Amazon Spends $55.2 Million on Google Ads Every Year, More Than Almost Any Other Company

January 24, 2012 · 2 comments

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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:

An Amazon ad to the side of Google search results.

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.

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{ 2 comments… read them below or add one }

Joseph January 24, 2012 at 9:51 pm

I don’t know that Amazon profits on the sales it gets directly from Google Adwords. But Amazon thinks long term, and long term they want people to think ‘Amazon’ is synonymous with online shopping. Ie, don’t google for the product you’re looking to buy, go to Amazon.com and search for / buy it there. So in the short term their Google Adwords spend is probably a net loss, but over the long term, as they change the buying habits of online shoppers to shop on Amazon without looking elsewhere, it’s a net gain.

Thanks for the article, those were interesting statistics on Amazon / eBay advertising.

Tristan January 24, 2012 at 11:45 pm

Interesting thought, but I see no reason to think that Amazon doesn’t make money with the ads. Why wouldn’t they?

In fact, with how good Amazon is at getting people to buy stuff when they come to their site and getting you to buy more than what you originally went there for, I highly doubt Amazon experiences a net loss.

Moreover, if you look at the infographic that I like to at the end of the article, there are dozens of companies spending tens of millions of dollars on AdWords. I find it hard to believe that all of those other companies would be able to use AdWords profitably but Amazon wouldn’t be able to figure it out.

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