Amazon advertising rockets 77% higher

Chris Pash
By Chris Pash | 30 April 2021

Amazon grew its advertising revenue 77% to $US6.9 billion in the March quarter as brands chased consumers increasingly shifting their spend online.

The giant shopping platform joins Facebook and Google in reporting record profits, boosted by a pandemic-sparked trend to digital.

Overall, Amazon posted a 44% rise in sales to $US108 billion for the three months to March. 

The giant digital retailer is an increasingly major player as an advertising platform. According to eMarketer estimates, Amazon has more than 10% of US ad revenues. 

Amazon, Facebook and Google between them gather up around two-thirds of digital advertising dollars, according to some  industry estimates. 

Amazon also has started to move into streaming sport including the US National Football League. Amazon paid $US660 million for Thursday night games.

GroupM analysts say the move will significantly impact the shape of the ad-supported video industry in the US and markets around the world.

"Amazon might more aggressively bid for additional rights in other countries around the world," they say.

"To Amazon, the value of its rights is heavily weighted to indirect sources. While the ad revenue they will generate is undoubtedly an incremental source of value for Amazon, it probably doesn’t represent even half of the value that Amazon expects to recover from its investment. 

"More critical to Amazon is that exclusive access to content of this nature allows the company to persuade some consumers to become new subscribers to Prime and prevent churn for others. Amazon assesses the value of investments by estimating its contribution to the company’s overall profitability.

"So long as the NFL rights bring new subscribers or new purchases to Amazon that would otherwise occur to the degree that offsets content costs less direct advertising, they could find significant value in these rights." 

In releasing first quarter results, Amazon founder Jeff Bezos spoke about Prime Video, also being lifted by changing consumer habits during the pandemic.

“As Prime Video turns 10, over 175 million Prime members have streamed shows and movies in the past year, and streaming hours are up more than 70% year over year," he says.

"Amazon Studios received a record 12 Academy Award nominations and two wins. Upcoming originals include Tom Clancy’s Without RemorseThe Tomorrow WarThe Underground Railroad, and much more."

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