Amazon’s advertising business grew 20% in the second quarter

Amazon’s online advertising business brought in $12.77 billion during the second quarter, marking a 20% year-over-year increase, but missing analysts’ estimates.

Amazon disclosed the latest quarterly financial results of its online advertising unit on Thursday when it reported its second-quarter earnings. The company’s overall second-quarter sales were $147.98 billion, trailing analysts’ estimates of $148.56 billion.

Analysts were expecting Amazon to report online advertising sales of $13 billion. The company’s online advertising unit is still small relative to its core online retail business, but it is quickly growing and changing the digital advertising industry, in which Meta and Alphabet still dominate.

Indeed, Meta’s online advertising sales continue to improve after a tough 2022 when Apple introduced an iOS privacy update in 2021 that weakened the company’s ad-targeting system, along with smaller social media rivals such as Snap and Pinterest.

On Wednesday, however, Meta reported second-quarter earnings that beat expectations and indicated that the company has rehabilitated its advertising technology. Indeed, Meta said second-quarter overall sales, the bulk of which comprises advertising, increased 22% year over year to $39.07 billion.

Meta’s revenue growth rate was double that of rival Google’s ad business. When Alphabet reported its quarterly earnings last week, the company said its Google ad unit logged second-quarter sales growth of $64.6 billion, representing an 11% year-over-year increase.

Alphabet also said at the time that its second-quarter YouTube advertising sales were $8.66 billion, trailing analysts’ expectations of $8.93 billion.

Meanwhile, Microsoft said earlier this week as part of its latest quarterly earnings that its search and news advertising sales rose 19% year over year in the second quarter, but the company does not reveal that unit’s specific quarterly revenue figures.

Smaller online advertising-powered businesses such as Snap, Pinterest and Spotify also recently reported revenue growth of 16%, 21% and 20%, respectively, in their latest reports.