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Comment by cm2012 | Hacker News Reader

cm2012

Amazon ad revenue alone ($2.2 billion) for Q2 was already around 15% of Facebook's total Q2 revenue ($13 billion). That is nuts, if they have any room to grow that further, since ads isn't even Amazon's specialty.

For reference, Snapchat did $290 million in the same timeframe, Twitter $660 million.

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Amazon has one of the perfect data mixes - like Google, it has all the infrastructure for true intent based advertising (sponsored listings on result pages, based on specific searches or product info), as well as comprehensive end-to-end customer journey information for your more passive advertising as well.

The latter will probably earn them decent scratch, even if it's perhaps not long-term sustainable with data issues and adblocking (Facebook can work for passive advertising because the user intent is snacks of procrastination, passive ads can be snacks of procrastination too if done well, though will always be low rent). The former though, now they're in pretty much every vertical, is where the winning happens.

As in the article, even if companies don't sell through Amazon, there'll still be an Amazon Tax if they want to get into the search results like with AdWords.

I wouldn't be at all surprised to see Amazon leapfrog Facebook, once their attribution pixel gets some traction in the wild.

Also when you are on Amazon you are usually there to buy stuff so its a good time to show stuff to buy. On Facebook not so much.

Pretty much the TL;DR of my point ;)

If it wasn't obvious already:

> For reference, Snapchat did $290 million in the same timeframe, Twitter $660 million.

Just goes to show how much potential Amazon has in the Ad Market. Does anyone else think Amazon could overtake one or both of Amazon's biggest competitors in the market (Facebook or Google)?

Amazon is most like Facebook in that the ads are only displayed on its own property rather than all across the whole internet on any site that displays 3rd party ads. That, combined with the fact that Amazon also has a ton of data on its users just like Facebook makes them very alike (not that Google doesn't as well).

What separates Google from Amazon is that their paid ads can be displayed on any 3rd party site that they don't own, through DoubleClick. And of course the whole search engine monopoly makes that impenetrable for now.

Of course, it's all up for grabs, Amazon could go out and buy an ad network like Mediavine and go head-to-head with DoubleClick.

We've been displaying Amazon CPM display ads on a site for over 2 years now. This is an ad network for affiliates, but paid by CPM. It's mostly a mix of large brand adverts and Amazon remarketing ads (normally for products you've looked at).

The service is about to be shutdown though at the end of this month, and their suggestion is that we apply to their larger header bidding network (Unified Ad Marketplace), but not sure we'll qualify for that.

Facebook has a display network similar to DoubleClick, called Audience Network. In my experience it pays publishers a lot better than DoubleClick. For advertisers, they're able to target on more demographic categories (for now, the CA scandal has done a lot to reduce targeting options).

Also people tend to forget that advertising on Google’s own properties represents the vast majority of its ad revenue.

A significant chunk of that ~4 Billion or ~5% of total global online advertising is because Google also owns YouTube, which captures a large chunk total advertising spending independent of search.

Which is almost all revenue that Google has to share with YT publishers. 50% anyway.

Twitter also has an ad product called "Twitter Display" in which your promoted tweets get reformatted into display ads and shown in other ad-supported mobile apps. It was some of the cheapest, but worst-performing, traffic we've ever driven through a paid channel.

in my experience FB's audience network was junk

The first thing I look at when optimizing a Facebook ad campaign is to look at performance by placement.

In many cases, turning off the Audience Network will do wonders for your CPA.

Seconded - one of my default actions when setting up a campaign is to switch that off.

Compared to Google's Display Network using non-retargeting ads? IMO, comparing banner placements to native social is like comparing apples to oranges

GDN is generally bad, worse than FB

I've seen lots of money wasted on blogspam websites within GDN (non-retargeting) -- there's a need to be very hands on if you don't want to waste money across all display tactics, in my opinion

FB, Instagram, and WhatsApp may as well be the whole internet for too many people.

Amazon is starting to roll out their ad network - we're currently getting ready to roll out an update to my $dayjob's app with Amazon ads in it.

More importantly, almost all of Amazons searches are commercial in nature, whereas I think for Google it is only about 30%, the other categories being navigational and educational. This means that their data is much more monetisable.

Amazon and Facebook already have integrations with third parties

An analyst with Piper Jaffray recently projected their ad business will rapidly exceed AWS when it comes to being their profit center. By 2021 sometime they're forecasting $16b in operating income just for ads. That would make Amazon's ad business one of the few dozen most profitable businesses anywhere.

> The analyst estimates Amazon's ad business operating income will grow to $16 billion in 2021 versus $15 billion for Amazon Web Services that year. He believes Amazon already has product search market share "well above" 50 percent. Olson noted the "Other" segment, where Amazon's ad business resides, grew sales 72 percent in the second quarter.

https://www.cnbc.com/2018/08/13/amazons-advertising-profits-...

Amazon will overtake everyone once they overcome working conditions problem.

Isn't that like an immutable problem and what their business model is based on? Push employees to the limits to have very high performance for a short time and then throw them out when they burn out?

Robots will solve that.

The problem with Amazon is that it is a race to the Absolute lowest possible price point. Now don't get me wrong, I'm not saying that boatloads of vendors don't make money advertising there (and people on Amazon are for Sure in the market), but wouldn't you rather get people to your own website via say YouTube, which is only going to get more and more popular, and then convince them to buy from you Now... I would if I was currently selling online. It simply makes more "cents."

Problem is it's much harder to get sales elsewhere. On Amazon, you can sell a $25 item and maybe spend $5-10 in ads per sale. On your own site, you might pay $25 per sale, which means you need a compelling offer at $70+ or so. This is because conversion is worse and bids are only going up as people get better funnels and can afford to throw a ton of cash on ads.

I have to say your comment sounds like an opinion, that may or may not be true; furthermore you are assuming there is $5-10 profit margin on a $25 item on Amazon... this does not seem very likely or rather an exception not the norm in the cutthroat and competitive selling arena that is Amazon.

How about AdWords; can Amazon get 50 bucks a click on a search? Nope they can't, but Google does. I don't see Amazon dethroning Google anytime soon for ad revenue. They could, but I think they'd need a high end site that caters to quality and not peeps looking to save $1.96 on a set of Tupperware.

I'm in the industry, I hear people talk about ads all the time. The $25 per action is from a talk I was at 2 weeks ago from someone doing 8 figures a year on shopify and a ton on amazon as well who made this point specifically.

Generally private label on Amazon has high margins but high competition, in the good niches at least. Everything eventually dies and gets commoditized. People spend 10-30% ACoS all day long, people give away hundreds or thousands of units. Typically people will buy amazon ads at breakeven or worse in order to gain sales rank to get more organic sales.

>can Amazon get 50 bucks a click on a search?

Google is only getting that on cars or enterprise software or other things with high purchase prices. If Amazon sold cars, I'm sure they'd be able to get people to pay 50 bucks a click.

> Typically people will buy amazon ads at breakeven or worse in order to gain sales rank to get more organic sales.

This is a very important point. I sell on Amazon and I run ads at break even profit to get more organic reviews and higher sales rank. Much more retained value compared to paid search engine ads in ecommerce

Total revenues for 2017

Alphabet = $110B (about 85% comes from advertising) Facebook = $40B

If Amazon is doing ~$8B and the others about $4B annually.. how does this square with the $88B market size in this article headline?

$88B is probably the US or North American market, where Facebook's revenue is $20B, not $40B.

Christ I wish they could state that. When you are reporting companies like Apple, Facebook and Google which has an worldwide operation, we expect those figures to be world wide and not a specific market.

Edit: I just look up the worldwide total for Digital Ads are $228.44 billion in 2017. Total Ads market worldwide including TV, Print Ads etc are 500+ Billion per year.

That is startling.

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