Two reasons stated for its profits are cloud business and advertising.
Though both are doing great, Amazon finds a tremendous response in revenue from its advertising business. Brian Olsavsky the CFO says that the advertising program from Amazon is a billion-dollar business that is doing great, with high future options.
So long Amazon has not provided any break up of its advertising services, as they have been clubbed into the “Other” category. According to its financial statements, it is included along with sales in its advertising services, and sale of other services.
Advertising has helped the growth of profits for Amazon. Its sale through online store has grown by 12 percent, while its AWS sales have increased by 49 percent. Thousand of advertisers are using our platform to advertise, says Olsavsky.
He also says that the company will continue with this e-commerce investment. There are many advertisers who are willing to improve their brand visibility through product searches. New features in automation will be added along with ad measurements to bring in new advertisers in Amazon.
Advertisers are shown that advertising on Amazon will provide direct benefits as they are uniquely positioned at Amazon. Recommendations are provided for customers. International business will continue with improvements in advertising, says Olsavsky.
We should be able to bring in new revenue soon, says Olsavsky. Its competitors Google and Facebook had earlier earned around $114 billion as ad revenue online. But Amazon will prove to be a true competitor to them, he says.
An analyst from Cenkos Securities says that advertising business can grow to almost $20 billion by the end of 2020.
Amazon has become a fierce competitor for Google and Facebook.