AMZN Amazon.com Inc

By Alexandra Bruell 

Amazon.com Inc.'s ad business is again outstripping earlier projections.

Last September, the research firm eMarketer said Amazon would finish 2018 as the third-largest digital ad seller in the U.S., with a larger market share than eMarketer expected just six months earlier, partly due to accounting changes by the e-commerce giant.

EMarketer has again revised upward its estimates for Amazon's U.S. ad revenue for both past and future years. This time the boost is due partly to third-party data indicating that advertising provides more of Amazon's revenue than was thought, said Monica Peart, senior forecasting director at eMarketer.

EMarketer now estimates that Amazon's ad revenue in 2017 totaled $3.3 billion, for example, up from its estimate of $1.9 billion in September.

Amazon generates advertising revenue from various business units, including its e-commerce site, the live-streaming video-gaming site Twitch, film site IMDb and its advertising technology division.

Amazon's ad revenue is expected to increase to $15 billion in 2020, or just under 10% of the digital ad market share in the U.S., from $11.3 billion in 2019 and an 8.8% share, according to the latest forecast.

Alphabet Inc.'s Google and Facebook Inc. will continue to dominate the digital ad pie, with a combined $89 billion in ad revenue in the U.S. in 2020, according to eMarketer's predictions. But Amazon's accelerating rise is giving marketers hope of an alternative to the so-called digital duopoly, although some fear Amazon's growing power.

EMarketer increased its estimate for Facebook's U.S. ad revenue for 2019 by about $1 billion, due to strong growth from Instagram as advertisers increase investments in the platform, said Ms. Peart.

Reports are more consistent for Google and Facebook, where advertising accounts for the bulk of revenue and both companies report their advertising revenues directly. Amazon reports a revenue category that includes advertising, but not the advertising dollars themselves.

As marketers allocate more dollars to digital video and social platforms to reach consumers, digital ad spending is usurping traditional ad spending in mediums like television, radio, print and outdoor, Ms. Peart said.

Digital ad spending in the U.S. is expected to grow 19% to $129.3 billion this year, according to eMarketer, accounting for 54.2% of total U.S. ad spending and surpassing traditional ad spending for the first time.

Write to Alexandra Bruell at alexandra.bruell@wsj.com

(END) Dow Jones Newswires

February 20, 2019 06:14 ET (11:14 GMT)

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