Amazon’s ad business is now worth almost $2.2 billion according to the company’s second-quarter earnings, a year-over-year increase of 129 percent. The revenue was, as always, in the “other” line item, which is primarily sales of ad services.
In the first-quarter filing, Amazon said that ad revenue had grown 132 percent year over year to just touch $2 billion.
It’s been a period of consistent growth for the e-commerce giant. Many marketers now see Amazon as its third-biggest media partner behind Facebook and Google, especially with lower-funnel activities. Since Amazon provides a clearer understanding of what is actually being sold, the advertising product is of particular interest to marketers who want better attribution.
“Stepping back, [advertising is] now a multibillion dollar business, and we’re seeing strong adoption across Amazon vendors, sellers, authors and third party advertisers,” chief financial officer Brian Olsavsky said on the company’s earning call. He also said continued pain points include improving the usability of its tools for advertisers, helping make smarter recommendations for customers and automating the process as much as possible. “We also think measurement is going to be important, so advertisers understand what outcomes they’re driving on our properties.”
While Amazon continues to beef up its agency development arm, it is now for the first time approaching brands directly, looking for direct deals. HP and Lego are two brands that are working directly with Amazon both through AMS and its internal media team Amazon Media Group.
Ad position: web_incontent_pos1
It’s a question that’s even come up during the earnings season for agencies, with analysts on the Publicis second-quarter call specifically asking about how the rise of Amazon — and how it chooses to work with agencies or not — will affect the company.
“It’s clearly a very strong challenger to the duopoly of Google and Facebook in digital advertising,” said Publicis Media CEO Steve King. “At one level it’s making the digital environment a lot more complex and for us that’s a good business opportunity.”
King added that Amazon is about more than advertising — brands have to compete on price, reviews and logistical delivery issues, which means that brands need a deeper understanding of customers to be able to navigate it. He also added that the majority of Publicis clients are now putting Amazon into their media plans.
Ad position: web_incontent_pos2
Google parent Alphabet, in comparison, said ad revenue was at $28.1 billion, with total revenue up 26 percent to $32.7 billion.
According to data from ad tracker Standard Media Index, Amazon ad revenue is up from 36 percent from last year from national advertisers — that is, big Fortune 500 brands. The majority — about 74 percent — is coming from display ads in the year to date.
Amazon’s total second-quarter sales were $52.9 billion, missing estimates.
For more retail coverage from Digiday, including exclusive analysis, research and interviews, subscribe to our weekly retail briefing email.
More in Marketing
In the marketing world, anime is following in the footsteps of gaming
As marketers look to take advantage of anime’s entry into the zeitgeist, they might be wise to observe the parallels between the evolution of anime as a marketing channel and the ways brands have learned to better leverage gaming in recent years.
With the introduction of video ads and e-commerce, Roblox looks to attain platform status
Roblox is expanding into more areas than just ads in 2024. Much like platforms such as Amazon and Facebook have transcended their origins to evolve from their origins as online marketplaces and social media channels, Roblox is in the midst of a transformation into a platform for all elements of users’ virtual lives.
PepsiCo wants to remain a ‘driver of culture’ as it turns to influencers and activations amid rebrand
The soda-maker says it can translate cultural relevance into sales volume.
Ad position: web_bfu