One of Amazon’s most promising new business areas, advertising sales, appears to be slowing down.
The growth of Amazon’s “Other” segment, which consists primarily of advertising sales, slowed dramatically to 36% in the first quarter from the previous year, at $2.72 billion. That’s a big slowdown from 97% year-over-year growth last quarter, and over 100% growth for three consecutive quarters before that.
However, the rate of growth was artificially boosted in 2018 by an accounting change in January 2018. On an adjusted basis, the year-over-year growth rate in the “Other” segment in Q4 2018 was only 38%, and ranged between 51% and 73% in the previous quarters last year. So, while advertising growth has slowed, the drop-off was not as dramatic as it seemed to be from the company’s earnings statement.
Amazon’s fast-growing advertising business has been a bright spot for the company amid slowing growth in its core e-commerce business.
According to figures from eMarketer, Amazon has become the number three digital advertiser in the U.S, behind only Alphabet’s Google and Facebook. CNBC previously reported that some consumer packaged goods advertisers were moving as much as half of their search ad budget from Google to Amazon, where an advertisement can be converted into an immediate sale on the site.