Amazon making HOW MUCH?!
Many ad companies and traditional media owners are braced for tough times due to the coronavirus pandemic. Many companies marketing spends have been brought to a halt. However , Amazon’s ad business has emerged as a somewhat of a bright spot. For the tech giants financia update for Q1. This is despite belt tightening in from brands in other areas.
Amazon Ad Revenues
Amazon disclosed on the 30th April that it’s companies revenues from it’s advertising arm had seen a gain of over 44% over the past 3 months to reach $3.9BN! However Amazon doesn’t break out it’s ad revenue figures , chief fiancial officer Brian Olsavsky told investors that the Q1 ad growth rate was in line with previous results of Q4 2019. It grew at a 40% clip.
This trajectory outstripped the growth of its more established offerings such as online sales 24%, subscription services 28% and Amazon Web Services 33%.
Overall, Amazon’s total earnings for the first 3 months of 2020 showed that the pandemic has actually helped Amazon make money. It pulled in a total of $33M an hour. Between January and March revenues were $75.4BN
Amazon’s Q1 profit was $2.5bn down from $3.6bn onthe same period last year. Jeff Bezos cautioned that this would dip further in light of the Covid-19 related spend.
Amazon Calming down….
Bezos has cautioned that despite the company earning a lot of money. Shareholders should ‘take a seat’ as they planned to spend $4bn or more in the next 3 months on coronavirus related expenses. Such as keeping employees safe and getting products to customers.
“This includes investments in personal protective equipment (PPE), enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own Covid-19 testing capabilities,” Jeff Bezos
Profit
The $4bn spend will equal to Amazon’s entire profit for Q2 which caused Amazon’s shares to plummet immediately after. Amazon’s director of investor relations, Dave Files said that it had seen some impact from advertisers belt tightening.
“In March, [we saw] some pullback from advertisers and some downward pressure on price, but how but advertising continues to advertise at a high cliff,” he said.
“It wasn’t as noticeable maybe as with what some others are seeing, and it’s probably offset a bit by the continued strong traffic we have to the site. So it’s a bit of a mixed bag. We have again, as I said, downward pressure a bit on pricing.
Files also noted that a “large portion” of the firm’s advertising related to Amazon sales, “not [to] things like travel and auto”. Those sectors however, have been impacted by coronavirus pandemic.
“Our advertising will prove to be very efficient as well,” he assured investors. “And it can be directly measured. So even as people are cutting back perhaps on advertising, or are their costs, I think this will be one area that will prove its value. It has in the past.”
Amazon’s positive outcome from the pandemic comes as platform and media owners look for ways to help limit the impact that coronavirus has on their business and ad revenues.
(The Drum)
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