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This Just In: Amazon’s Ad Revenue Reaches $2 Billion in Q1 2018

Business

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The growth of Amazon’s advertising business now outpaces that of the company’s overall revenue.

Amazon’s first earnings report of 2018 is in, and the company has hit a grand slam.

The retail giant reported in its recent Q1 2018 earnings call that its advertising revenue had reached $2 billion, a 139 percent increase year-over-year.

For reference, in the first quarter of 2017, Amazon’s ad revenue was marked at $580 million. According to Digiday, this number had some help in January as Amazon underwent an accounting change during which some revenue shifts boosted the number to $560 million. Still, the company confirms that advertising was its fastest growing segment at 72 percent. Even more, this growth has outpaced that of the company’s overall revenue, which increased 43 percent year-over-year to $51 billion.

In the last quarter of 2017, ad revenue had climbed to $1.7 billion, translating to a 60 percent uptick year-over-year. As PRWeek calls out, this is particularly noteworthy given that typically the last quarter of the annual year is usually the strongest for retail advertisers due to the holiday season. Amazon specifically saw its best holiday to date with “tens of millions of Alexa-enabled devices sold worldwide.”

“Advertising continues to be a bright spot from a product standpoint and a revenue standpoint, and a strong contributor to profitability. It is a multibillion program,” stated Chief Financial Officer, Brian Olsavsky, during the call.

Another big player in Amazon’s success? Amazon Web Services (AWS), it’s cloud computing platform. Sales of AWS grew 49 percent year-over-year, generating a massive $1.4 billion in operating income, or 73 percent of Amazon’s total OI.

“AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down. As a result, the AWS services are by far the most evolved and most functionality-rich” said Amazon CEO, Jeff Bezos.
Quarter results aside, what’s next for Amazon?

When asked about integrating video ads within its TV and video offerings within its Prime membership program, now boasting 100 million users, Olsavsky, the CFO, said, “There may be opportunities over time … but we choose to not do that now.” Speaking of Prime, the membership entry-price will increase from $99 to $119 on May 11. Further, this fall you can also expect to see more Thursday night football games streamed on the service as the company has renewed its streaming deal with the NFL for the 2018 and 2019 seasons.

More immediately, the company has opened its Alexa in-skill purchasing offerings to all U.S. developers. Customers essentially will have the same experience of purchasing via voice command, but now developers will receive 70 percent of the list price for their ISP before any discount by Amazon is offered.

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