Amazon again smashes expectations as ads arm surges 87%
Amazon has pulled in yet another record-breaking quarter propelled by its surging cloud computing, subscriptions and advertising arms, all of which led the umbrella ‘other’ grouping to revenue growth of 87%.
Amazon has posted another set of impressive results for the second quarter
The outsize contribution to the e-commerce giant’s bottom line exceeded expectations, although a weaker-than-expected outlook for third-quarter revenue suggests that the long gold rush may be losing steam.
Amazon has posted another set of impressive results for the second quarter, led by a surging advertising business as brands continue to pivot their marketing strategies toward digital. This shift brought in $7.9bn to further swell Amazon’s coffers over the quarter and represents a marked improvement from the 77% growth registered last quarter and 41% growth logged a year ago.
Crowing over the figures, chief financial officer Brian Olavsky credited the launch of “over 40 new features and self-service capabilities” for the performance, citing a tool for creating regional sponsored product campaigns as one reason for recent success.
The internet conglomerate also benefited from a healthy performance at Amazon Web Services, which grew 37% over the period, accelerating from the 32% rate of growth recorded in the previous quarter. Revenues for the sector duly hit $14.81bn, ahead of a projected $14.2bn.
Amazon’s share of the entire US advertising market is now in excess of 10%, a proportion that is only likely to rise further as recent trends toward online shopping demonstrate their staying power.
Despite this apparent runaway success, investors came away less than impressed with overall revenues of $113.08bn, falling short of the $115.2bn that had been expected – the first time Amazon had fallen short in three years.
Compounding this softening is an expectation that growth rates will recede further over coming quarters as a pandemic-fueled sales surge passes.
Hugh Fletcher, global head of consultancy and Innovation at Wunderman Thompson Commerce, said: “Amazon’s Q2 earnings results was one of its most anticipated yet. With Prime Day, Jeff Bezos’s space flight, a multi-million-pound deal with MGM, a potential cryptocurrency payment service and the return of consumer confidence in the high street, investors will have been chomping at the bit. And for the retail marketplace that seemingly knows no bounds, its results did not fail to disappoint; with 14% of all online global spend passing through Amazon, it continues to hold the fort through its horizontal expansions, lucrative acquisitions and allyship with small businesses.
“The challenge for the second half of the year will be sustaining growth and maintaining sales as physical shopping returns and Covid-19 restrictions ease – although over one-third (36%) of global consumers are still fearful of shopping in store. Amazon also has some work to do to ease concerns around its sustainable and ethical work practices – while its services continue to set the benchmark, over half of global consumers say that Amazon should pay more tax. In the UK alone, almost seven in 10 (69%) consumers support the idea of Amazon paying more tax.
“Nonetheless, with more and more consumers comfortable with shopping online, and a potential second Prime day in October, Amazon will undoubtedly be a major player in retail in the second half of 2021. And while it’s hard to predict Amazon’s every next move, you can be sure they’re ten paces ahead of the rest of the chasing pack.”
To maintain momentum Amazon has launched a bonus program to incentivize merchants to advertise their Amazon listings over other platforms.
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