Amazon announced Thursday how large its advertising business is. According to its fourth quarter earnings statement, it generated $31.2 billion in revenue and saw fourth-quarter sales rise 32%.
This disclosure comes after years of Amazon investing heavily in advertising and keeping information private.
It’s much larger than many other online advertising companies, such as cloud rival Microsoft whose CEO Satya Nadella revealed last week that the company’s 2021 advertising revenues exceeded $10 billion. Snap’s total revenues reached $4.12 Billion in 2021. Pinterest had a $2.58 Billion.
According to Amazon’s earnings statement, advertising still represents 7% of total revenue for the fourth quarter.
During a conference call with analysts, Brian Olsavsky (Amazon’s finance chief) stated that he was excited to keep innovating in areas such as sponsored ads, streaming videos, and measurement. Advertising works only if it is useful to customers. When we create great customer experiences, we can build better outcomes and more value for brands.
Investors were not informed by Amazon that they should expect information about the size of its advertising operations, which places ads in product listings, search results, and on the wake screens of Amazon Fire tablets. This news is more shocking than when Amazon started reporting operating income and revenue from Amazon Web Services in 2015. It now accounts for about 13% of total revenue.
Thomas Szkutak was Amazon’s finance chief in January 2015. He told analysts that “we expect to change our reporting segments to report North America and International beginning with the first quarter 2015.” came out three months later. It included AWS results along with the results from the previous four quarters. This helps analysts understand the unit’s evolution over time.
This move ended the era when observers tried to guess the size of the cloud company. Instead, they were surprised by the positive operating margin of 17%.
Amazon has not yet disclosed its operating income for its advertising services section.
In 2018, Jeff Bezos (Amazon’s founder, former CEO) told employees that he had changed his mind regarding having Amazon advertise its product. CNBC reported.
