Some big digital news in the spotlight tonight, as we get positive news from Amazon and Google, not so much from facebook…
Amazon announces solid 4th Quarter Earnings
Echoing our best Larry David impression, Amazon did “pretty good…prettay prettay prettay good!” I know we all expected positive results, but they had a great 4th quarter, on top of a great year. Here are the highlights:
- Net sales increased 9% to $137.4 billion, compared with $125.6 billion in fourth quarter 2020.
- Operating income decreased to $3.5 billion, compared with $6.9 billion in fourth quarter 2020.
- Net income increased to $14.3 billion, compared with $7.2 billion, in fourth quarter 2020.
For the full year, Amazon increased Net sales 22% to $469.8 billion, compared with $386.1 billion in 2020. Operating income increased to $24.9 billion, compared with operating income of $22.9 billion in 2020. And Net income increased $33.4 billion, compared with net income of $21.3 billion in 2020.
But, Amazon also gave us more of a peak under the hood on those earnings, as for the first time ever they broke out advertising revenue…
As reported by Jason Goldberg (@retailgeek): For the first time ever, Amazon now breaks out in Advertising revenue. $31.16B in 2021 ad revenue (growing at 32% YoY)
And on the same day, we get reports about Amazon raising the cost of Amazon Prime membership 17% to $139 a year
At this point, they might as well double the cost. If you are in for $119, you aren’t going to blink at $139. Not after they have you addicted to free 2 day delivery (or faster) and all the bells and whistles you get as a Prime member.
Google with a solid quarter, beating expectations
Alphabet, Google’s parent company, also had a great quarter with a few key takeaways with respect to their advertising business:
- Search continues to dominate, driving outsized impact. In this latest earnings release, search saw YOY growth of 36%. This had an outsize impact on ad performance as search accounts for 71% of Google ad revenue (and more than half of overall revenue).
- AI got a lot of air time, and its applications in advertising are myriad. Making search better by applying AI (among other things) was a drumbeat throughout – this came as no surprise as it’s a core pillar of Alphabet’s continued success.
- YouTube ad revenue grew 25% YOY and the team placed a strong emphasis on integrating “shoppable” elements into the YT environment, such as shoppable holiday live stream events.
Honestly, I can’t believe facebook is still news…I thought we all left it years ago. I guess some of us are still on the facebook…or Meta or whatever Zuckerberg is calling it these days…
- User stats disappointed. Facebook’s daily active users (DAUs) averaged 1.93 billion in December, a 5% YoY gain. The DAUs for the big blue app were the same as in Q3, meaning the platform didn’t grow in the close of 2021.
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- At the same time, Meta continues to feel the impact of Apple privacy changes that have hampered advertising performance and thrown cold water on new formats. Looking forward, executives pinned their optimism on the strength of Reels, a TikTok clone, and a broader vision of building out the metaverse, an initiative that motivated a rebrand to Meta in October.
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