Amazon’s ad sales soar 77% as marketers target online shoppers

Dive Brief:

  • Amazon’s revenue segment that includes advertising sales surged 77% from a year earlier to $6.91 billion in the first quarter as marketers sought to reach online shoppers. The company’s e-commerce revenue jumped 44% to $52.9 billion, helping to drive total sales to $108.5 billion, per a quarterly earnings announcement.
  • About 175 million members of Amazon Prime streamed movies and shows from Prime Video in the past year as streaming hours climbed 70%, CEO Jeff Bezos said in a statement. More than 200 million people worldwide belong to Amazon Prime.
  • Amazon forecast that revenue during the current quarter would reach $110 billion to $116 billion, or 23% to 30% more than last year’s $88.9 billion, when the pandemic drove a surge in online shopping among homebound consumers who stocked up their pantries and relied on delivery.

Dive Insight:

Amazon’s 77% growth in Q1 ad sales marked an improvement from the prior quarter, when it grew 64% during a period that included the holiday shopping season. The faster growth in the post-holiday season indicates that marketers continued to see value in advertising on the platform as people continued to shop online. The current quarter also is likely to show strong growth compared with last year, when many marketers paused ad spending or revamped their campaigns during the pandemic’s onset.

“As predicted, Amazon continues to take a share of the digital ad market by capitalizing on its position with brands as an e-commerce powerhouse,” Brent Ramos, director of product and search at data management firm Adswerve, said in emailed statements to Marketing Dive. “It’s no longer possible to have a siloed shopping experience, as advertisers and brands work to build transparent relationships with consumers that stretch beyond one touchpoint.”

Amazon’s recent growth rate suggests it will surpass its Q2 target for total revenue, though the reopening of the economy as more people are vaccinated against COVID-19 is likely to bring another shift in consumer habits. With many people returning to their offices, traveling more frequently or spending time outside the home going to restaurants, sporting events and movie theaters, their media consumption habits are likely to change again. Still, researcher eMarketer predicts Amazon’s U.S. ad business will grow 30% this year to exceed $20 billion for the first time, and surpass $30 billion by 2023. The growth will most likely have a negative effect on Google’s search ad business, the researcher forecasts.

Looking ahead, Amazon is taking steps to expand its ad sales with a bigger push into streaming content featuring commercial breaks. Starting in 2023, its Prime Video service will be the only place to watch the National Football League’s “Thursday Night Football.” As part of its 10-year pact with the league, Amazon will stream the games and have rights to sell commercial time. The deal with the NFL marks a significant step toward expanding its video ad sales beyond its existing digital platforms.

Amazon is the latest company to report strong Q1 growth in digital ad sales as marketers sought to reach consumers spending more time online during the pandemic. Facebook said its ad sales jumped 46% from a year earlier to $25.44 billion as its ad prices rose 30%, while Google saw a 32% gain to $44.68 billion on the strength of YouTube. Snap, the maker of photo-messaging app Snapchat, experienced a 66% jump to $769.6 million amid strong user growth.

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