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News Analysis 22 Feb 2022 - 4 min read

Amazon triples Australian ad revenues, media execs predict it will triple again in 2022 as juggernaut starts to roll

By Sam Buckingham-Jones - Deputy Editor
Amazon Ad business

Amazon's advertising business has continued its exponential growth.

Amazon grew its Australian advertising business 3x in 2021 – and agency ecomm execs think the juggernaut is starting to roll. They predict it will triple again in 2022, putting it on track to take $180 million in ad dollars by year's end. Amazon is already the biggest 'publisher' behind Google, Meta (aka Facebook), and YouTube, and its mountain of first party data makes it largely immune to privacy and mobile app tracking changes. But where is the money coming from? The answers may be surprising. 

What you need to know: 

  • Amazon’s revenue from advertising in Australia has increased threefold in 2021 to more than $63 million. E-commerce experts predict is rate of rise will continue.
  • The company is now a US$31 billion global advertising business, according to latest filings. Advertising was seven per cent of its revenue in Q4 2021. In Australia, ads make up 3.5 per cent of revenue.
  • Amazon is largely immune to shifts in data collection and consent – its own trove of first party data means it will benefit when third party cookies are deprecated from Google’s Chrome browser, per Dentsu’s Mark Byrne.
  • Agencies are ramping up investment. E-com specialist Pattern Australia increased Amazon spend by 165 per cent over 2021.

[Amazon] are the fourth largest publisher in Australia based on unique visits, with only Google, Meta and YouTube ahead.

Mark Byrne, Dentsu

Amazon is starting to ramp up its ad business in Australia, tripling revenues to more than $63m in 2021 – and agency execs say the juggernaut is now starting to roll.

Over the past four years, Amazon has grown its ad business from about $500,000 in 2018 and $4.3m in 2019, to $20.9m in 2020 and $63.5m last year. To put it in perspective, Snapchat had Australian advertising revenues of $56m in 2020, its most recent financial reporting year.  

“Personally, I don’t find it hugely surprising,” Mark Byrne, Dentsu’s Executive Director of Digital Growth and Commerce, said. 

“When you combine their local assets (Amazon, Twitch and IMDB), they are the fourth largest publisher in Australia based on unique visits, with only Google, Meta and YouTube ahead. With this, comes a level of inventory and scale that sets them up for the growth that we’re now starting to see.”  

In the US, Amazon accounted for 76.2 per cent of e-commerce ad spend in 2021, according to eMarketer. Its recent fourth quarter results, which broke out advertising as a separate revenue line for the first time, put its ads business at US$31 billion a year. Ads made up seven per cent of total revenue in the quarter.  

The rise of Amazon’s marketplace and ad business in Australia has been relatively steady, after fears it would steamroll in. Amazon had local revenues of A$1.75 billion in 2021, meaning advertising was 3.59 per cent of its total revenue – which is likely to grow. 

The global juggernaut has spearheaded the rise of retailer media, in which retailers leverage their stores and websites to target advertising. In Australia, retailer media has been predicted to grow to more than $1 billion by 2025

It might be better to think of Amazon less as an online retailer and more as an enormous behavioural marketing company.

Mark Byrne, Dentsu

Privacy schmivacy

Byrne said Amazon is largely immune to the disruption publishers and platforms now face.

“Amazon’s advertising business has a major advantage in the secular shift that is happening around digital advertising at the moment,” he said. “They are largely unaffected by changes to data tracking. So if you look at Apple’s App Tracking Transparency (ATT) initiative – since all of Amazon’s data collection, ad targeting, and conversion happen on the same platform —, or the Amazon app – ATT doesn’t affect them.”

When third party cookies are eventually removed from Google’s Chrome browser – as is planned for the end of 2023, publishers with a lot of first party data will win.

“I think Amazon will be right up there (alongside Google) at the top of that list,” Byrne said.

“Amazon is known globally for building its ads business over multiple years. Australia is no different in our opinion and we see momentum,” said Omnicom’s Chief Investment Officer Kristiaan Kroon.

If Amazon maintains its current growth trajectory as media execs predict, it will take some $180m in advertising revenues this year and more than $540m in 2023.

Our use of Amazon's Sponsored Product campaigns is up by 381 per cent alone.

Merline McGregor, GM of Pattern Australia

Amazon Ad business revenue

Amazon's advertising revenue, according to its most recent filings with financial regulator ASIC.

Follow the money

Companies specialising in e-commerce report more than five times growth in revenue after increasing Amazon ad spend.

“Amazon Advertising is certainly taking hold in Australia,” said Merline McGregor, General Manager of e-commerce agency Pattern Australia.

Pattern has increased its Amazon ad spend by 165 per cent, which has driven revenue growth of 530 per cent, McGregor said.

“As Amazon increases the sophistication of its advertising platform, what we have seen from our overseas markets is that brands will also use Amazon’s DSP to achieve next-level granularity of targeting,” she said.

“Our use of the Sponsored Product campaigns is up by 381 per cent alone, and with the addition of the more visual and traffic driving campaigns have enabled us to gain market share on Amazon in the region.”  

But it's not the fast moving consumer goods (FMCG) brands that are spending most on Amazon, said Dentu's Mark Byrne. “The three largest spending categories on Amazon globally are financial services, auto and telco and utilities," he said. "And I suspect it’s these non-endemic categories that are driving a lot of the growth locally too.

“In this context, it might be better to think of Amazon less as an online retailer and more as an enormous behavioural marketing company.”

Being a largely self-serve advertising product, Amazon is in a position to work with micro and local businesses. Mohammad Heidari Far, General Manager of Resolution Digital, says they contribute a large part.

"Amazon’s e-com business [and therefore ad business] has a large third party seller and small business customer base," he said, "where Amazon would make a much larger share of their e-com sales."

Not be all, end all

In Mi3’s Rise of Retailer Media report, Resolution Digital CEO Des Odell questioned whether an standalone Amazon-focused agency would work in a market like Australia. That’s still the case, said Heidari Far.

“Amazon is one of many touch points in customers’ purchase journey ... having a customer-led approach across all channels and platforms ultimately delivers the best results," he said. 

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Sam Buckingham-Jones

Deputy Editor

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