Amazon is on track to generate $10 billion a year from its advertising business

Key Points
  • Amazon reported $2.5 billion in net sales in a category it has previously said contains mostly advertising services sales.
  • The company is poised to become a major advertising platform, creeping up on competitors Google and Facebook.
Here's what seven experts think about Amazon's earnings

Amazon's nascent ad business is creeping up on the giants of online advertising, and is on track to book close to $10 billion a year in annualized sales.

The company reported $2.5 billion in sales in its "Other" category in Q3. The number marks a 122 percent increase year over year and is an increase of $301 million from last quarter.

The accelerating growth of Amazon's advertising business poses a threat to entrenched digital ad platforms Google and Facebook. Some advertisers have already opted to move over half of their budgets from Google search to Amazon ads, CNBC previously reported. Back in March, eMarketer predicted Amazon was on track to become the third largest advertising player by 2020.

Amazon's ad service is appealing to brands who want to connect their ad dollars to direct customer action. A Survata study published in December said 49 percent of customer product searches start on Amazon.

While Amazon's ad business is growing fast, it still has a long way to go to catch the leaders. By way of comparison, Alphabet reported advertising revenues of $28.95 billion in the third quarter, a 20.3 percent increase from a year ago.

Amazon stock drops after hours, despite beating earning expectations