7 charts show why Amazon's ad business could balloon to $17 billion this year and is a growing threat to Google
- Financial services firm Cowen surveyed 50 US advertisers to understand Amazon's fast-growing ad business.
- Those surveyed said Amazon advertising costs less than Google but that Google search ads have a stronger return on investment than Amazon.
- Cowen expects for Amazon to make $17.6 billion in advertising this year, up 36% from $13 billion in 2019.
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Advertising is one of Amazon's fastest-growing areas and shows no sign of slowing down, according to financial services firm Cowen.
For the past eight years, Cowen has published an annual survey of 50 US advertisers. This year's affirms Amazon's becoming a third big player for advertising behind Google and Facebook. Cowen expects Amazon to make $17.6 billion from advertising this year, up 36% increase from 2019, and $46.6 billion by 2025. To compare, the firm expects Google to make $191.4 billion in advertising this year and Facebook, $84 billion.
Here are seven charts that show how Amazon's ad business is growing.
Cowen's data includes two types of metrics: A straight average and a weighted average that takes the advertiser's spending volume into consideration.
Looking at the average, 40% of advertisers surveyed said that Amazon is the biggest threat to Google and Facebook. Another 36% of buyers said they believe Google and Facebook will continue to control the bulk of digital dollars.
Google search was the biggest single company where advertisers are taking money from to put into Amazon advertising. 56% also said they're pulling from other platforms, including Snapchat, Bing Search, and Pinterest, according to Cowen.
Half of advertisers said that Amazon's cost-per-click prices are lower than Google search ads.
Buyers said Google's search ads have a far higher return on investment, though. Amazon came in second, followed by Instagram and YouTube.
Amazon's biggest advertisers are spending more there. Only 36% of buyers in Cowen's survey said they bought Amazon ads in 2019. But 61% of those advertisers said they expected to spend more there this year.
20% of advertisers that did not use Amazon in 2019 plan to advertise there in 2020.
In another sign of its appeal, Amazon has largely avoided data and privacy concerns that have caused advertisers to pull back spend with Facebook, YouTube and adtech companies.
