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.
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.
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
As Pinterest improves ad platform, advertisers continue to increase spend
While ad spend on Pinterest might be low, momentum among buyers is building.
After a year of Google’s AI Overviews, marketers consider tweaking their paid search strategies
Faced with shifting user habits, some agencies and clients are adapting their approaches to paid search a year after Google launched AI Overviews.
AI is scaling in advertising – outcome-based pay isn’t
AI may be racing ahead in advertising but it hasn’t yet rewritten the invoice.