Dive Brief:

• Amazon’s revenue derived from advertising increased 18% year over year to $17.29 billion in Q4 2024, according to an earnings statement. That marks a deceleration in the rate of growth from the year-ago period and a figure that narrowly missed analyst estimates. 
• Executives emphasized a focus on full-funnel advertising, including upper-funnel tactics that can build brand awareness. A key part of that strategy is Amazon Prime Video, which is entering its second year of running ads, but it’s an area where Amazon still lacks maturity compared to its core retail media offerings. 
• Still, the upper-funnel shift has helped Amazon attract more non-endemic advertisers, or advertisers that wouldn’t normally sell products through its e-commerce marketplace, such as automotive and financial services brands. Ad-supported streaming is an area where competition is quickly heating up.

Dive Insight:

Amazon’s ad segment is a juggernaut that has made the company into one of the most formidable platforms in the digital media arena. That said, its rate of growth continues to cool, suggesting that areas like lower-funnel retail media are maturing while upper-funnel bets are too fresh to have yet realized their full monetization potential. Sponsored product ads, which remain the largest contributor to Amazon’s advertising, still have a runway for more growth, CEO Andy Jassy said on a call discussing the results with investors. 

“We also have a number of newer streaming offerings that are starting to become significant new revenue sources,” Jassy said. “On the streaming video side, we wrapped up our first year of Prime Video ads, and we’re quite pleased with the early progress and headed into this year with momentum.”

In Q4 2023, Amazon’s ad revenue was up 27%, compared to 18% over the same period in 2024. Despite the slowdown, the company is attracting an “increasingly large base” of advertisers, CFO Brian Olsavsky said on the analyst call.

Prime Video is the core piece of Amazon’s upper-funnel pitch, bolstered by prime-time programming like NFL “Thursday Night Football.” A strong content slate has welcomed non-endemic advertisers into the fold. Amazon’s full-year advertising haul reached $56.2 billion in 2024, the first year in which ads ran on Prime Video. That’s nearly double the figure from three years prior.

“It is likely that Prime Video accounts for a significant portion of the roughly $19 billion that Amazon Ads saw in 2024 year-over-year net revenue growth,” said Gartner Vice President Analyst Eric Schmitt in emailed comments. 

“Much of Amazon’s growth is also coming from non-endemic sellers, such as financial services and telecom companies keen to tap into Amazon’s audience reach, premium streaming TV inventory and built-in data assets and commerce connections,” Schmitt added. 

Some sort of deceleration is to be expected as any business matures. Crucially for Amazon, advertising is still providing a boost to profitably, which could help as the e-commerce giant navigates future headwinds. Amazon reported robust Q4 earnings overall but its Q1 2025 forecast was weak, anticipating an “unusually large, unfavorable impact” from foreign exchange rates. 

While Amazon was a front-runner in bringing premium live sports to streaming, it is facing stiffer competition in 2025. Netflix, which is also making ad-supported streaming a bigger part of its growth agenda, has seen traction thanks to moves like airing two Christmas Day NFL games and the blockbuster Jake Paul vs. Mike Tyson boxing match last year.