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Amazon achieved its highest profits with $ 2.9 billion in the last quarter. Credit: Bloomberg
Amazon's ad business continued its staggering growth in the last quarter, reaching $ 2.5 billion in sales, demonstrating once again why the company is gaining its place as the third largest digital advertising player behind Facebook and Google.
Thursday, Amazon released its results for the third quarter and, while investors were worried about its forecast for this holiday quarter, advertising remained bright. Ads are the fastest growing segment of Amazon, up 123% from the previous year.
Overall, the e-commerce giant reported third quarter sales of $ 56.6 billion, an increase of 29% over the previous year. Amazon also made record profits of $ 2.9 billion. However, its fourth-quarter forecast of $ 72.5 billion was less than the expectations of Wall Street analysts.
The ad concerned many of the analysts who joined the company after a call following the results. They asked how much additional Amazon inventory could hope to release, and how it would continue to develop its advertising technology to serve the brands and sellers of the platform.
"We still think that there is still much to be done to improve the presentation," said Brian Olsavsky, chief financial officer at Amazon, adding that the company would analyze the number of ads and the type of ads that buyers would find useful.
Amazon is experimenting with new formats, such as video ads that appear in product listings. The company has also reorganized all of its advertising business by consolidating the platform under one name, Amazon Advertising.
It is even thought that this surge in advertising is detrimental to Google's dominance of search advertising. Google announced Thursday results below expectations, in part because Wall Street expects Amazon to take some of its market position.
Advertisers buy on Amazon as a place of contact with buyers when they perform their product searches.
Amazon is also working more closely with Madison Avenue to improve its advertising technology and data services, which could help brands prove that ads are the most effective on its platform.
In addition, the company is investing more in media, content licensing, and ways to create Amazon Prime and Fire TV. A Wall Street analyst asked about Amazon's IMDB video service, which could run ads that, according to several Amazon advertisers, are being prepared. Dave Fildes, director of investor relations for Amazon, did not approach the IMDB service, but said that Prime would not broadcast ads. Prime is the $ 120 annual subscription service that offers digital streaming programs and free shipping.
"We are not planning to create a free, ad-supported Prime Video offer yet," said Fildes.
There is only one place where Prime is currently broadcasting advertisements, namely Thursday Night Football games, which Amazon licenses under license from the National Football League and are broadcast live. The games are also streamed on the Amazon streaming site, Twitch.
The company has released new audience figures for these games. In total, eight million people watched the first four games on Prime and Twitch combined, said Amazon.
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