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Amazon’s online advertising business is getting bigger as the slumping digital ad market shows signs of improvement.
The online retail giant’s ad business brought in $10.68 billion in sales in the second quarter, which was a 22% jump from the previous year during the same period, the company said while reporting its latest financial results on Thursday. Amazon’s overall sales grew 11% year over year to $134.4 billion in the second quarter.
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Analysts polled by StreetAccount projected Amazon’s advertising business would bring in $10.4 billion in sales for the second quarter.
Amazon’s online advertising has developed into a lucrative business for the online retailer, representing about 7.3% of the worldwide digital ad market, according to Insider Intelligence. Alphabet and Meta are still the leading digital advertising companies, holding 28.8% and 20.5% of the global market, the research firm noted.
Over the past year, Amazon’s advertising business has been growing while Meta’s core digital ad business has been shrinking. With Apple’s 2021 iOS privacy update limiting the effectiveness of Meta’s online ad platform, some companies, particularly retailers, shifted their Facebook and Instagram ad budgets to Amazon’s platform in the belief that they could make more sales.
But Meta’s online advertising business could be on the mend with the digital ad market showing signs of a modest recovery.
Meta reported last week that its second-quarter revenue grew 11% year over year to $32 billion, marking the second-straight quarter of sales growth after three straight quarters of declines. The sales growth, driven in part by Meta’s efforts to improve its online advertising platform in the wake of Apple’s iOS update, has lifted the spirits of investors who are more optimistic about the social networking giant’s core business than they have been in nearly a year.
Alphabet shares rose 7% last week after the tech giant said its second-quarter sales grew 7% year over year to $74.6 billion. Google’s advertising revenue was up 3.3% year over year to $58.14 billion during the second quarter, while sales in the company’s YouTube advertising unit grew 4.5% year over year to $7.7 billion.
Earlier this week, Pinterest reported second-quarter sales that increased 6% year over year to $708 million while its costs and expenses rose 11% year over year to $781 million.
Snap, on the other hand, said last week that its second-quarter revenue dropped 4% year over year to $1.11 billion, which is the social messaging company’s second straight period of declining year-over-year revenue.
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