Amazon has shared its Q1 results for 2018 with its advertising services income heralded as a ‘bright spot’. The global marketplace says it made over $2bn from advertising in the three months to March. Overall, figures show a $51bn revenue for the quarter.
The numbers paint a very heathy picture for the retailer and confirm that while many brands are struggling (new figures from the British Retail Consortium (BRC) show that retail sales fell by their largest margin in more than two decades last month), Amazon is going from strength to strength. The $51bn overall revenue for the period January – March 2018 is a 31% year-on-year growth, with a 132% increase in the ‘other’ revenue stream category where its web services division sits.
In its earnings report, the Amazon leadership team said that its advertising income was a strong part of the business and hinted that other developments may be on the way. The Sponsored Products option is doing very well the firm says, especially in North America. It also suggested that additional video advertising options may be in the works with a vague statement that they may be rolled out “over time.”
Speaking about the revenue figures and advertising’s role in the strong start to the year, Amazon’s chief financial officer, said: “Advertising continues to be a bright spot both from a product standpoint, and also financially it continued to be a contributor for profitability in Q1.”
The revenue figures have some analysts reiterating their theories that Amazon could be a looming threat to Google. There have been rumblings of this for a while now but the strong ad revenue performance means this is much more of a reality.
The marketplace is already nipping at the search engine’s heels when it comes to product discovery with a study by Kenshoo last year concluding that while 85% of shoppers go to Google to research a product, 75% use Amazon. At some parts of the consumer journey, Amazon is actually the preferred source, with more than half using the marketplace to confirm information found elsewhere.
For brands, this abundance of traffic is proving compelling and Amazon has cashed in with a range of advertising options.
Currently, sellers can set up sponsored products (keyword ads similar to AdWords), headline search ads for three or more products or product display ads. Agencies and more seasoned advertisers also have the option of off-Amazon ads, which offer display and video placements on Amazon and partner sites for products that aren’t sold via the marketplace.