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Amazon ad revenue may top $800 million this year: eMarketer

A worker packs boxes at Amazon's logistics centre in Graben near Augsburg December 17, 2012. REUTERS/Michael Dalder
A worker packs boxes at Amazon's logistics centre in Graben near Augsburg December 17, 2012. REUTERS/Michael Dalder

By Alistair Barr

SAN FRANCISCO (Reuters) - Amazon.com Inc advertising revenue may top $800 million this year as the world's largest Internet retailer uses its huge customer base and store of purchasing data to show more-target ads on its websites and those of other companies, eMarketer estimated on Tuesday.

Amazon is known as a sleeping giant in the ad industry because the company has rich consumer data but has been tentative about using it for a lot of advertising. That has begun to change recently, prompting industry consulting and data firm eMarketer to estimate the company's ad revenue for the first time.

Amazon's worldwide ad revenue may reach $835 million this year, up 37 percent from $610 million in 2012, eMarketer forecast. In 2011, the company generated $419 million from advertising, the firm added. These estimates include traffic acquisition costs, or TAC, which are payments Internet companies pay to other websites for sending online traffic their way.

Advertising is a relatively new revenue stream that may be more profitable than Amazon's original online retail operations, so Wall Street is watching its expansion closely.

"Advertising could be a significant revenue opportunity for the company given its sizable site traffic and the significant number of new ad format innovations it has been rolling out," said Mark Mahaney, an analyst at RBC Capital Markets, wrote in a note to investors on Sunday.

Amazon recently launched "eCommerce Ad" units, which include customer ratings and reviews, coupons and buy buttons to quickly add products into online checkout carts, Mahaney explained.

Most of Amazon's ad revenue comes from ads placed in or near search results that appear when a person searches on Amazon.com for a product to buy, according to eMarketer.

Amazon took in $450 million in ad dollars last year in the United States, its principal ad market, and that will climb to $1.1 billion by 2015, eMarketer estimated.

That forecast suggests Amazon is on course to top AOL Inc, Twitter and LinkedIn Corp as one of the largest online ad companies in the United States by 2015, according to eMarketer. It will still clearly lag Google Inc, Facebook Inc, Microsoft Corp and Yahoo! Inc, the data also show.

(Reporting by Alistair Barr; editing by Andrew Hay)

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