Amazon's Advertising Revenue Surges 26% Driven by 'Thursday Night Football' and Machine Learning

Article Brief:

In the Q3 2023 period ending Sept. 30, Amazon witnessed a significant growth in advertising sales, with a remarkable increase of 26% year-over-year, reaching a total of $12 billion. The company's overall net sales also surpassed analyst expectations by climbing 13% to $143.1 billion.

The growth in advertising can be attributed to sponsored products, a resilient lower-funnel ad product, which has performed well even during challenging economic conditions. Andrew Jassy, the President and CEO of Amazon, mentioned that the company's advertising integration into video, audio, and grocery is still in its early stages, indicating that this segment continues to drive growth.

Article Insight:

Amazon's dominance in the digital advertising industry remains strong, surpassing its main rivals once again. The company recorded an impressive growth rate of 26% this quarter, outperforming its previous results and overshadowing Google's 11% growth rate as well as the 23% growth rate witnessed by Meta. CEO Jassy acknowledged that Amazon's unique capabilities and offerings have been instrumental in setting it apart from its competitors.

"We have achieved considerable success, largely due to our extensive portfolio of owned and operated properties that attract substantial volumes of advertisers and brands. Despite challenging economic conditions, e-commerce purchasing remains robust, making it highly desirable for businesses to reach our customers through our marketplace," he expressed during the earnings call.

As an illustration, Jassy highlighted that "Thursday Night Football" on Prime Video is currently garnering ratings that are 25% higher than the previous year, consequently bolstering Amazon's advertising performance. This surge in ratings aligns with brands' objective of engaging with a weekly audience of approximately 13 million customers.

Prime Video will introduce limited ads starting in early 2024, aiming to boost Amazon's ad growth. The company aims to have fewer ads compared to traditional TV and other streaming providers, allowing it to retain subscribers in a competitive streaming landscape. However, the initial pricing of the new Prime Video ad tier has faced resistance from media buyers, according to Ad Age. Amazon is heavily relying on machine learning to enhance the relevance of sponsored product ads, improving ad performance and appealing to advertisers seeking large ad volumes despite budget constraints. Jassy also highlighted the potential for ad growth in video, audio, and grocery, noting the company's efforts to place sponsored products on third-party platforms like Pinterest, Hearst Newspapers, and Buzzfeed.

The company made another effort to entice advertisers during its annual UnBoxed conference this week. They showcased a variety of advertising products, such as a specialized data clean room for publishers and a cutting-edge artificial intelligence (AI) solution designed to enhance campaign assets.