Despite an overall mixed performance in the last quarter, Amazon continued to steadily expand its ads business, clocking 19% in year-over-year growth even as tech giants like Meta and Google have seen sales slow.
The online shopping giant said in its earnings report this week that it brought in $11.6 billion of ad sales in the last three months of 2022.
The result comes amid overall revenues that beat analyst expectations with $149.2 billion. But the company forecast a weaker performance this quarter as it continues to struggle with economic headwinds, causing its stock to dip in after-hours trading.
The quarter caps off a shaky year for Amazon as the company continues to grapple with consumers returning to physical stores, inflation and recession fears hanging over the tech industry as a whole. While advertising remains a small part of its overall business, the devision has been a bright spot for the company as it continues to pair its extensive troves of customer data with a growing array of targeted offerings.
Research firm Insider Intelligence projects that Amazon ads will continue to grow this year by 20%, which would give the ecommerce giant a 7.3% share of the overall digital ads market.
But Insider Intelligence principal analyst Andrew Lipsman also said that the company’s ad growth this past quarter was dampened by a disappointed holiday season, despite Amazon’s retail sales surpassing analyst expectations.
“Even though Amazon easily cleared the hurdle of its anemic Q4 guidance, it’s hard to read this as anything other than a disappointing holiday quarter,” Lipsman said. “The ecommerce slowdown also created a drag on growth in the ads business, which had been a huge bright spot in the preceding quarter.”
The growth in Amazon ads comes as tech giants Google and Meta have seen slipping sales amid increased competition from TikTok, tightening marketing budgets and the ongoing effects of Apple’s privacy clampdown. Google’s advertising revenues dropped 3.6% last quarter, while Meta posted revenues down 4% from the previous year despite surpassing analyst expectations overall.
