Dive Brief:

• Amazon’s revenue derived from advertising was up 24% year-over-year in Q1 to $11.82 billion, according to an earnings statement. The results beat Wall Street expectations. 
• Sponsored product ads on the company’s sprawling e-commerce marketplace remained the primary growth driver for the segment. The introduction of commercials to Prime Video in January also showed encouraging early results, executives said.  
• A continued windfall from advertising could support Amazon’s other technology bets, including the rollout of a new generative artificial intelligence (AI) assistant called Amazon Q that is targeted at software developers. 

Dive Insight:

Amazon’s advertising business remained on a tear during a quarter that saw other digital platforms also benefit from robust ad spending. Much of Amazon’s growth in the category still stems from traditional retail media in the form of sponsored products listings that surface as users browse its e-commerce platform. But Q1 also saw the company’s streaming video strategy come into clearer focus with the introduction of ads to Prime Video, which has produced promising results so far, CEO Andy Jassy said.

The change has proved controversial with some subscribers, even resulting in a class-action lawsuit, but is important to Amazon’s continued momentum in advertising as it invests in expensive premium programming and looks to offer marketers full-funnel capabilities that boost brand-building efforts. Amazon members can pay an extra fee to avoid seeing commercials and the company has promised to keep the ad load light compared to streaming rivals and linear TV.  

Amazon also operates the livestreaming service Twitch and a separate ad-supported streamer called Freevee. But Prime Video stands as the crown jewel of its video suite with offerings like NFL “Thursday Night Football” and hit shows like “Fallout,” a video game adaptation that has drawn 65 million global viewers since premiering last month. In January 2025, Amazon will broadcast its first NFL Wild Card playoff game as it continues to evolve its sports content slate. 

“I think advertisers are excited about being able to expand their ability to advertise with us in video beyond Twitch and Freevee to Prime Video shows [and] movies. I think they also find that the relevancy and the measurability of that type of advertising and Prime Video ads is unique for them,” said Jassy on a call discussing the results with investors. “So, it’s off to a very good start.” 

Amazon touting traction for ads on Prime Video comes as brands head into the thick of the upfronts season, an annual media-buying bonanza where they broker advertising deals for the months ahead. Amazon in recent years has presented as part of the NewFronts, the upfronts’ digital counterpart, but passed on a large showcase this year. Instead, it will make its upfronts debut on May 14. The upfronts will bring stiff competition as Netflix, Google’s YouTube and a smattering of streamers are also making bigger overtures for ad dollars. 

Amazon’s overall Q1 performance was impressive, with total revenue increasing 13% YoY to $143.3 billion. Echoing other tech firms’ earnings talks of late, executives spent a lot of their time championing advances in generative AI, an emergent tech area that has excited investors but is costly to develop. Ahead of the earnings report, Amazon announced the wide availability of Amazon Q, an AI assistant that uses a company’s internal data to accelerate software development projects.