Amazon CFO: advertising was a 'key contributor' to revenue growth

Key Points
  • Amazon CFO Brian Olsavsky called Amazon's advertising business a "key contributor" to the company's revenue growth, during fourth quarter earnings call on Thursday.
  • He said ads are meant to improve the overall shopping experience on Amazon.
  • For brands, it helps them reach new customers and drive brand awareness, he said.
Source: Amazon

Amazon had a blowout fourth quarter earnings report on Thursday, and part of it has to with its advertising business, according to CFO Brian Olsavsky.

In a call with analysts on Thursday, Olsavsky said advertising was a "key contributor" to Amazon's North American sales growth, and pointed out how ads on the site are helpful to both customers and sellers on Amazon.

"Advertising was also a key contributor as we're continuing to make the offerings more valuable, both to customers and advertisers alike," he said.

Amazon's advertising business has long been considered a sleeping giant for the e-commerce company because of the vast amount of shopping data it owns. Amazon can leverage actual shopping data to help the sellers target customers that have a higher chance of buying online.

Olsavsky went on to explain how exactly ads on Amazon's site improve the shopping and selling experience on Amazon.

"Our strategy is to make the customer experience additive by the ad process," Olsavsky said. "We want customers to be able to see new brands and have an easier time discovering products that they're looking for. For brands, we think the value proposition is that we can find ways for them, especially emerging brands, to reach new customers."

Amazon doesn't break out the sales of its advertising business. Instead, it loops it under the "other" category, which is mostly comprised of ad revenue. In the fourth quarter, other revenue grew 62 percent year-over-year to $1.7 billion.

Investors have grown bullish on Amazon's ad unit lately, as the company has beefed up its advertising offering. Morgan Stanley recently published a note forecasting almost $8 billion in revenue by 2019.

"We're definitely seeing some strong growth in our advertising revenues," Olsavsky said. "We're going to keep building more and new tools based on what we're learning from our customers there to better serve in the future."