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Home Tech Amazon Prime ads help tech giant drive profits
Tech
May 2, 2024

Amazon Prime ads help tech giant drive profits

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Adverts shown during Amazon Prime shows and films have helped the tech giant to beat forecasts for sales and profit.

Advertising revenue for the first three months of this year was 24% higher year-on-year, with the company making Amazon Prime adverts the default option for many customers over the period.

Cloud services and its fastest-ever Prime delivery times also boosted results.

Chief executive Andy Jassy said it was “a good start to the year”, although unions and employee groups say the push for delivery speed comes at the expense of staff.

Mr Jassy said it was “very early days in all of our businesses” and added he was “excited” about the future.

Amazon is one of the world’s largest companies and it initially started as an online shop before moving into other business areas.

One of these is online television and film streaming, which comes as an additional benefit of being an Amazon Prime member alongside faster delivery.

Adverts in shows and films became the default option for Amazon Prime members in a range of countries, including the US and the UK, in January and February with members needing to pay a fee to turn the adverts off.

In the UK, adverts became default on 5 February and the monthly fee to turn them off is £2.99.

Getty Images Nicholas Galitzine attends Prime Video's "The Idea Of You" New York premiere
Nicholas Galitzine stars in Prime Video’s The Idea Of You alongside Anne Hathaway

Meanwhile, the company said it had achieved its “fastest speeds ever” across its delivery services, with 75% of packages in London, Tokyo, and Toronto delivered the same day or the day after.

However, unions in the UK and other countries have argued that Amazon’s drive for speed can affect the wellbeing of employees.

Amazon does not recognise any UK worker unions, but Unite the union argues that workers need one because of the company’s “break-neck production targets”.

In response to union action in the UK, Amazon has previously said that it offers competitive pay and other benefits.

Elsewhere in the business, Amazon’s cloud service revenue grew more than analysts had expected, which the company said was due to “AI capabilities reaccelerating its growth rate”.

The company’s AI service, Amazon Bedrock, is a large language model like Open AI’s Chat GPT and Google’s Gemini.

“Tens of thousands of organisations worldwide are using Amazon Bedrock,” Amazon said.

Despite growth beating expectations, Amazon’s share price dipped 3% following the results after the company’s sales guidance for the three months to 30 June was less than expected.

Amazon predicted revenue would be between $144bn (£115bn) and $149bn, growing between 7% and 11%, but this would be less than the $150bn analysts had forecast. – bbc.com