Amazon's Brand New Ad Business Is Already Massive

Amazon CEO Jeff Bezos.In December we told you that Amazon had entered the ad exchange business, offering advertisers real-time-bidding on ad space targeting its users via tracking cookies.

Amazon's entry into RTB is huge because it puts the company in direct competition with Google and Facebook, who operate their own RTB ad targeting services. Facebook's exchange, called FBX, is expected by some to generate $1 billion in annual revenue. Amazon's exchange has the potential advantage of allowing advertisers to target people on whom Amazon has a huge amount of historic purchase data -- which is often the gold standard for advertisers.

Now a report in MIT Technology Review estimates that the size of Amazon's ad business is already $500 million a year:

... compared to Google and Facebook, advertising has been a relatively small and low-key business for Amazon. It brought in about $500 million of Amazon’s $48 billion in revenue in 2011, Baird & Co. senior research analyst Colin Sebastian estimates. Mostly this came from selling ads on its own websites.

"Relatively small and low-key"? Hmm.

A half-billion dollar revenue base after less than a year in business looks a bit more exciting than that.