Amazon’s ad services revenue rises 22%, bringing in more than $10 billion in Q2

Amazon generated $10.68 billion from its ad services in the second quarter of 2023.

The figure marks a 22% increase from the same period in 2022, as the wider digital ad market begins to show signs of recovery from the economic downturn.

Why we care. Following a slump in the digital ad market amid the economic downturn, Google, Meta and Microsoft have all reported improvements in advertising revenue. However, none have achieved year-on-year percentage growth quite as strong as Amazon. The retail giant’s solid performance sends a clear message that the digital ad industry is rebounding which should offer reassurance to hesitant marketers. Restoring faith in the sector should help restore trust, leading to increased ad spend in Q3.

Leading the way with AI. Amazon partly attributed its strong performance to the introduction of more advanced machine learning models. The company explained that its new technology has been helping advertisers reach their target audiences with optimal cost-efficiency as the industry moves away from third-party cookies. Amazon reported that marketers benefited from increased click-through rates and ROAS, along with a fall in cost per impression.

What has Amazon said? Andy Jassy, Amazon CEO, described Q2 as “another strong quarter of progress”. He said:

• “We continued lowering our cost to serve in our fulfillment network, while also providing Prime customers with the fastest delivery speeds we’ve ever recorded.”
• “Our AWS growth stabilized as customers started shifting from cost optimization to new workload deployment, and AWS has continued to add to its meaningful leadership position in the cloud with a slew of generative AI releases that make it much easier and more cost-effective for companies to train and run models (Trainium and Inferentia chips), customize Large Language Models to build generative AI applications and agents (Bedrock), and write code much more efficiently with CodeWhisperer.”
• “We’re continuing to see strong demand for our advertising services as the team keeps innovating for brands, including the ramp up for Thursday Night Football with the ability for advertisers to tailor their spots by audience and create interactive experiences for consumers.”
• “We remain excited about what lies ahead for customers and the company.”

Earnings report. You can read Amazon’s full second quarter 2023 results report for more information