Amazon grew revenue from advertising services by 222% according to its Q3 filing. Brian Olsavsky, the CFO of Amazon, referred to advertising as a revenue segment with very strong growth in the past quarter, during the earnings call.
“We’re continuing to invent both on the product side, the tools side with our goal being improve the usability of the tools for advertisers, make smarter recommendations for customers, automate activities so that advertisers don’t have to work as hard, and invent new products for advertisers,” said Olsavsky.
Categorized as “other” in earnings reports, Amazon Advertising offers advertisers and agencies solutions in the display, video, and sponsored listings formats. Unlike solution pricing on Facebook and Google, Amazon Advertising charges its customers based on performance across owned and operated sites of Amazon, including devices.
The conversion-centric nature of the platform means that Amazon does not allow an advertiser to push free offers, sweepstakes, and contests using its ads. Platform-specific solutions within Amazon Advertising also the ability to create a store, which is essentially a custom landing page for selling on Amazon, and the ability to use the Amazon DSP which programmatically reaches audiences on Amazon sites, apps, publishing partners, and third-party exchanges.
Similar to Google’s decision to relaunch its ad suite, Amazon retired the names Amazon Media Group (AMG), Amazon Marketing Services (AMS), and Amazon Advertising Platform (AAP) to launch Amazon Advertising as a unified brand. The revenue channel saw multiple upgrades in 2018, with improvements in sponsored products, new measurement tools for stores, a new performance dashboard, and an attribution solution. According to eMarketer, Amazon will own 2.1% market share in terms of revenue for the digital advertising space, growing to 3.5% by 2020.
Overall, Q3 earnings by Amazon exceeded expectations, with a 29% year-on-year rise in revenue to $56.6 billion of which net income rose by $2.9 billion. The company announced that the number of smart-home devices that are Alexa-compatible quintupled year-to-date to 20,000 in over 3,000 brands. Ramping up its home invasion plans, Amazon also introduced new Echo devices to augment cars and replace clocks.