Amazon reports 3rd straight quarter of triple-digit ad revenue growth
Amazon's Q3 earnings report shows ad sales climbing 123% to reach $2.5 billion for the quarter with overall revenue up 29% year-over-year.
Amazon released its Q3 earnings report on Thursday, reporting 29 percent year-over-year revenue growth with $56.6 billion in sales for the quarter. The company’s digital advertising business is continuing to show consistent acceleration. This was the third consecutive quarter for Amazon’s ad sales to see triple-digit growth, up 123 percent to $2.495 billion for the quarter.
Amazon ad business continues to climb. Amazon’s digital advertising business first surpassed $2 billion during Q1 of this year, when the figure represented 132 percent year-over-year growth. Last quarter, ad sales growth was up 129 percent at $2.194 billion. Now at nearly $2.5 billion, Amazon advertising is on its way to four full quarters of steady growth.
According to a September eMarketer report, Amazon is now the third biggest digital ad seller in the U.S., outperforming both Oath and Microsoft to come in at No. 3 behind Google and Facebook. eMarketer predicts Amazon ad revenue will increase more than 50 percent per year through 2020. Research firm PiperJaffray echoed eMarketer’s Amazon forecast, also saying it exoected Amazon’s ad revenue to surpass its Amazon Web Services (AWS) earnings by 2021. This quarter, AWS generated $6.6 billion for Amazon, up from $6.1 billion last quarter.
Third Door Media, MarTech Today’s parent company, found in a recent survey that 80 percent of Amazon advertisers plan to increase their Amazon ad budgets. In its recently published report “Making Room for Amazon,” Third Door Media surveyed nearly 700 marketers and found 49 percent were currently advertising on Amazon. Among those who are planning on increasing their Amazon ad investments, many plan to pull dollars from search spend, display and paid social budgets.
As more companies reallocate their marketing dollars, Google and Facebook’s lead in the digital advertising arena will likely suffer the impact of Amazon’s growing ad business.
CEO says Amazon Business not slowing down. In the release announcing Amazon’s earnings report, CEO Jeff Bezos kept his comments focused on the company’s Amazon Business sellers program, remarking on the millions of businesses currently using the platform. It’s worth noting that these sellers on Amazon’s platform are also often the ones purchasing advertising to promote their products on the site, so focusing on Business is likely to fuel ad revenue.
“Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organizations in eight countries. And we’re not slowing down – Amazon Business is adding customers rapidly, including large educational institutions, local governments, and more than half of the Fortune 100,” said Bezos.
Earlier this year, Amazon Business added a Business Prime program for sellers in the U.S., Germany and Japan. Amazon also partnered with American Express to release an Amazon Business American Express credit card for small businesses that offered flexible benefits and customizable rewards and payment terms.
More Amazon Q3 Highlights. At $6.6 billion in revenue this quarter, Amazon’s AWS saw 46 percent year-over-year growth. The company says it has several new customer commitments for AWS, with Hubspot and Samsung Heavy Industries both having signed on to Amazon’s cloud service this year.
Amazon also reports the number of Alexa-enabled smart home devices has quintupled year to date, with more than 20,000 devices from more than 3,500 brands using its voice-assistant technology. Amazon Go, the company’s brick and mortar grocery store division, recently opened a total of five new locations in Seattle, Chicago and San Francisco. In September, Amazon also launched “Storefronts” in the U.S. Germany and the UK, providing SMBs with a designated area on its website.