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Amazon’s Ad Business Reaches $1.7 Billion While Facebook Ad Prices Soar

Amazon’s Ad Business Reaches $1.7 Billion While Facebook Ad Prices Soar

PerformanceIN

Voice assistant Alexa has been a key driver behind Amazon’s ad business growth.

E-commerce retailer giant Amazon has posted its latest ad tech earnings report revealing its ad revenue has increased 67% year-on-year to $1.7 billion, while net e-commerce sales reached $60.5 billion - up 38% year-on-year.

The company states that its voice assistant service Alexa available on Echo devices has “exceeded expectations” to become a key driver behind its ad business. The Echo dot, among its Fire TV stick, were its best-selling products last year among more than five billion items shipped through Amazon Prime worldwide.

“Advertising was a key contributor [to strong growth],” said Dave Fildes, director of investor relations at Amazon on the earnings call; “We continue to make the offering more valuable - We’re focused on finding ways to work with those companies – vendors or sellers — coming to us, and offer them a great experience on the website and ability to reach customers.”

The latest reports comes as the e-commerce retailer pushes its ad offering beyond its own websites and products - working with third-party advertising firms to test a range of sponsored ads across multiple channels.

Facebook ad prices soar

From one tech giant to another, social media network Facebook also released their quarterly earnings amid concerns of slower user growth on the platform and ensuing changes to its News Feed algorithm.

Despite a 2.1% growth in daily users (now at 1.4 billion globally), Facebook beat expectations with revenue growth, reaching $12.97 billion, with advertising accounting for 98% of the revenue.

However, the network’s ad growth slowed to 15% in 2017, compared to 50% in 2016. On top of this, the average price per ad according to its report rose by 29% compared with growth of around 5% the previous year.

According to Facebook, the slowdown in ad growth has been a result of the overpopulation of its News Feed which has seen the social media platform take action in tweaking its algorithm to prioritise personal posts from users above sponsored content from businesses.

Facebook’s finance chief, David Wehner, reportedly told analysts that the average ad prices in Q4 increased 43% from the previous year, with ad impressions up 4% - possibly indicating advertisers willingness to pay more to reaching the channel’s billion users.

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Mustafa Mirreh

Mustafa Mirreh

In addition to managing editorial on PerformanceIN, Mustafa reports on the latest day-to-day news updates from the world of digital marketing, while also doing social media promotion, live reporting of events, article features and interviewing key industry players and stakeholders.

Based in Bristol, Mustafa graduate with a marketing degree before delving into the world of music journalism through self-starting an online blog and collaborating with other publications. Now he has joined the PI team and has set his sights on succeeding in digital marketing.

Read more from Mustafa

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