Amazon logo seen displayed on a smartphone.
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Amazon’s ads business grew at an astonishing pace in the first quarter.
Amazon’s “Other” unit, which is primarily made up of advertising but also includes sales related to other service offerings, grew revenue 77% year over year to more than $6.9 billion, the company reported on Thursday. That’s almost seven times as much revenue as Twitter, which generates substantially all of its revenue through advertising and reported first-quarter earnings the same day.
That growth has sped up dramatically from the 44% year-over-year growth rate Amazon posted in the first quarter of 2020.
Amazon CFO Brian Olsavsky said on the company’s earnings call that traffic to the site has been one large driver of the strength in its ads business. But he said ad relevancy and new ad products are also helping.
“The advertising team has done a great job of turning clicks into productive sales,” he said. “We’re using new deep learning models to show more relevant sponsored products, we continue to improve the relevancy of the ads being shown on the product detail pages and we’ve seen rapid adoption of the video creative format for sponsored brands, among other things.”
The digital advertising hot streak aided by stay-at-home trends has evidently lasted into the first quarter as travel starts to return and e-commerce spend persists, with companies such as Facebook and Alphabet seeing blowout results for their ads businesses.
Amazon’s cut of the industry only just cracked a 10% cut of the U.S. ad market last year and is expected to keep on taking share. Amazon’s ads business appears poised to keep growing if the adoption of e-commerce ad budgets stays steady.
Next week, Amazon will join companies such as Twitter, Snap and Google’s YouTube for the first time in pitching advertisers at the Interactive Advertising Bureau’s NewFronts event. The company’s program promises to show “how to reach customers across Amazon content, services, and devices.”
Amazon shares were up more than 3% after hours Thursday following a strong earnings report, while Twitter shares were down more than 10%.
