More importantly, almost all of Amazons searches are commercial in nature, whereas I think for Google it is only about 30%, the other categories being navigational and educational. This means that their data is much more monetisable.
LemonAndroid 8y ago
Amazon will overtake everyone once they overcome working conditions problem.
- oblio 8y ago
  Isn't that like an immutable problem and what their business model is based on? Push employees to the limits to have very high performance for a short time and then throw them out when they burn out?
  - LemonAndroid 8y ago
    Robots will solve that.
adventured 8y ago
An analyst with Piper Jaffray recently projected their ad business will rapidly exceed AWS when it comes to being their profit center. By 2021 sometime they're forecasting $16b in operating income just for ads. That would make Amazon's ad business one of the few dozen most profitable businesses anywhere. > The analyst estimates Amazon's ad business operating income will grow to $16 billion in 2021 versus $15 billion for Amazon Web Services that year. He believes Amazon already has product search market share "well above" 50 percent. Olson noted the "Other" segment, where Amazon's ad business resides, grew sales 72 percent in the second quarter. https://www.cnbc.com/2018/08/13/amazons-advertising-profits-will-surpass-its-aws-income-by-2021-pipe.html https://www.cnbc.com/2018/08/13/amazons-advertising-profits-...

RaceWon 8y ago

The problem with Amazon is that it is a race to the Absolute lowest possible price point. Now don't get me wrong, I'm not saying that boatloads of vendors don't make money advertising there (and people on Amazon are for Sure in the market), but wouldn't you rather get people to your own website via say YouTube, which is only going to get more and more popular, and then convince them to buy from you Now... I would if I was currently selling online. It simply makes more "cents."

ikeboy 8y ago
Problem is it's much harder to get sales elsewhere. On Amazon, you can sell a $25 item and maybe spend $5-10 in ads per sale. On your own site, you might pay $25 per sale, which means you need a compelling offer at $70+ or so. This is because conversion is worse and bids are only going up as people get better funnels and can afford to throw a ton of cash on ads.
- RaceWon 8y ago
  I have to say your comment sounds like an opinion, that may or may not be true; furthermore you are assuming there is $5-10 profit margin on a $25 item on Amazon... this does not seem very likely or rather an exception not the norm in the cutthroat and competitive selling arena that is Amazon. How about AdWords; can Amazon get 50 bucks a click on a search? Nope they can't, but Google does. I don't see Amazon dethroning Google anytime soon for ad revenue. They could, but I think they'd need a high end site that caters to quality and not peeps looking to save $1.96 on a set of Tupperware.
  - ikeboy 8y ago
    I'm in the industry, I hear people talk about ads all the time. The $25 per action is from a talk I was at 2 weeks ago from someone doing 8 figures a year on shopify and a ton on amazon as well who made this point specifically. Generally private label on Amazon has high margins but high competition, in the good niches at least. Everything eventually dies and gets commoditized. People spend 10-30% ACoS all day long, people give away hundreds or thousands of units. Typically people will buy amazon ads at breakeven or worse in order to gain sales rank to get more organic sales. >can Amazon get 50 bucks a click on a search? Google is only getting that on cars or enterprise software or other things with high purchase prices. If Amazon sold cars, I'm sure they'd be able to get people to pay 50 bucks a click.

carlsborg 8y ago

Total revenues for 2017 Alphabet = $110B (about 85% comes from advertising) Facebook = $40B If Amazon is doing ~$8B and the others about $4B annually.. how does this square with the $88B market size in this article headline?

Arnt 8y ago
$88B is probably the US or North American market, where Facebook's revenue is $20B, not $40B.
- ksec 8y ago
  Christ I wish they could state that. When you are reporting companies like Apple, Facebook and Google which has an worldwide operation, we expect those figures to be world wide and not a specific market. Edit: I just look up the worldwide total for Digital Ads are $228.44 billion in 2017. Total Ads market worldwide including TV, Print Ads etc are 500+ Billion per year.

wastedhours 8y ago

Amazon has one of the perfect data mixes - like Google, it has all the infrastructure for true intent based advertising (sponsored listings on result pages, based on specific searches or product info), as well as comprehensive end-to-end customer journey information for your more passive advertising as well. The latter will probably earn them decent scratch, even if it's perhaps not long-term sustainable with data issues and adblocking (Facebook can work for passive advertising because the user intent is snacks of procrastination, passive ads can be snacks of procrastination too if done well, though will always be low rent). The former though, now they're in pretty much every vertical, is where the winning happens. As in the article, even if companies don't sell through Amazon, there'll still be an Amazon Tax if they want to get into the search results like with AdWords. I wouldn't be at all surprised to see Amazon leapfrog Facebook, once their attribution pixel gets some traction in the wild.

tim333 8y ago
Also when you are on Amazon you are usually there to buy stuff so its a good time to show stuff to buy. On Facebook not so much.
- wastedhours 8y ago
  Pretty much the TL;DR of my point ;)

goatherders 8y ago

That is startling.