Amazon has an ad business of $31 billion a year

Andy Jassy, ​​AmazonAWS

Source: CNBC

Amazon revealed on Thursday how big its advertising business has become. It generated $31.2 billion in revenue in 2021, with fourth-quarter sales up 32%, according to the retailer’s fourth-quarter earnings statement.

The disclosure follows years of Amazon’s investment in the advertising business and privacy of details.

On this scale, it is larger than several other online advertising entities, including cloud rival Microsoft, whose CEO Satya Nadella revealed last week that the company’s 2021 ad revenue topped 10 billions of dollars. Snap’s total revenue was $4.12 billion in 2021, while that figure was $2.58 billion for Pinterest.

Advertising is still small by Amazon standards, accounting for 7% of total revenue in the fourth quarter, according to the company’s income statement.

Amazon had not told investors to expect information about the size of its ad operation, which places ads in product listings and search results and Amazon Fire tablet wake-up screens. That makes the news more surprising than when Amazon in 2015 began reporting revenue and operating income for Amazon Web Services’ cloud division, which now accounts for about 13% of overall revenue.

In January 2015, Thomas Szkutak, then Amazon’s Chief Financial Officer, told analysts, “We plan to change our reportable segments to report North America, International, and Amazon Web Services beginning in the first quarter of 2015. ” Three months later, AWS results are out, along with results for the previous four quarters to help analysts understand how the unit has developed over time.

The move ended an era of observers guessing the size of the cloud business, leaving them surprised by its positive operating margin of 17%.

Amazon did not disclose operating profit for its advertising services segment.

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