Amazon.com, Inc, the world's largest ecommerce platform, this week revealed the 2021 revenue figures for its mammoth sponsored advertising network for the first time ever in a quarterly earnings report for investors.
Splitting out the earnings figures for the advertising business from AWS and other parts of the Amazon business revealed Amazon delivered $31 billion (£23 billion) of revenue from ecommerce products ads across its platforms in 2021.
Despite $9.7 billion (£7.1billion) of ad revenue in Q4, alongside record profits, Amazon also announced a 17% increase to the price of Prime membership for its US-based customers - the first increase since 2018 - due to increased operating costs.
Sponsored Advertising Revenue Split
Whilst Amazon's advertising business is substantial, looking at the revenue split with the rest of the business it still only represents a small percentage of total income.
At $9.7 billion, sponsored advertising revenue makes up just over 7% of the total reported business revenue of $137.4 billion in Q4 2021 for Amazon.
Amazon vs Google Ad Revenue
Google also announced their revenue figures this week, revealing a whopping $209.5 billion (£155 billion) of revenue direct from their advertising business.
Google's revenue from advertising has increased over 43% YoY, from $146.9 billion (£108.5 billion) in 2020.
As this is the first year for Amazon to specify their revenue from advertising we are unable to make a similar comparison.
Google's combined advertising business still dwarfs that of Amazon, with 575% more revenue generated from sponsored advertising in 2021 compared to Amazon.
Ecommerce Product Ad Business
Similar to when users search in Google, Amazon uses a large percentage of the most visible areas of the page for product searches - both above and below the fold - to host sponsored product and brand ads from paying customers that want to increase their sales on the platform.
Allowing different brands and vendors to fight among themselves for business makes sponsored product ads a highly profitable revenue source, able to generate income regardless of the number of products actually sold and delivered on the platform.
