In the third quarter, Amazon’s advertising revenue surpasses $12 billion.

ByYasmeeta Oon

Oct 27, 2023

Amazon’s online advertising business continues to thrive, despite increasing concerns among investors about the potential negative effects of the Israel-Hamas conflict on the global economy.

In its latest financial report released on Thursday, the e-commerce giant announced that its advertising division generated $12.06 billion in revenue during the third quarter, marking a 26% increase compared to the same period in the previous year. Analysts surveyed by StreetAccount had anticipated third-quarter revenue of $11.6 billion for Amazon’s advertising business.

Amazon’s overall quarterly sales showed a 13% year-over-year increase, reaching $143.1 billion.

Investors closely monitor Amazon’s online advertising unit, which now holds a 7.5% share of the global digital advertising market, according to Insider Intelligence. Alphabet remains the leader in digital advertising with a 28.4% market share, while Meta accounts for 20.1%, as reported by the research firm.

During an earnings call, Amazon CEO Andy Jassy highlighted the company’s partnership with the National Football League as a growth opportunity. Amazon Prime Video has been streaming “Thursday Night Football” for the second season, and Jassy noted a 25% increase in ratings during the first six weeks compared to the previous year.

Jassy also mentioned that Amazon has significant untapped potential in integrating ads into video and grocery stores.

One factor contributing to Amazon’s success in the digital advertising market is the impact of Apple’s 2021 iOS privacy update, which affected the online advertising businesses of social media firms like Meta, Snap, and X (formerly Twitter). Many advertisers redirected their budgets from Meta to Amazon due to perceived weaknesses in Facebook’s ad targeting capabilities resulting from the Apple update.

However, Meta has been investing heavily in artificial intelligence to enhance its online advertising platform, attracting more companies, particularly Chinese retailers, to increase their spending on Facebook and Instagram promotions. Meta reported a strong third-quarter earnings growth of 23% year over year to $34.15 billion.

Despite these positive results, Meta’s CFO, Susan Li, mentioned during an analyst call that the unpredictability of the Middle East crisis led the company to widen its fourth-quarter guidance, now ranging from $36.5 billion to $40 billion. Meta’s shares experienced a 2% decline on Thursday, reflecting investor concerns about the Israel-Hamas conflict.

Alphabet, in its third-quarter report, revealed a 9% year-over-year increase in Google advertising revenue, reaching $59.65 billion. YouTube ad sales also rose by 12% to $7.95 billion, and the tech giant’s overall sales grew by 11% to $76.69 billion during the quarter.

Snap, in its third-quarter earnings announcement, indicated that it would not provide formal guidance due to the unpredictable nature of global conflicts.

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.