Amazon Is Quietly Becoming an Advertising Powerhouse

2022 hasn’t been a fun year for


Amazon


(AMZN
-three.43%)
investors, whose stock is down 48% year to date. Simply the words of investing fable Warren Buffett, “exist greedy when others are fearful,” might ring true for those with a little fleck of patience.

Let’due south discuss two new concern opportunities that could help power Amazon’s growth over the coming decades.

The side by side big movie studio?

First an online bookstore, then an e-commerce giant, and now a diversified tech conglomerate, Amazon has depended on its ability to rapidly seize new opportunities in the economy. The company’s recent investments in flick entertainment video streaming advise it hasn’t lost that adventurous spirit.

In March, Amazon
spent $viii.5 billion to acquire
 the motion-picture show and television set studio MGM, known for iconic motion picture franchises like
James Bond
and
Rocky,
along with more than 4,000 other motion-picture show titles and 17,000 TV episodes.

At the fourth dimension, many industry watchers believed the move was designed to boost intellectual belongings on Amazon’s streaming platform. However, the November announcement of plans to plough $one billion a twelvemonth into theatrical releases sheds more light on the long-term strategy.

More simply using streaming equally a loss leader for Amazon Prime, direction may be looking to plow the box role (which generated $21.three billion concluding year) into a full-fledged growth driver. While it could take decades for this strategy to play out, the MGM acquisition gives Amazon the human upper-case letter and manufacture relationships needed to tackle the opportunity.

A natural edge in digital advertisement

Amazon’s deep pockets and massive scale correspond
an economic moat

that tin can help information technology tackle synergistic industries like digital advertising, and the visitor is diving headfirst into the opportunity.

Co-ordinate to Business Insider, Amazon is already the third-biggest ad company behind
Alphabet‘south
Google and

Meta Platforms
‘ Facebook, generating a whopping $31 billion in advertising revenue in 2021.

With 300 meg active users, Amazon’s platform has a significant reach, which makes it valuable for advertisers. Ads can too be more than targeted at consumers because of the huge corporeality of search and shopping data the company gathers from its users.

Just like with MGM, Amazon is using this equally a adventure to unlock synergies with acquired subsidiaries — in this case, Whole Foods (a business organisation acquired for $13.seven billion in 2017). The visitor is already placing ads on a variety of screens and signage located within these brick-and-mortar stores. And long-term plans could include placing ads on smart shopping carts, check-out kiosks, and fifty-fifty glass refrigerator doors.

Investing with a long-term perspective

Amazon’s core east-commerce operations remain nether pressure because of macroeconomic challenges similar inflation and a possible recession. And it is tempting for investors to get caught up in these nearly-term headwinds — especially every bit they put pressure on the company’southward stock cost.

That said,
long-term investing
 is the key to sustainable success in the stock market. And for Amazon, the time to come looks bright. The tech giant’s massive scale and capital base allow information technology to create value for investors through new opportunities like film production and digital advertising. Who knows what new business opportunities could be next?