Amazon’s ad sales surge 77% to nearly $7 billion

Amazon’s advertising business is on a tear. 

Ad sales, which the company breaks out as “other,” rose 77% year-over-year to $6.9 billion, Amazon said in its Q1 earnings call on Thursday. 

The fast-developing unit puts Amazon in close competition with heavyweights Google and Facebook for share of the U.S. ad market, of which Amazon now comprises 10%.

Traffic, ad relevance and new products drove the ad business, CFO Brian Olsavsky said on the earnings call 

“The advertising team has done a great job of turning clicks into productive sales,” he said. “We’re using new deep learning models to show more relevant sponsored products, we continue to improve the relevancy of the ads being shown on the product detail pages and we’ve seen rapid adoption of the video creatie format for sponsored brands, among other things.”

Amazon Prime Video also saw substantial growth in the quarter, reporting 175 million Prime members streaming TV shows and movies in the past year. Prime Video streaming hours were up more than 70% year-over-year. 

Amazon also recently inked a deal with the National Football League to stream Thursday night games by 2023 — a move likely to further increase its ad sales.

Live-stream service Twitch also fared well in Q1 with an average of 35 million daily visitors, said Olsavsky.

Overall, Amazon’s sales surged 44% year-over-year with net income more than tripling to $8.1 billion and revenue logging in at $108 billion. Amazon also announced that one of the biggest sales events of the year, Prime Day, will again return in Q2, earlier than expected after Amazon moved the day to October last year during the pandemic.

The ecommerce boom comes as shoppers swapped brick-and-mortar stores for online shopping in the pandemic. Amazon, Google and Facebook now dominate more than half of ad dollars spent in the U.S., according to the Wall Street Journal.