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Amazon's ad business jumps 64% as Jeff Bezos retreats from CEO role

Amazon's ad business jumps 64% as Jeff Bezos retreats from CEO role

Amazon’s advertising business has become the fastest-growing division of the e-commerce colossus, after surging 64% year-on-year to reach $7.95bn in the fourth quarter.

The striking figures were published in the latest financial filing, during which it was divulged that Jeff Bezos would step down as chief exec.

Bezos will be stepping aside on a high, with the business he founded delivering its largest quarter by revenue of all time at $125.56bn, pushing it past the symbolic $100bn mark for the first time while consumers are blocked from visiting bricks and mortar retailers.

Amazon’s booming ad business

  • Advertising revenues are not specifically recorded by Amazon in its financial filings but accounts for the bulk of its ’other’ category, which netted $7.9bn in revenue for the quarter.

  • This return makes for a healthy 64% uptick from last year and is attributed to resurgent ad spending around Prime Day.

  • Across the board, Amazon recorded quarterly net sales of $125.56bn, a 44% bump from the same period last year and far beyond the $119.7bn that had been penciled in by Wall Street’s soothsayers.

  • The rosy revenues should not distract from the key takeaway of a resurgent ad business, which comes on the back of a 51% jump in revenue to $5.4bn in the three months to September last year.

  • Andrew Lipsman, principal analyst at eMarketer, said: “Two consecutive quarters of huge bottom-line beats in the face of rising operational costs and softening Amazon Web Services growth points to a much more profitable ads business than previously appreciated.”

  • Amazon’s envious gaze has increasingly been directed towards Google as it seeks to claim a greater share of the digital advertising market pie, still dominated by Google which posted bumper search and advertising revenue of its own earlier today at $31.9bn.

  • Walmart, Amazon’s physical retail counterpart, is also getting in on the game by changing the name of its media business to Walmart Connect to draw advertisers wishing to reach its 150 million customer base.

Jeff Bezos ‘gets a new job’

  • Amazon also took the occasion to reveal that Web Services boss Andy Jassy will succeed Jeff Bezos as Amazon chief exec during the third quarter, with Bezos withdrawing from day-to-day decision making as executive chairman.

  • This will enable Bezos to devote more time to pet projects, including Day One Fund, Bezos Earth Fund, The Washington Post and his private space venture Blue Origin.

  • Bezos said: ”If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive.

  • ”Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.”

  • Chief financial officer Brian Olsavsky added: “I will reiterate that Jeff is not leaving. He is getting a new job. He will be involved in many large one-way-door issues, as we say, one-way doors meaning the more important decisions things like acquisitions, things like strategies, and going into grocery and other things.”

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