Amazon just passed a major milestone in the digital advertising market

Look out, Google and Facebook. Amazon is growing fast.

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This article was originally published on All figures quoted in US dollars unless otherwise stated.

Amazon's (NASDAQ: AMZN) share of the U.S. digital advertising market climbed to 10.3%, according to research from eMarketer cited in a report by The Wall Street Journal on Tuesday. Amazon is currently the third-biggest digital ad player in the market, with Alphabet's Google division accounting for roughly 28.9% of sales last year and Facebook capturing 25.2% of the market. 

eMarketer's data suggests that Amazon recorded roughly $15.73 billion in 2020, up roughly 52.5% annually. The company's growth in the market is likely just getting started. 

Amazon's leadership position in the broader e-commerce market looks pretty much unshakeable, and the company should be able to leverage this strength to continue driving growth for its digital advertising initiatives. Roughly 90% of the company's ad revenue last year came from search ads, spots, and promotions featured on its namesake online retail platform, with the remainder coming from sources including its Fire TV streaming ecosystem and its Twitch live-streaming platform.

Digital advertising is one of Amazon's biggest growth opportunities. With searches made through Amazon's online retail platform driving a market-leading percentage of purchases, the e-commerce hub is a natural destination for sellers looking to boost their sales. The company's market-leading position in the e-commerce space gives it a huge advantage, and it also has analytics and artificial intelligence (AI) resources thanks to its market-leading Amazon Web Services platform. A report from Cowen estimates that Amazon will be able to grow its digital ads revenue to $85.2 billion in 2026. 

A greater percentage of retail spending will take place through digital channels each year, and this will help continue to drive a greater percentage of advertising spending online as well. Both of these trends bode well for Amazon's long-term prospects.

This article was originally published on All figures quoted in US dollars unless otherwise stated.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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