Amazon is quietly becoming a major player in the advertising business.

Accuracy score :

Amazon is quietly becoming a major player in the advertising business.

In the first quarter, the e-commerce giant recorded more than $2 billion in "other" revenue, which largely consists of ad sales, the company announced Thursday. That amount was up a whopping 139% from the same period a year earlier. The result marked the fourth straight quarter that Amazon's ad-related revenues have grown on a sequential basis from the immediately prior quarter.

Better yet for the company, advertising sales were a "strong contributor" to Amazon much bigger-than-expected profit in the first quarter, said Brian Olsavsky, Amazon's chief financial officer, on a conference call with investors on Thursday.

"I would say advertising continues to be a bright spot," Olsavsky said


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Facts: Amazon entering the advertising Market. Amazon has reached $2 billion in revenue this year from advertising. Utilizing data from prime subscribers Amazon has an assortment of purchasing data which is much more valuable than free Customers. Selling advertising from Paid customers has a higher Revenue then free visitors. Prime subscribers pay Over $12.99 per month annual fee is $99 a year and it has been increased to $155.88(paid monthly) per year  [2018]

Analysis: If this Market move was done by a Smaller company It would be very valuable, Done by Amazon Might not translate to much stock price improvement. The profit margin on advertising is very high at a minimum of 60%, The profit margin might be even higher then Amazon's cloud server business, Advertising may expand to selling advertising to Product sellers and name brand owners. For example Sells advertising to individual restaurants to up Place their position in The search engine results. Without predicting advertising revenue for the future , At the current rate $2 billion a year In revenue The final growth rate could be exponential , Depending on Jeff Bezos Market direction if He thinks that the advertising revenue is important The revenue rate might grow to $10 billion a year,At 60% profit margin is $6 billion in Pure profit.

Conclusion: move by Amazon into the advertising market space Is very good. Buy Amazon when it drops.


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