SEATTLE: Amazon last week announced record revenue of $60.5bn for the fourth quarter of 2017, representing year-on-year growth of 38%, but behind the headline figures attention is increasingly focused on the growth of its ad business.
The e-commerce giant does not detail its revenue from advertising in its quarterly financial statement – instead including these sales in an “other” category – but they were reported to have increased 62% year-on-year to $1.7bn.
According to Chief Financial Officer Brian Olsavsky, Amazon’s advertising business is becoming a “key contributor” to the company’s sales growth, especially in North America.
Speaking on a call with investors, he said: “Advertising was also a key contributor as we’re continuing to make … the offering more valuable, both to customers and advertisers alike.”
He went on to outline the company’s strategy when it comes to advertising and explained how it sees ads helping to improve customer experience.
“I would say our strategy is to make the customer experience additive by the ad process. We want customers to be able to see new brands and have [an] easier time discovering products that they're looking for,” he said.
“For brands, we think the value proposition is that we can find ways for them, especially emerging brands, to reach new customers.
“So we’re working with advertisers of all types and sizes to help them reach our customer base and the goal of driving brand awareness, discovery and better purchase decisions by the customer.”
Although Amazon’s advertising revenues are tiny compared with the likes of Facebook and Google, it is clear they are growing in importance for the company, not least because of the mass of shopping data that ads help to generate.
Indeed, according to CNBC, investment firm Morgan Stanley recently published a note forecasting that Amazon’s ad unit would generate $8bn in revenue by 2019.
Sourced from Amazon, Seeking Alpha, CNBC; additional content by WARC staff