You know those ads that you see on the right side of Google search results? Have you ever noticed that some of them are actually Amazon ads? It turns out that Amazon spends more than $50 million on those ads every year.
If you’re not familiar with the ads in question, they look like this:
These are called AdWords ads, and you see them in Google search results, in Gmail, on YouTube, and on other Google properties.
Amazon is apparently the #1 spender on Google ads in the retail world, spending about $12.4 million more a year annually than eBay, the company in the second-place spot in the retail category . Overall, only Lowe’s (the home improvement store) spends more annually on Google advertising than Amazon–$59.1 million total.
This is especially interesting because Google and Amazon are competitors on a lot of fronts, yet they’re working together here. Both companies sell ebooks, have cloud storage services, sell streaming video, and have cloud-based MP3 players. Amazon released its Kindle Fire tablet a few months back and Google is reportedly working on its own 7″ tablet. Though each company clearly has totally different main businesses (Amazon’s retail vs. Google’s search), we’re seeing these companies come together at more and more points.
So getting back to the ads. It’s interesting because the two companies are rivals, yet the arrangement is obviously mutually beneficial. Amazon pays Google each time someone clicks on of its “Buy this on Amazon”-style links next to the search results, and Amazon presumably make more money from the overall amount of sales those clicks generate that the cost of the clicks is covered.
When you think about it, $55.2 million dollars a year is a TON to spend on advertising. That’s more than $150,000 per day for every single day of the year. But why wouldn’t Amazon spend this much? I mean, even if they just make $1.10 in sales for every $1.00 they spend on an ad, isn’t it still worth it? Just pump more money into that Google ad machine and the sales will keep rolling in.
This information about the $55.2 million a year comes from a cool infographic by Wordstream that breaks down Google’s revenues. It shows what other industries and companies spend on Google ads every year. You should go check it out.