Friday, February 03, 2017

Amazon's Growing Stealth Ad Business

Amazon released it's quarterly earnings statement and had a conference call after the market closed today.  One point of particular interest was in the Sales section of their financials:  "Other" was seen to grow significantly as shown below:

Growth of "other" Net Sales (millions)
2015 2016

North America 824 1318
International 196 245
Total 1020 1563
Inc year over year 53%

"Other" is defined as including "advertising services" and "credit card agreements."  While the exact amount attributed to Amazon's ad services is unclear, it is believed to contribute a large bulk.  While this is a rounding error compared to Google's ad business ($80 billion), this type of growth is significant.

This was even brought up during the conference call today!  They discussed it with some cautious optimism, and it seems like we'll see them expanding this business further.

I imagine Alexa is a key component of their expanding advertising presence.

With all the data they collect on consumers across multiple platforms (computer, mobile, and now, through Alexa - fridges, cars, and likely more in the future), they will be in a unique position to increasingly harvest data from consumers passively, a proposition differentiating them from Google.

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