Amazon enjoyed a 51% jump in advertising revenue to draw $5.4bn over the three months to September alone.One of the few businesses to benefit from Covid-19, the e-commerce juggernaut has also reaped the benefits of its fledgling advertising business.
Amazon’s ad revenue growth
Amazon’s vague ’other’ category, buried in its third quarter financial results, largely encompasses its advertising business. It has swollen 51% year-on-year to reach revenues of $5.4bn in the third quarter.
No-one is better placed to understand what its customers are clamouring to buy and what they wouldn’t touch with a bargepole, handing Amazon a built-in advertising advantage which is now paying dividends.
This has opened up a second lucrative revenue stream for the e-commerce giant which is already drawing housebound shoppers in record numbers as high streets shutter.
By way of comparison, Amazon's advertising revenues stood at just $4.2bn in the previous quarter, hammering home the intense rate of growth.
Amazon, the next advertising behemoth?
While advertising is rapidly gaining in importance Amazon remains at heart an e-commerce business first and foremost, generating $48.35bn in sales from online stores, equivalent to a 38% year-on-year rise.
Subscription services proved to be another bright, jumping 33% to $6.58bn on the back of Amazon Prime, which has convinced 150m people to pay for the privilege of shopping in return for expedited delivery and access to streaming content.
The centrepiece of Amazon's calendar is Prime Day on 13-14 October, which fell outside the scope of today’s results. The company would not be drawn on how this years shopping frenzy compared to previous events but has been at pains to stress the trickle-down benefits to small and medium-sized businesses.
Chris Mole, chief executive officer of Amazon agency Molzi commented: “Amazon’s Q3 earnings statement should encourage brands and investors as we head towards Amazon’s busiest period. Profit may be affected short-term as Amazon continues to invest in Covid-19 measures and services like Amazon Web Services, which is swiftly becoming the company’s hero offering.
“But crucially, Amazon demand is not going anywhere, and current investment to improve Amazon services and attract even more brands and consumers will help to drive long-term success.”