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Amazon Sales Surge as Company Focuses on AI

Amazon Sales Increased with Artificial Intelligence and Advertising

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Amazon’s first-quarter 2024 financial report is even more remarkable, showing a sharp increase in profits. The massive retail chain revealed a significant rise in revenue on Tuesday, blaming it on its strategic focus on advertising sales and artificial intelligence (AI).

Highlights of Earnings

With $143.3 billion in sales for the first quarter, Amazon recorded a notable 13% rise in revenue over the same time in 2023. Wall Street was expecting $142.65 billion in sales, but this came in higher. Notably, from $3.17 billion in Q1 2023 to $10.4 billion in Q1 2023, the company’s net income more than quadrupled.

AI Drives Amazon's Growth

Amazon Sales Surge as Company Focuses on AI

Image Source: foxbusiness.com

Andy Jassy, the company’s chief executive, highlighted the critical role artificial intelligence (AI) plays in spurring growth, especially in the cloud computing division of Amazon Web Services (AWS). With sales rising 17% year over year to $25 billion, AWS’s growth rate has “reaccelerated” due to the sustained focus on AI. The fact that AWS accounted for a huge 62% of total operating profit highlights how crucial it is to Amazon’s overall financial success.

Revenue is Powered by Expanding Advertising

Amazon’s ad sales saw significant rise as well, rising 24% year over year to $11.8 billion. This increase came after marketing campaigns were expanded, such as the introduction of advertisements on Prime Video earlier in the year. Using Prime Video for advertising is a calculated decision to take advantage of the platform’s wide audience base and high level of engagement.

Infrastructure Investment

Amazon expects to require more infrastructure expenditures as it develops its AI and cloud computing capabilities. Jassy emphasised that in order to meet the expanding demand for AWS services and cutting-edge AI products, more capital expenditure, or capex, is required. The company’s recent announcement of a $11 billion plan to build new data centres in Indiana is another proof of its dedication to enhancing its technical skills.

Optimistic Reaction of Investors

The financial performance and strategic efforts of Amazon have received strong feedback from investors. The company’s cost-cutting initiatives, which have included recent layoffs of over 27,000 workers, have been positively welcomed, which has helped its stock price rise. Shares of Amazon increased 5% in after-hours trading, indicating investor optimism in the company’s potential for future development.

In summary, Amazon’s excellent Q1 2024 earnings release highlights the company’s capacity to adapt and persevere in the face of a changing digital economy. Given its unwavering commitment to AI innovation and its growing advertising endeavours, Amazon is positioned to sustain its success in the very competitive retail and technology industries.

advertising

Is advertising the future of streaming?

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The rise of streaming services has revolutionized the way we consume media. With a plethora of streaming options, from Netflix to Hulu to Disney+, there has never been a better time to be a viewer.

However, with the increased competition between streaming services, the need for revenue has become more critical. Advertising has emerged as one of the ways streaming services can generate revenue, but is it the future of streaming?

Image Source: adage.com

Advertising has been a part of television for decades, and with the rise of streaming services, it was only a matter of time before it made its way into the world of online streaming.

The appeal of advertising is clear: it generates revenue for the streaming service, allows for more affordable subscription prices, and can provide targeted advertisements to viewers. This is especially beneficial for smaller streaming services that don’t have the financial power of Netflix or Amazon Prime.

Also Read: Why is Amazon shutting down Halo Division?

The fastest-growing segment of the streaming industry right now is free, ad-supported platforms. Many platforms have quietly accumulated large content collections and millions of users over the course of their existence.

And now, they’re beginning to make a greater impact as consumers hunt for cheaper means to access entertainment and companies look for innovative ways to monetize. Free streaming has its allure already present in the name—it’s cost-free!

According to an increasing number of streaming customers, they already pay more than they would like to for their subscriptions, and a Deloitte poll conducted in the fall of last year indicated that 44% of respondents had canceled at least one subscription service in the previous six months.

In addition, Deloitte discovered that 59% of customers would be content to view a few adverts per hour as a substitute for a less expensive or even free subscription.

Netflix has already found that their ad-supported option, which costs $6.99 a month and features a few advertisements per hour, generates more revenue per user than pure subscriptions. There is also an ad-supported option for Disney Plus as well. As does Peacock, the newest Max service, and a growing portion of the rest of the sector. It seems that advertisements are the streaming industry’s future.

Also Read: Amazon sees cloud slowdown in April, shares erase gains

However, it may have its drawbacks too. Advertising may not be enough to sustain smaller streaming services in the long run. The streaming market is becoming increasingly saturated, with new services popping up all the time. To stay competitive, streaming services need to offer something unique, and advertising may not be enough to differentiate them from the competition.

Services like Netflix and Amazon Prime have the financial power to invest in original content, which is a significant draw for viewers. Smaller services may not have the same luxury, and relying solely on advertising may not be enough to keep them afloat.

Twitter

Why major advertisers are leaving Twitter?

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Elon Musk’s Twitter deal was met with swift criticism. One of the four biggest advertising agencies, IPG Megabrands, urged their clients to halt advertising Twitter just days after the acquisition. Along with these other businesses, paid advertisements on the platform have been suspended by Pfizer, General Motors, and Volkswagen.

Twitter
Image Source: mashable.com

Ninety-two percent or so of Twitter’s overall revenue in 2021 came from advertising. If there was any doubt before, it is now evident that Musk must wean Twitter off its dependence on advertising revenue in order for his vision for the company to succeed.

At Twitter, Elon Musk has had a very busy week. His most active users will now need to pay a monthly fee, and he has sacked half of his workers and told the other employees they may no longer work remotely.

Also Read: Ad Spending on Twitter Falls by Over 70%

He has also criticized advertising. Elon Musk in his tweet on Friday claimed that Twitter had experienced a “massive drop in revenue” as more advertisers choose to stay away from what can only be called a turbulent transition.

It’s important to note that overall spending on digital advertising has decreased as the economy faces its own uncertainty. Additionally, it appears that everything is being done to divert attention from the mass layoff issue.

Musk tweeted about advertising again later though. This time, it was in response to a request that Musk “name and shame” companies who have halted their advertising. He tweeted, “A thermonuclear name & shame is exactly what will happen if this continues.”

It appears that 50 out of the top 100 advertisers on Twitter have halted advertising on the platform. These 50 advertisers have spent about $2 billion on Twitter advertisements since 2020, and more than $750 million only in 2022, according to research from Media Matters for America.

Also Read: What Does Twitter 200 Million User Email Leak Actually Mean?

Based on the report, which was released on Tuesday, seven new companies have reduced their advertising to nearly nothing. Since 2020, these businesses have paid Twitter over $255 million for advertising. Chevy, Chipotle Mexican Grill, Ford, Kyndryl, Jeep, Merck & Co., and Novartis AG all made announcements concerning the suspension of Twitter advertisements, or it was rumored and confirmed that they had done so.

The others stopped using the site to advertise for a significant period of time following direct outreach, controversies, and media buyers.” The day following an account pretending to be from Eli Lilly and Co. posted, “We are excited to announce insulin is free now,” the pharmaceutical business ceased running advertisements on Twitter.

The post was left up for hours despite Eli Lilly’s request for Twitter to remove it because the company’s staff was overworked as a result of recent firings and resignations. Eli Lilly’s shares fell shortly after the tweet received thousands of likes and hundreds of retweets.

Advertisers have stopped spending on Twitter advertisements because they don’t want to pay for ads that would randomly start appearing next to violent or racist content. They want assurances that the situation won’t worsen into an even worse swamp than it already is.

Musk hasn’t taken any action to reassure them that it won’t. Instead, he simply continues to use his “management by chaos” approach. He believes it works for him, however, brand stability and predictability are what advertisers desire.

ad space for TV+

Apple to sell ad space for TV+ next year

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Tech behemoth Apple is allegedly in talks with executives from media companies and networks about the prospect of offering ad space for TV+ streaming platform, possibly as early as next year.

ad space for TV+
Image Source: siasat.com

According to media reports, Apple intends to sell video ad spaces in early 2023, presumably for its Apple TV+ platform.

As per reports, Apple wants to increase its advertising revenue from its current level of $4 billion annually to double-digit numbers through this ad space for TV+. Apple executives believe TV+ has untapped potential. The company’s advertisements are currently dispersed throughout display adverts for applications in the App Store, News and Stocks applications, and other apps on iPhone, iPad, and Mac. While some shows on Apple TV already have featured adverts, these did not come for Apple.

Ad-supported tiers also aid in curbing price rises as streaming providers put more emphasis on profitability than subscriber growth. In December, Disney+ will introduce an ad-free tier for the same $7.99 monthly fee as the current ad-free tier.

Apple’s involvement in live sports is also tied to the availability of its video ad inventory. On the TV+ platform, MLB Friday Night Baseball has already generated some advertising revenue, but so far, MLB Network, not Apple, has been the seller of these commercials.

Eddy Cue, Apple’s executive VP of services, claimed to have reorganized services management in May to put a greater emphasis on streaming and adverts.

In order to entice users on a budget, streaming providers Disney and Netflix are also attempting to develop ad-based monetization strategies. They are expected to unveil their plans within the next few months.

By 2022, Netflix also plans to introduce an ad tier for subscribers. The decision was taken after the company experienced a significant decline in revenue for the very first time in ten years.

Comparatively speaking to Netflix and Disney, Apple’s customer base in the streaming industry is modest. The tech giant has nonetheless received praise for its high-end, award-winning shows and its expanding sports coverage.

In a period of rising inflation and economic insecurity around the world, an ad-based tier might attract more price-conscious users to the company. Next year, Apple will also broadcast Major League Soccer events. Apple is also expected to secure the rights to broadcast NFL Sunday Ticket along with other major sports events.

Millions of prospective viewers will watch these live sports programs, which will increase advertising sales. Currently, an Apple TV+ membership in the United States costs $4.99/month or $49.99/year.

Apple, though, is fully committing to the “premium content” brand. It might adopt a price increase for its ad-free membership along the lines of Disney+ and launch an ad-supported tier at the existing $4.99 pricing. Additionally, Apple TV+ features a tonne of acclaimed, brand-friendly programs like “Ted Lasso” and “The Morning Show” that marketers would undoubtedly want to capitalize on.

Some of Apple’s Big Tech competitors have expressed disapproval of the company’s growing ad presence. However, since so many streaming platforms are entering the ad-tier market, Apple TV+’s decision will be considerably simpler to defend.

Apple Inc. owns and runs Apple TV+, a paid streaming service available in the United States. It debuted in 2019, and it offers a variety of original movies and TV shows under Apple Originals production.

kakao

Kakao – Renowned For Its Free Messaging App Kakao Talk.

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Kakao corporation is a South Korean internet company providing services like messaging, advertising, music, and e-commerce. The firm was established 12 years ago in 2010 by Brian Kim headquartered in Jeju City, South Korea. Presently, It is managed by Co-CEOs Manson Yeo and Sean Joh. The Firm achieved a 4.16 trillion South Korean Won (2020). Currently, it is competing for the Number 1 Position with Naver in the Japanese web novel and comic market.

Founding Of Company

Kakao corporation is the company after Kakao Talk serving as its primary platform and flagship application founded by Kim Bum-Soo in 2006. It is based in Seoul, South Korea. Three of App Annie’s Global top 10 android apps were bound up with Kakao Talk in august 2013, which were Everybody’s Marble, Ani pang, and Cookie Run. Some games played on its platforms, such as Dragon Flight and Ani Pang, were named National Games. Some key people were Brian Kim, Stephen Kim, and Namkoong When. It’s a versatile corporation providing services in different industries such as entertainment, fashion, finance, transportation, community services, and investment.

Mergers

The Corporation decided to merge with Daum Corporation, one of Korea’s top Internet portals, using a stock swap in May 2014 to compete with South Korea’s biggest portal, Navier, and was renamed Daum Kakao, which was changed back in 2015. The firm’s board of directors replaced CEO Kim-Beom-Soo with Rim Ji-Hoon.

kakao
Image source: mk.co.kr

New Business Model

Kakao corporation introduced its KakaoTaxi service on March 10, 2015, which allows users to call a taxi using the Kakao Taxi app. Different taxi companies supported the Kakao taxi service, and approximately six lakh taxi- users booked their rides with this application just eight months after the launch.

Revenue

Having 93 % of the South Korean population on Kakao Talk, it made a revenue of approximately 200 USD with gaming, mobile commerce, digital content, and marketing channels, becoming the world’s third top publisher at google play in 2013.

Achievements

Kakao Corporation was acknowledged as an elite developer on Google’s Android Market, and its flagship application KakaoTalk was selected as the number one Free messaging App by Cnet. It became the World’s Top publisher on Google Play in December 2013. Presently, it is the No. 1 publisher for Google Play and iOS in South Korea, and KakaoTalk is the Number 1 application for Google Play and iOS platforms in South Korea. In 2014, It was chosen for the Most Innovative Mobile App Award at Global Mobile Awards.

Subsidiaries

Its renowned subsidiaries are:

  • Kakao games
  • Kakao entertainment
  • Kakao mobility
  • Kakao friends
  • Lycos Inc.

Founder – Kim Beom-Soo

Kim-Boem-Soo, also called Brian Kim, born on 8 March 1996, is a Korean Billionaire Entrepreneur, chairman, and founder of Kakao corporation. He grew up in Seoul, and his grandmother did his upbringing, and he holds a BSc and MSc degree in engineering from Seoul National University. He joined Samsung as a developer. Kim started Hangame as an internet cafe business in 1998 which became Korea’s first online gaming platform. He also worked in NHN corporation as a representative until 2007. He was worth 11.2 billion USD by Forbes in 2021.

Chief Executive Officer – Namkoong Whon

He worked on finding new growth engines for the corporation and worked as Chief executive officer at Kakao corporation’s new organization. He holds a degree from Sogang University. He was also an early founding member who led the firm through a difficult time and contributed much to making it a success.

Phunware

Phunware – 3 Million dollars Deal To Built The Trump Re-Election App.

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Phunware is an American Mobile Software and Blockchain firm. It showcases a game-like mechanism so that it can engage the right audience for Brands. Basically, it manufactures mobile applications for business goals such as advertising and marketing and cryptocurrency brand loyalty programs. It was established in Austin, Texas. In 2020, it became the fifth-largest technology firm in politics due to its involvement with Trump’s 2020 re-election campaign. It was criticized immensely for it. It operates 940 million unique active devices monthly and holds 5 billion daily transactions. The firm has made more than 120 million dollars since its founding.

History

Phunware was founded on 25th March 2009 by Alan Knitowski and Luan Dang in Austin, Texas. The key people involved in its foundation other than its founders were Randall Crowder (COO) and Matt Aune (CFO). Its headquarters are in Austin, Irvin, San Diego, and Miami. Its services include campaign data. It provided users’ daily digital trail to the Trump re-election campaign through a contract made with Brad Parscale’s American Made Media consultants. The deal was worth 3 million dollars and It also built the Trump re-election app in 2019. It had 93 employees in 2019 and got lowered to 44 in 2020, Phunware admitted Larry Sanger, Wikipedia co-founder to their advisory board that year.

Phunware
Image source: www.phunware.com

Renowned Customers

Phunware provided its services for many renowned companies such as Warner Brothers, NASCAR, NFL, NBC Sports, American Made Media Consultants, Fox Networks Group, HID Global, Presidio Networked Solutions, and MD Anderson. They also made an app for Gun Talk Media and worked with Cedars-Sinai Medical Center. Its location Tracking was used to target Democratic ads at participants in the anti-Trump 2017 Women’s March in 2018.

Acquisitions and Mergers

Phunware acquired Digby Mobile Commerce based in Austin, Texas in 2014 as a part of a 30 million dollars expansion. It also bought its subsidiary Movaya established in Seattle and Chengdu for an undisclosed sum. In December 2018, It performed a reverse merger with a special-purpose acquisition firm, Stellar Acquisitions III. In October 2021, It acquired Lyte technology, a computer system provider, for 10.98 million dollars to provide support to its blockchain research.

Revenue

The firm reached a Non-GAAP adjusted net revenue of 22.5 million dollars in 2018, got reduced to 19 million dollars in 2019 while its GAAP gross revenue in 2018 was 30.8 million dollars which was lowered to 19 million dollars in 2019. Fox Networks Group made their 50% sale in 2019 which was 42% in 2018. After the completion of the Fox project in 2019, their sales decreased. On April 17, 2020, the company got nearly delisted from NASDAQ due to the stock trading just below one dollar but got saved because the company’s shares increased just before the delisting.

Court Cases

Phunware filed a suit against Uber Technologies for failing to pay its taxes on three million dollars in unpaid services on September 26, 2017, in The Superior Court of California show. In response to this, Uber Technologies sued Phunware for fraud, accusing them of displaying ads of their ride-sharing app on unauthorized third-party websites. In October 2020, after a settlement, Phunware agreed to pay 6 to 4 million dollars to Uber for its fraudulent advertising.

Alan Knitowski – CEO

He works as the Chief Executing officer in the firm. He is a successful entrepreneur who has worked for over 15 years in the communication industry having multiple exits. He was also listed as a finalist for the 2014 Ernst and Young Entrepreneur of the year award for Central Texas. He served as an investor and also as a fund manager. He also served in United States Army as an Airborne, Air Assault, and Ranger qualified captain in the engineering unit.

Luan Dang – CTO

Luan serves as the Chief Technology Officer and Co-founder at Phunware. He is a great Entrepreneur, author, techie, Investor, and inventor. Before founding Phunware, he used to be the president of strategic Investments for Curo Capital LLC and of Alternative investment for Trymetris Capital Management. He was also the director of Engineering at Linksys. He also invested in Vonage and Telverse communications. In addition to these, he was a founding member of the Technical Advisory Board of OMPA and ISC. He has an experience of over 15 years in the communication industry.