Dive Brief:
- Amazon saw advertising sales grow 27% year-over-year for a total of $14.6 billion in the Q4 2023 period ended Dec. 31, per an earnings release. The company’s overall net sales increased 14% to $170 billion in the quarter.
- Viewership for the second season of "Thursday Night Football" on Prime Video increased by 24% year-over-year, with 14% growth in the 18-to-34-year-old demographic, per Nielsen data shared by Amazon.
- Amazon also rolled out a generative AI-powered conversational shopping experience, Rufus, with executives expecting generative AI to drive "tens of billions of dollars" in revenue over the next few years.
Dive Insight:
Amazon had yet another strong quarter with continued growth of its high-margin advertising business. The growth is primarily driven by sponsored product ads, with streaming TV advertising — which recently expanded to Prime Video — growing quickly, executives said on an earnings call.
"The strength in advertising was primarily driven by sponsored products as our teams worked hard to increase the relevancy of the ads we show customers by leveraging machine learning," CFO Brian Olsavsky said on the call. "We're also continually focused on improving our measurement capabilities, which allow brands to see the payback of their advertising spend."
The company has recently added more than 15 new advertising capabilities to enhance insights, planning, activation and optimization across its suite of ad products. In the U.S., Amazon recently added a sponsored TV offering that includes a self-service solution for brands that has no minimum spend, expanding the reach of the offering. Along with Prime Video, advertisers can reach viewers across Twitch, Freevee and Fire TV.
"Thursday Night Football" continues to be a winner for Amazon, with increased viewership overall and in key demographics during the show's second season on Prime Video. A Black Friday football game saw viewership increase 24% year-over-year with advertisers seeing "dramatic" gains in ad sales.
"We have increasing conviction that Prime Video can be a large and profitable business on its own, and we'll continue to invest in compelling exclusive content for Prime members," CEO Andy Jassy said on the call. "With the ads in Prime Video, we'll be able to continue investing meaningfully in content over time."
Advertising on Prime Video is still in early days, but executives maintain it will be an important part of the business model despite not having heavy ad loads relative to its competitors. Amazon will grow its worldwide Prime membership 10% this year to 317.8 million, with U.S. Prime households up 2.9% to 97.2 million, per Insider Intelligence data shared with Marketing Dive.
Amazon's latest numbers underscore how the platform continues to dominate among retail media networks, a space that Dentsu recently forecast will be the fastest growing among digital channels in 2024.
Separate from its earnings, the company announced the launch of Rufus, a conversational shopping experience powered by the buzzy tech trained on Amazon’s product catalog and information from across the web. Rufus launched in beta and will roll out to the rest of Amazon's U.S. customers in the coming weeks. Amazon is bullish on its growing generative AI ambitions, which has applications across e-commerce, advertising, AWS and beyond.
"Gen AI is and will continue to be an area of pervasive focus and investment across Amazon, primarily because there are a few initiatives, if any, that give us the chance to reinvent so many of our customer experiences and processes, and we believe it will ultimately drive tens of billions of dollars of revenue for Amazon over the next several years," Jassy said on the call.
