Amazon Advances in the Digital Advertising Space

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Amazon has also been gradually increasing its revenue exposure to the digital advertising business—and there’s huge opportunity in the space. For the second quarter, Amazon (AMZN) reported revenues of $3.00 billion for its “Other” product category. These revenues are mainly associated with advertising service sales. The company reported a 36.83% year-over-year increase in Other revenues for Q2. The company also reported Other revenues of $5.71 billion in the first half of 2019, a year-over-year rise of 35.34%.

Amazon reported Other revenues as a percentage of Amazon’s total revenues of 4.73% for the second quarter of 2019. This level is higher than its 4.15% revenue exposure in Q2 of 2018. The company also reported Other revenues as a percentage of total revenues at 4.64% in the first half of 2019. This level was also higher than its 4.06% revenue exposure in the first half of 2018.

A huge global digital advertising market opportunity

Juniper Research expects digital advertising spending to grow 15% annually from $294 billion in 2019 to $520 billion in 2023. The rise of artificial intelligence to deliver targeted ads has been a key growth driver. eMarketer also expects global digital advertising spending to hit $333.25 billion in 2019 and $517.51 billion in 2023.

Plus, Juniper Research also expects Amazon to report $40 billion in advertising revenues in 2023. This level would mark a 470% rise from Amazon’s sales in 2018. The company is also expected to account for 8% of global digital advertising spending in 2023—versus a 3% share in 2018. Amazon could benefit from its store of consumer data, coupled with its machine learning capabilities.
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