• General
  • August 1, 2021
  • 6 minutes read

Earnings: Amazon’s Unlikely Ad Business Grows Stronger

Tech behemoth Amazon has dropped its latest quarterly earnings report like many companies in this period. Notably, the company posted…

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Tech behemoth Amazon has dropped its latest quarterly earnings report like many companies in this period. Notably, the company posted $100bn in sales for the third quarter in a row in Q2 this year.

Amazon’s earnings report also made note that it was fined nearly $900mn for alleged privacy violations in the EU.

  • Among the many pieces of information shoveled into Amazon’s latest earnings report include the growth of an unlikely part of the company’s business – online advertising. Usually, Amazon is known for online retail and cloud computing (AWS) but the company has an ad business that’s getting stronger day by day.
  • The earnings report shows that Amazon’s “Other” business segment, which is primarily advertising, brought in $7.9bn in sales in Q2, representing 87% year-over-year growth. This indicates that Amazon is building more strength in the online ad business that’s dominated by Google and Facebook.
  • Amazon’s ad business includes advertising by third-party sellers on the various Amazon retail websites as well as ad spend on its Amazon Prime Video streaming service, et al. It appears that these segments are getting bigger by the day.
  • An online retailer by heart, an ad business seemed like an unlikely one for Amazon many years back. But now, the company is pulling weight in that area and is estimated to have about 10% market share of the US digital ad market.
  • With advertising, the ever-growing Amazon has a segment to look forward to for growth save for retail and cloud computing. It shows that Amazon is getting more powerful than ever, as it draws more antitrust action towards itself from that. Just recently, it was fined $900mn for alleged violations of Europe’s GDPR laws, the latest episode of the company’s long spat with EU authorities.
  • Overall, Amazon reported $113bn in sales in Q2, up 27% year-over-year. Its net income in the same period was $7.8bn, up 50% year-over-year.

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