In its fourth-quarter earnings today, Amazon reported that “other” revenue, which mostly means advertising, plus its co-branded credit card agreements, increased to $1.7 billion in the fourth quarter. That’s 60 percent growth year over year.
In the third quarter, “other” revenue grew 58 percent year over year to $1.12 billion.
“Advertising was a key contributor [to strong growth],” director of investor relations Dave Fildes said on the earnings call. “We continue to make the offering more valuable. We’re focused on finding ways to work with those companies – vendors or sellers — coming to us and offer them a great experience on the website and ability to reach customers.”
The company hinted more was to come in terms of building out the platform. CFO Brian Olsavsky said that Amazon has found itself as a “key lean-in from brands and agencies into the e-commerce marketing space,” which has helped bolster that growth.
In comparison, Google parent Alphabet, which also reported earnings on Feb. 1, reported overall revenue increased 24 percent year over year, with its ad business posting $27.3 billion in revenue in the fourth quarter.
At Facebook, advertising revenue grew 48 percent from a year ago. Total revenue grew 47 percent to $13 billion.
Over the last few months, Amazon has begun giving the duopoly a run for its money thanks to growth in Amazon’s search marketing offering, Amazon Marketing Services. The platform has gotten somewhat of a face-lift recently, media buyers say. From October to December, ad spend on sponsored product ads and headline search ads have increased 64 percent and 75 percent quarter over quarter, respectively, per a new report from Merkle.
Speaking at an industry conference earlier this year, Seth Dallaire, Amazon’s vp of global ad sales and marketing for Amazon Media Group, said the business has grown.
“Two years ago, we oftentimes had to explain why we had an advertising business,” said Dallaire on stage. “But now, we go beyond that, and the tenor of the [client] conversation is more urgent, centered on how advertising on Amazon works. Holding companies are looking to build capacity in data interpretation and e-commerce marketing, while boutique agencies are very focused on search and programmatic display [on Amazon].”
This week, Citi analysts predicted that ad sales at Amazon will be $10.2 billion this year, with revenue expected to rise to $50.6 billion by 2028. That was the highest estimate heard yet. JPMorgan Chase has estimated Amazon will bring in $4.5 billion in ad revenue this year.
Amazon’s pitch to brands and agencies is that it is able to create a “total wallet” perspective — actually figure out what people are searching for with what they’re buying.