Amazon is 'biggest advertiser on Earth' as adspend hits $11bn

Amazon: Super Bowl 2020 ad by Droga5 London
Amazon: Super Bowl 2020 ad by Droga5 London

Ecommerce giant accounts for nearly 2% of global ad expenditure.

Amazon is now "the biggest advertiser on Earth" after reporting annual advertising expense soared to $11bn (£8.4bn) – an increase of 34%, or $2.8bn, year on year.

The online retailing and cloud computing giant boosted its spend on "advertising and other promotional costs to market our products and services" more rapidly than net sales, which climbed 20% to $280.5bn, according to its annual report.

"We direct customers to our stores primarily through a number of marketing channels, such as our sponsored search, third-party customer referrals, social and online advertising, television advertising and other initiatives," the annual report said.

Amazon has become a regular advertiser during the US Super Bowl, using Accenture Interactive’s Droga5 London to make a spot that featured Ellen DeGeneres for this year’s big game.

A number of ad agencies, including Lucky Generals and Joint, have shared duties on the company's creative in recent years.

Amazon uses Interpublic’s Initiative to handle global media buying.

'Nearly 2% of all global adspend'

Amazon, which was founded by Jeff Bezos in 1994, has hiked its ad expenditure almost 20-fold in a decade from $593m in 2009 to $3.3bn in 2014 and $11bn in 2019, according to company filings.

The scale of Amazon’s spend means it has overtaken consumer packaged goods giants Procter & Gamble and Unilever as the world’s top advertiser.

Brian Wieser, president of global intelligence at WPP’s Group M, said: "Amazon is likely the biggest advertiser on Earth, accounting for nearly 2% of all spending."

Amazon’s four largest markets are the US, Germany, the UK and Japan. Its subsidiary brands include Alexa, Fire, Fresh, Kindle, Prime, Prime Video, Twitch and Web Services.

The company disclosed in its annual report that total marketing expense was $18.9bn, which included $11bn in advertising and about $7.9bn of other costs.

"Marketing costs include advertising and payroll and related expenses for personnel engaged in marketing and selling activities, including sales commissions related to Amazon Web Services," the report said.

"While costs associated with Amazon Prime memberships and other shipping offers are not included in marketing expense, we view these offers as effective worldwide marketing tools and intend to continue offering them indefinitely."

P&G, which has been widely considered the world’s biggest advertiser until recently, reported its ad expenditure fell $350m to $6.8bn in 2019. Its selling, general and administrative expense, which included "marketing-related" and other costs, was $19.1bn.

Amazon has also become a significant media owner in recent years by offering ad space on its website.
The company said it brought in $14.1bn "primarily" from ad sales, although that figure, which was up 39% year on year, also included revenue from "some other service offerings".

It now ranks fourth in the world by digital ad sales, behind Google, Facebook and Alibaba, according to eMarketer.

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