Amazon makes bank from marketplace seller ads

The giant retailer's advertising segment is leaving its other sectors in the rearview mirror.

| More on:
Yellow cogs of a wheel with 'online marketing' written on them in black lettering

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Scorching growth in advertising revenue appears poised to propel retail titan Amazon (NASDAQ: AMZN) over $100 billion in quarterly revenue for the first time in its history, according to reporting by PYMNTS.com and The Financial Times. Considering the year as a whole, $21 billion of the company's revenue is expected to come from ads, skyrocketing 47% year over year, FactSet data indicates.

The Financial Times also says Amazon's swift advertising growth is outpacing all of its other major segments, including its Amazon Prime subscription service and its retail sales. While these areas may still be making more money, their growth is much slower. Amazon has posted powerful gains this year as lockdowns related to COVID-19 devastated America's small businesses, which were typically not deemed "essential," while Amazon was allowed to operate unhindered, gaining immensely from the switch to e-commerce.

Amazon's advertising growth has been enough for it to start taking market share from Alphabet's Google, formerly the undisputed monarch of online product searches and advertising. According to The Financial Times, eMarketer analyst Andrew Lipsman asserts there is a lack of general "recognition for just how big of an advertising business Amazon is on the way to creating."

According to Amazon's head of investor relations David Fildes during the company's third-quarter conference call, Amazon is looking to streamline registration, setup, and use of its advertising in the future. He also noted Amazon is in "a unique position to be able to provide measurement services that help all these brands sort of understand the impact" of their advertising with direct data, rather than advertisers needing to tease information out of obliquely related web searches as with Google and other search engines.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Rhian Hunt has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

A young entrepreneur boy catching money at his desk, indicating growth in the ASX share price or dividends
International Stock News

Why this high-flying investor is selling Tesla shares and buying this US tech stock instead

Ark Invest funds have been selling the electric vehicle maker's stock over the last few weeks and reinvesting the proceeds…

Read more »

two computer geeks sit across from each other with their laptop computers touching as they look confused and confounded by what they are seeing on their screens.
International Stock News

Is Nvidia stock heading to $175?

The bulls are lining up ahead of Nvidia's earnings report next week.

Read more »

A woman holds a bitcoin token in her hand as she smiles at the camera in the background.
International Stock News

Bitcoin keeps soaring. Could it hit $95,000 this week?

Could the current crypto rally have enough juice to push the coin above that once-inconceivable level?

Read more »

A boy in a green shirt holds up his hands in front of a screen full of question marks.
International Stock News

2 reasons to buy Nvidia shares before November 20 (and 1 reason to wait)

This top AI stock has soared nearly 200% this year!

Read more »

A group of friends push their van up the road on an Australian road.
International Stock News

Why Tesla stock just pulled back

Tesla finally hit a speed bump after a blistering post-election rally.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
International Stock News

Why Tesla stock keeps going up

Tesla stock costs more than $1 trillion now. Is that too expensive?

Read more »

A businessman in soft-focus holds two fingers in the air in the foreground of the shot as he stands smiling in the background against a clear sky.
International Stock News

2 Numbers I'll be looking for on November 20 when Nvidia reports earnings

While many analysts and investors will be looking at revenue and profit growth, two other figures are more important to…

Read more »

A man wearing a blue jumper and a hat looks at his laptop with a distressed and fearful look on his face.
International Stock News

Magnificent Seven: Unstoppable tech stock giants or risky buys?

Did you know the "Magnificent Seven" moniker was meant as a warning, not an endorsement? Check out the risks and…

Read more »