Amazon has a surprise advantage over Google and Facebook
Ad dollars have driven out online shoppers during the pandemic at a rapid pace.
Digital advertising spending jumped 35% to $189 billion in 2021, a $50 billion increase in a single year and the biggest increase since 2006.
Tech giant Amazon (AMZN) – Get the report from Amazon.com, Inc. advertising revenue jumped 25% to $7.8 billion at the end of the first quarter of 2022. (GOOGL) – Get the Class A report from Alphabet Inc. advertising revenue grew 22.5% to $54.6 billion at the end of March 2022. Meanwhile, Meta Platforms (Facebook) – Get the Class A report from Meta Platforms Inc. recorded $26.9 billion in advertising revenue for the same period, an increase of 5% compared to the first quarter of 2021.
These companies make money by selling their advertising services to vendors, suppliers, publishers, authors, and others through programs such as sponsored ads, display, and video advertising.
Amazon Chief Financial Officer Brian Olsavsky said the numbers were strong on the earnings call.
“We continue to be very happy and satisfied with the performance of the advertising team and how the advertisement has been appreciated by both vendors and vendors and others who use it to reach our customer base at the time. where they are considering purchases,” Olsavsky said.
Olsavsky added that Amazon will continue to roll out new products for sellers to manage their advertising and increase their ability to analyze and calculate a return on their investment.
How online advertising works
Tech giants Google, Facebook, and Amazon are considered the holy trinity of the online advertising pie that carve out the lion’s share of advertising budgets.
But the pecking order among the three is based on the costs they charge advertisers and the revenue generated.
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Amazon’s advertising rates for merchants and sellers are still cheaper than rivals Facebook and Google, according to new research from e-commerce analytics firm Sellics.
Globally, Amazon charges sellers 75 cents each time a user clicks on a particular ad attached to its site, also known as cost per click. These figures were calculated by Sellics.
The e-commerce giant charges 87 cents per click to advertisers in the United States. The cost-per-click metric is a widely used profitability metric in the advertising industry.
These figures quoted in the study are competitive by industry standards.
Amazon charges advertisers 68% less money than Google, is 44% cheaper than Facebook, has 79% lower ad rates than photo and video sharing site Instagram, and 86% cheaper than the site. of LinkedIn professional networking among digital platforms, according to Sellics advertising research.
The Seattle-based company’s advertising cost is also 25% lower than the nation’s largest retail platform, Walmart. (WMT) – Get the report from Walmart Inc.showed the Sellics advertising rate study.
The findings are based on an analysis of anonymized data from more than two million Amazon ad campaigns by sellers and vendors in 2020 and 2021.
Walmart, target (TGT) – Get target company reportand other retail giants have also started selling ads as part of their e-commerce operations.
“It’s not just the low cost per click that sets Amazon apart from advertisers. Amazon is unique as an advertising platform because it combines a high-intent retail platform that generates revenue profitably with massive reach and traffic,” said Thomas Ropel, Chief Marketing Officer of Sellics, in a press release.
“Remember, Amazon is the number one starting point for product searches across the entire web, making it extremely attractive to B2C and retail advertisers,” Ropel added.
In Amazon’s marketplace, ads placed in categories such as ‘Tools & Home Improvement’, ‘Industrial & Scientific’ and ‘Sports & Outdoors’ are the most profitable for advertisers, according to research by Sellics.