BARCELONA, SPAIN – MARCH 2: The Amazon ads logo, the advertising solutions service formerly known as AMD or Amazon Marketing Services, during the Mobile World Congress 2023 on March 2, 2023, in Barcelona, Spain. (Photo by Joan Cros/NurPhoto via Getty Images)
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Amazon’s online advertising business continues to boom amid growing investor concerns that the Israel-Hamas war could negatively impact the world economy.
As part of Amazon’s latest financial results on Thursday, the online retail giant said that its ad business recorded $12.06 billion in revenue during the third quarter, marking a 26% jump from the year-earlier period.
Analysts polled by StreetAccount were expecting Amazon’s advertising business to generate $11.6 billion in third-quarter revenue.
Amazon’s overall quarterly sales jumped 13% year over year to $143.1 billion.
Investors closely monitor Amazon’s online advertising unit, which now accounts for 7.5% of the global digital ad market, according to Insider Intelligence. Alphabet is still the digital advertiser leader with 28.4% share of the world online ad market, while Meta accounts for 20.1%, the research firm said.
When asked about the ad business on an earnings call, Amazon CEO Andy Jassy used the company’s deal with the National Football League as an example of a growth opportunity. This is the second season that Amazon Prime Video has carried “Thursday Night Football,” and Jassy said ratings through the first six weeks are up 25% from last year.
“We’re also doing much better on the advertising side than we did in our first year, and that’s a property that’s really valuable,” Jassy said. “It’s the one game that week and advertisers want to be in front of customers because there’s 13 million customers a week watching.”
Additionally, Jassy said Amazon has “barely scraped the surfaced” when it comes to integrating ads into video and grocery stores.
Amazon has been able to capitalize on the digital advertising market due in part to the residual effects of Apple’s 2021 iOS privacy update, which hurt the online advertising businesses of social media firms like Meta, Snap and X (formerly known as Twitter). Indeed, many retailers have shifted their advertising budgets this year from Meta to Amazon due to a perceived weakening in the online ad targeting capabilities of the Facebook parent due to the Apple update.
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But Meta has been investing heavily in artificial intelligence this year to improve its online advertising platform, which has led to more companies, particularly Chinese retailers, to increase their spending on Facebook and Instagram promotions.
Indeed, Meta said this week that its third-quarter sales soared 23% year over year to $34.15 billion, which was the fastest rate of growth for the social networking giant since 2021.
Although Meta reported strong third-quarter earnings, the company’s finance head, Susan Li, revealed during a call with analysts that the unpredictability of the Middle East crisis led the company to widen its fourth-quarter guidance by $1 billion to now reflect a range between $36.5 billion to $40 billion.
Meta shares were down over 2% on Thursday reflecting investor concern about the Israel-Hamas war.
Alphabet reported third-quarter earnings this week and said that its Google advertising revenue jumped 9% year over year to $59.65 billion while YouTube ad sales rose 12% to $7.95 billion. The tech giant’s overall sales grew 11% to $76.69 billion during the quarter.
Snap also said this week as part of its third-quarter earnings that it would not give formal guidance “due to the unpredictable nature of war.”
Watch: Meta has regained the confidence of investors, says Altimeter’s Brad Gerstner
Source link: https://www.cnbc.com/2023/10/26/amazon-advertising-revenue-tops-12-billion-in-the-third-quarter.html