Pascal Rossignol | Reuters
Amazon’s advertising business continues to grow despite a general slowdown in digital advertising, which has hurt companies like Google parent Alphabet, Facebook parent Meta and Snap.
The online retail giant’s advertising services unit brought in $11.6 billion in sales for the fourth quarter, representing a 19% year-over-year increase, according to its earnings report Thursday.
Although Amazon’s advertising unit still constitutes a small fraction of the $149.2 billion in revenue the company recorded in its fourth quarter, it represents a fast-growing area that analysts believe could be a crucial player in the digital advertising market.
Indeed, while investors were pleased that Meta is cutting costs, sales in the company’s fourth quarter dropped 4% year over year to $32.17 billion.
Meta executives explained on Wednesday during a call with analysts that they don’t see an immediate rebound in the digital advertising market coming anytime soon. Susan Li, the chief financial officer, said, “Consistent with our expectations, Q4 revenue remained under pressure from weak advertising demand, which we believe continues to be impacted by the uncertain and volatile macroeconomic landscape.”
Meanwhile, Alphabet on Thursday reported fourth-quarter advertising revenues of $59.04 billion, a slowdown from $61.24 billion in the year-earlier quarter.
Alphabet’s YouTube advertising unit, which faces competition from TikTok, brought in $7.96 billion in the fourth quarter, representing an 8% drop from a year ago.
Tech companies that are powered by digital advertising have been under pressure from several factors, including a tough economy, increased competition from TikTok, and the lingering effects of Apple‘s 2021 iOS privacy update.
The latest Insider Intelligence survey of digital advertising revenue share worldwide revealed that Amazon now holds 7.3% of the overall online ad market, trailing Alphabet‘s Google, and Meta-owned Facebook and Instagram, which respectively have 28.8%, 11.4%, and 9.1%, of the digital ad market.