Advertising Helps Push Amazon’s Profit To $2.5 Billion

Amazon’s ad business continued to throttle up in the second quarter.

The ecommerce giant’s “other” revenue category, where it houses advertising sales and services such as marketing measurement, cleared almost $2.2 billion, more than double the $945 million earned during the same period last year, according to the company’s earnings report, released Thursday.

Amazon’s gross sales, including global retail sales, AWS, advertising and subscriptions, totaled $52.9 billion.

And after 14 years of reporting unprofitable quarters or profit in the mere hundreds of millions – peanuts, considering Amazon’s $860 billion market cap – Amazon reported $2.5 billion in net income during Q2, its second consecutive high-profit quarter after earning $1.86 billion the first three months of the year.

“Advertising is starting to make an impact on gross profit,” said Amazon CFO Brian Olsavsky.

“Conceptually, stepping back it’s now a multibillion-dollar business,” Olsavsky said, with adoption across brands, sellers and developers.

The Amazon Advertising Platform (AAP) is also being used for a broader scope of marketing use cases, including shopper marketing, product discovery, brand awareness and performance ecommerce ads.

Measurement and analytics will become another driver of the ad business.

“We’re uniquely positioned to show them the direct benefit of their advertising,” he said.

Amazon’s ad platform still has improvements it can make as it pulls away from the pack as a true contender to Google and Facebook in online advertising. Its unrivaled consumer data powers very strong applications for AAP, but it’s relatively new and has a reputation as a clunkier system.

“To ease pain points our priorities include improving the usability of our tools for advertisers” and automating manual features, Olsavsky said.

Amazon Prime Day, the company’s big mid-summer shopping push, is also proving its value. This year’s Prime Day was Amazon’s biggest single-day addition ever to company’s Prime subscription program, the retailer’s loyalty program.

 

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