Amazon Q3: ad services revenue up 26% YoY to $12.1B, vs. $11.6B est., North American sales up 11% YoY to $87.9B, and International sales up 16% YoY to $32.1B
Driven in Part by ‘TNF’ Theo Wayt / The Information : Amazon's Ad Growth Driven Mostly by Search, Not Video Alex Weprin / The Hollywood Reporter : Amazon Advertising Revenue Soars to $12B in Q3 Earnings Beat Donovan Erskine / Shacknews : Amazon (AMZN) Q3 2023 earnings results beat EPS & revenue estimates Todd Spangler / Variety : Amazon Blows Past Q3 Expectations, Ad Revenue Jumps 26% David Marino-Nachison / Wall Street Journal : Amazon Stock Rises After Net Income, Revenue Beat Expectations X: Dev / @datawithdev : Five years from now, Prime will cost $200+, There will be surcharge on returned packages. You will be watching more Ads on Prime. AWS find innovative ways to do customer lock-in via marketplace billing for other vendors. Will Amazon have more revenue and profits? Absolutely yes.... @borrowed_ideas : 3P revenue grew by almost +20%, ads +25%, subscription mid-teen, and 1P MSD+. AWS, which was the key focus for many, grew by ~12%. More on AWS later; let's start more segment level discussion with Amazon, ex AWS. [image] @economyapp : Advertising revenue in Q3'23: 🔴 Google Search: $44.0B (+11% Y/Y). 🔵 Meta: $33.6B (+24% Y/Y). 🟠 Amazon: $12.1B (+26% Y/Y). Amazon is still a distant third but is catching up. $GOOG $META $AMZN [image] Susan Li / @susanlitv : Asked #Amazon's CFO Brian Olsavsky if advertising was being affected by the #MiddleEast Crisis after #Meta's warning yesterday 👇 “well on advertising, we're seeing a little different....what we're seeing is... the top of the funnel has been slowing down this year. But further... Rahul Sharma / @retail_guru : Testament to how strong a consumer platform is: in just two years, $AMZN advertising revenue has spiked from $29 billion to $48 billion. Ad revenue is now 45% larger than Youtube. When $AMZN focuses on something it is say good at it... $GOOGL $META Theo Wayt / @theo_wayt : Despite efforts like this to boost Amazon's video ad business, Amazon's CFO just told reporters that the company's ad growth is still coming primarily from merchants paying to boost their items in search results. https://www.theinformation.com/ ... LinkedIn: Annie Palmer : Amazon blew past earnings and revenue expectations for the third quarter, helped by recovery in its core retail business and ongoing cost-cutting efforts that appear to be paying off. … See also Mediagazer
Context & Ripple Effects
Amazon’s advertising business had already moved from the loosely labeled “other” segment to a separately reported line: Q1 2021 advertising revenue exceeded $6.9B, and Amazon later broke out $9.7B in Q4 advertising services revenue for the first time. This quarter shows that business continuing to scale while remaining tied to Amazon’s commerce activity.
The reported mix matters: management attributed much of the growth to merchants promoting products in search, rather than video. That makes the result primarily a read on seller demand for placement at the point of purchase, alongside rising North American and international sales.
First-order effects
- Amazon materially outperformed the ad-revenue expectation, giving its advertising unit a larger immediate contribution to the company’s quarterly revenue beat.
- Merchants are directing more budget toward sponsored search placements on Amazon, while video is not the principal driver of the reported ad growth.
Second-order effects
- Marketplace sellers face a more competitive paid-placement environment: as more merchants use search ads to surface products, visibility is likely to depend more on ad spending as well as organic placement.
- The combination of stronger commerce sales and ad growth reinforces Amazon’s ability to monetize shopper intent without relying chiefly on video inventory, sharpening the retail-media proposition offered to brands.
Third-order effects
- If search-led growth persists, Amazon’s marketplace increasingly functions as both a retail channel and a paid discovery system, concentrating product-discovery economics within the platform.
- The broader retail-media shift would put greater pressure on competing commerce platforms to build measurable, purchase-adjacent advertising products; the durability of that shift depends on continued merchant returns from ad spend.
The trend: This is one data point in retail media’s evolution from a supplemental marketplace feature into a core monetization layer built around high-intent product search.