Amazon fielded two inquiries from analysts about advertising services on today’s Q3 earnings call, but CFO Tom Szkutak wasn’t biting.
Brian Pitz, managing director at Jefferies & Co., asked Szkutak about domestic ecommerce trends, as well as the growth of Amazon Web Services and Advertising Services. (The company reports the groups together in an “other” supplemental revenue category. The category also includes co-branded credit cards.)
Szkutak said, “The largest and fastest growing area by far is AWS and that’s certainly reflected in that line item.” But he stopped there.
“Other” showed strong growth year-over-year, specifically a 58% increase from the $608 million recorded in Q3 of last year to $960 million this quarter. In Q2, that number was $844 million and, in Q1, $750 million. eMarketer numbers have pinned Amazon’s annual ad revenues at $840 million for 2013.
Amazon last December launched a real-time bidding platform, the Amazon Advertising Platform (AAP), and has been characteristically quiet about sharing details on its ads monetization strategy.
AAP allows advertisers to buy display ads across a range of inventory sources. They include Amazon.com; Amazon-owned and -operated sites like Zappos.com and IMDB; and mobile inventory on Kindle and Kindle Fire Devices. Additionally, buyers can tap into the rich Amazon shopper dataset for media buys on outside websites — although the specifics of what those properties entail are less than clear.
“We have seen excellent results with Amazon,” said Darren Herman, chief digital media officer for digital agency kbs+. He added that he “could speak highly of [Amazon] in their current advertising offerings as they harvest a ton of intent on that platform, similar to Google.”
AdExchanger reported Friday that Amazon recently may have gained access to the Facebook Exchange.
Scott Symonds, managing director of AKQA Media, buys media on Amazon on behalf of clients with mixed, but overall positive, results.
AdExchanger Daily
Get our editors’ roundup delivered to your inbox every weekday.
Daily Roundup
“We do use Amazon’s Advertising Platform and have found its performance compelling and we will continue to invest and learn there,” he told AdExchanger. “Adding FBX inventory would only make it more interesting and be a great way to demonstrate product intent and sales conversions for Facebook through Amazon.”
Amazon has been instrumental in certain vertical campaigns, such as media buys for an education client that was interested in the textbooks category, noted Crystal Snee, Hill Holliday’s platform media manager. “I think when they’re [after a] unique dataset, [it works] but, for a lot of our clients, I just don’t see a fit,” she said. “ I think it could be a fit for ecommerce or retail brands. … I know that there has been a lot of chatter in the space about using Amazon data off of Amazon, but I haven’t seen a whole lot of that happening from my perspective.”
One of the greatest challenges in working with Amazon as a media partner, Symonds noted, is that media is not the company’s primary business. “While their product is compelling in its audience targeting and proximity to moment-of-decision, crucial elements like rich media, transparency and other issues have made it less than perfect.”
However, the growing revenue opportunity for Amazon, as well as buyer interest, could be the momentum it needs to ramp up its media play, he said. Former Amazon engineer David Selinger, RichRelevance’s CEO, told AdExchanger that Amazon will ultimately be attracted to the unique bundling of its properties that span mobile devices and Pinterest-like Collections beyond the simple Web page.
“We expect them to continue to be a bigger and more formidable media publisher – especially with CPGs where Amazon can effectively ‘ecommerce-ize’ them,” Symonds noted.
Overall, for Q3, Amazon’s revenues were up — to $17.09 billion, compared to $13.81 billion in Q3 of last year. Investors sent the stock soaring in late trading, despite a net loss of $41 million.
