Amazon's ad business soars, reaching US$56 billion in 2024

Amazon's advertising business reached a significant milestone in 2024, exceeding US$50 billion for the first time, with total revenue of $56.2 billion coming from various sources like sponsored ads, display, and video advertising. This is an 18% increase compared to the $46.9 billion generated in 2023.

The ecommerce giant's advertising business also continued to grow faster than the company’s overall growth. Amazon’s ad business grew 18% year-over-year compared to a 11% year-over-year growth from overall net sales.

During a recent earnings call, Amazon CEO Andy Jassy told investors that the company's advertising growth equates to a $69 billion run rate, a projection of this year's revenue based on current performance. Jassy noted that this figure represents a substantial increase from the $29 billion run rate from four years ago. 

This growth is fuelled in part by Amazon's expansion into streaming advertising, particularly with Prime Video. In 2024, video ads were introduced into Prime Video content in the US, UK, Germany, Austria, Canada, France, Italy, Spain, Mexico, and Australia. Furthermore, Amazon Ads announced it would introduce limited ads on Prime Video in Brazil, India, Japan, the Netherlands, and New Zealand in 2025.

In January, Prime Video's ad-supported tier, the default option for subscribers, marked its first anniversary, boasting an average monthly reach of over 115 million customers in the US and more than 200 million worldwide.

During the earnings call, Jassy stated that Amazon is improving its ability to demonstrate that its advertising, especially streaming products, can boost upper-funnel goals, such as brand awareness and recall. 

"We made it easier to do full funnel advertising with us," said Jassy. 

Amazon has also enhanced mid-funnel advertising products, which enable advertisers to use specific keywords and audiences to target search ads. Meanwhile, bottom-of-the-funnel ads continue to be effective for advertisers aiming to drive sales from search results. 

"We make this easy for brands to sign up for and to play across our growing advertising," Jassy added.

Amazon's Q4 2024 ad revenue reached $17.29 billion, which was slightly below analyst estimates of $17.4 billion. However, this figure still represents an 18% increase compared to the previous year, indicating substantial growth. 

Amazon's advertising revenue now constitutes approximately 9% of its total turnover. The company's overall Q4 sales reached $187.8 billion, a 10% increase, with a net income of $20 billion. The retail giant's advertising segment is now the third-largest in the digital advertising space, trailing only Alphabet and Meta, according to data from Emarketer. 

The company's overall net income also saw significant growth, with a full-year net income of $59.2 billion in 2024, a substantial increase from $30.4 billion in 2023.