On Feb. 02, 2023, Amazon announced its results for the fourth quarter of 2022.
In a nutshell:
- Amazon generated total revenue of $149.2 billion in Q4
- Advertising revenue increased 23% Y/Y to $11.6 billion
- Amazon's online advertising business continues to grow rapidly and is increasingly becoming a competitor to companies such as Google and Meta
Amazon's advertising revenue up 23%
Y/Y in Q4
Although Amazon CEO Andy Jassy describes an "uncertain economy," Amazon's fourth-quarter earnings report made it clear that the company greatly exceeded Wall Street's expectations. At $11.6 billion, Amazon's advertising revenue for the year-end quarter reached a record high.
"Sellers, vendors and brands continue to look to Amazon’s advertising capabilities to reach customers in the always competitive holiday season, even as the macro environment required them to scrutinize their own marketing budgets", Brian Olsavsky, the company's CFO, said on the quarterly earnings conference call.
While Amazon's advertising business continues to grow, Google and Meta struggle with slowdowns
While Amazon increased its advertising revenue by 23% Y/Y, Meta reports a 4% year-on-year decline in advertising revenue to $31.17 billion. Google's parent company Alphabet is also expected to report a decline of more than 1% Y/Y in advertising revenues to USD 60.4 billion.
Despite a general slowdown in digital advertising, which is clearly evident at Facebook and Google, Amazon's advertising business continues to grow strongly. Amazon now takes 7.3% of the total online advertising market, increasingly becoming a competitor to digital advertising giants like Facebook and Google.
The quarterly figures show how important the platform is for advertisers. Amazon's e-commerce business has clear potential to become a decisive player in the digital advertising market due to its rapid growth.
Still, CFO Brian Olsavsky says they expect "some slower growth rates" in the coming quarters. CEO Andy Jassy gave the following outlook in the conference call:
"In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon."
