Amazon’s advertising services grew 22% to $US10.68 billion in the June quarter as the digital market shows signs of recovery.
Amazon CEO Andy Jassy says it was another strong quarter.
Overall net sales increased 11% to $US134.4 billion for the three months to June.
The giant online retailer is also the world’s third largest digital advertising platform, behind Google and Meta.
“We’re also continuing to see strong demand for our advertising services as the team keeps innovating for brands, including the ramp up for Thursday Night Football with the ability for advertisers to tailor their spots by audience and create interactive experiences for consumers,” Jassy says.
“We remain excited about what lies ahead for customers and the company.”
Amazon says it has introduced new, more advanced machine learning models to help advertisers reach previously un-addressable audiences with Amazon Ads.
"The new machine learning models analyse a range of signals to help advertisers predict and reach highly relevant audiences with optimal cost-efficiency, which is critical to reaching desired audiences as the advertising industry moves away from third-party cookies," the company says.
"Performance improvements include an increase in click-through rate, an increase in return on ad spend, and a decrease in cost per impression."
Insider Intelligence principal analyst Andrew Lipsman says the upturn in Amazon's ecommerce business is an encouraging sign for the back half of the year that should add to topline growth, while offering a tailwind to the high-margin ads business.
"Advertising held up especially well this quarter, and the picture should only get brighter in H2 with Prime Day and the holidays adding to its momentum," he says.
Also in the June quarter, Amazon partnered with Pinterest to display ads on its website for products sold in Amazon’s store, where over 463 million people go each month to find recipes, home, and style inspiration.
"As Pinterest’s first partner for third-party ads, Amazon will make it easier for customers to discover and buy relevant products on Amazon and provide value for brands and advertisers," says Amazon.
Amazon says global advertising holding company Omnicom will use AWS generative artificial intelligence (generative AI) and machine learning services, including Amazon Bedrock and Amazon EC2 Trn1n to help accelerate advertising campaign development, including automating activities such as developing creative briefs, media plans, ad creative, audience segmentation, and performance measurement.
The latest results from Amazon add to others signs the advertising winter is coming to an end, according to analysts.
The digital media players last year and early this year started shedding staff in big numbers with forecasters expecting a deep fall in ad spend in 2023.
However, Meta, the parent of Facebook, Instagram and Threads, last week posted better than expected revenue for the June quarter, up 11% to $US31.999 billion.
The social media platform says ad impressions are on the rise and Meta expects September quarter total revenue to be in the range of $32 billion-$34.5 billion.
Alphabet, Google’s owner, also reported a better than expected revenue of $US74. 6 billion, up 7%, for the June quarter, reflecting improving advertising business.
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