Amazons ad income to top AWS by 2021
- Wednesday, August 15th, 2018
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Amazon’s ever-growing ad business could be set to leapfrog its cloud computing division by as early as 2021, according to analysts.
A note to clients from investment bank and asset management firm Piper Jaffray predicts that Amazon’s “quietly growing” ad business is likely to exceed Amazon Web Services in terms of income in three years’ time.
It is estimated that operating income for Amazon’s ad business will reach $16bn in 2021 compared to Amazon Web Services’ $15bn in the same year.
“While the Street has been focusing on the trajectory of core retail, growth of AWS, and new categories such as grocery & pharma, Amazons advertising business has been quietly growing into a massive driver of current and future profitability,” said analyst Michael Olson the note seen by CNBC. “By 2021, we believe it is likely that advertising operating income will exceed AWS. … Investors should be focused on Amazon advertising now; this is a major driver to results and valuation today and continuing in the coming quarters & years.”
While Amazon’s ad business is being predicted for great things, the company is working to make those predictions a realty.
Earlier this week, it came to light that Amazon has been in talks with the ad industry since mid-July about launching ads within its mobile search results. As such, the eCommerce giants ‘Video in Search’ format is currently in a limited beta test.