Amazon's Mobile Ad Business Generating $500 Million in Revenue

Amazon's mobile advertising business, although not widely reported on, is reputed to already be a US$500 million per year business, and is growing.

The company has had an internal advertising sales team for its websites for some time, but recently set up a mobile advertising agency that is now pushing adverts onto mobile websites and tablets.

The company benefits from its vast customer base, which it can use to provide demographic information to advertisers so that they can more closely target adverts.

"Amazon spent a lot of time developing algorithms to make recommendations to consumers shopping on Amazon.com," an executive who oversees an ad exchange that is a partner of Amazon's told the Reuters news agency.

Amazon can use its demographic data to then bid on adverts in global publisher exchanges and more accurately target the delivery on behalf of its own advertisers.

"Amazon is not a retailer anymore, it is the largest behavioral marketing company in the world," added Yaakov Kimelfeld, chief research officer at Kantar Media Compete.

With an estimated US$500 million in revenue over the past year, it is however still tiny when compared to Amazon's US$75 billion in annual turnover. However, the division is also understood to post profit margins at least four times higher than Amazon's core retail business.