Amazon’s strategic placement of advertisements during Prime shows and movies has significantly contributed to the company’s surpassing of sales and profit projections.
In the first quarter of this year, advertising revenue surged by 24% compared to the previous year, largely attributed to Amazon Prime ads becoming the default choice for numerous customers during this period.
Augmented by cloud services and the swiftest-ever Prime delivery times, Amazon has marked a robust start to the year under the leadership of Chief Executive Andy Jassy.
Jassy expressed optimism about the future, stating that it’s just the beginning for all of Amazon’s business ventures, fueling excitement within the company.
As one of the globe’s largest corporations, Amazon’s origins as an online retailer have expanded into multifaceted business realms.
Among these ventures is online streaming of television and films, an added perk for Amazon Prime members alongside expedited delivery services.
Advertisements featured in these shows and films were set as the default option for Amazon Prime members across various countries, including the US and the UK, during January and February, requiring a fee for members to opt out.
In the UK, this default setting was implemented on February 5th, with members having to pay £2.99 per month to disable the ads.
Meanwhile, Amazon boasted of record-breaking delivery speeds, with 75% of packages in major cities like London, Tokyo, and Toronto being delivered either the same day or the following day.
However, concerns raised by unions in the UK and elsewhere highlight the potential impact of Amazon’s emphasis on speed on employee welfare.
Despite Amazon’s stance of not recognizing UK worker unions, critics argue that the intense pace of work poses risks to workers’ well-being.
In response to union activities, Amazon has defended its position, citing competitive pay and benefits for its employees.
Additionally, Amazon’s cloud service revenue exceeded analysts’ expectations, attributed to the resurgence in growth rates driven by AI capabilities, notably its AI service, Amazon Bedrock, akin to Open AI’s Chat GPT and Google’s Gemini.
According to Amazon, “Tens of thousands of organisations worldwide are using Amazon Bedrock,” highlighting its widespread adoption.
Despite outperforming projections, Amazon’s share price saw a 3% decline post-results announcement, influenced by sales guidance for the upcoming quarter, which fell short of analyst forecasts.
Amazon’s projected revenue for the three months ending June 30 is estimated between $144bn (£115bn) and $149bn, representing a growth rate of 7% to 11%, below the anticipated $150bn forecasted by analysts.
