Amazon buckets ad revenues in an "other" category ($1.2 billion for Q2, a YoY 38% increase from $844 million), which includes Amazon Web Services (AWS) and branded credit cards.
One of the biggest focuses for Amazon in the coming months will be the development of original content. The company plans to invest $100 million in original video content in Q3.
"In terms of content, we’ve seen more and more Prime customers streaming free content through our pipeline," said company CFO Tom Szkutak during the earnings call. " We have more and more customers taking free trials … and they are converting to paid digital video and then cross-shopping, [so it’s encouraging positive purchase habits]. The service we have today has improved dramatically over the last 12-24 months."
A number of companies like AOL and Yahoo have paid lip service to monetizing original content. In the case of Amazon, which has been rumored over the past year to be developing its own original series for Amazon Prime Instant Video users, this appears to be a continuing priority.
"We're ramping up spend significantly on video," Szkutak said. "We have two types of content: licensed and original content. … You've seen a lot of announcements how we’ve greenlighted a number of pilots, and will be in heavy production in Q3."
As Frost and Sullivan media analyst Aravindh Vanchesan pointed out, Amazon is looking to promote media through its own devices and streaming capabilities in order to drive content consumption in its own ecosystem. As Szkutak noted, video streaming customers are "cross-shopping," which indicates Amazon video viewers become long-term Amazon shoppers.
It was a pivotal quarter for the ecommerce company. On the ads front, it revealed the early workings of a self-serve ad platform that is in beta with agency partners.
Amazon also rolled out the Fire Phone and simultaneously told mobile app developers it would reward them with a a $6 CPM rate over a two-month promotional period to incent development for the Amazon Mobile Ad Network. Additionally, Amazon Web Services rolled out "Amazon Mobile Analytics," a developer tool to understand and visualize app usage data.
"We're very excited about the Fire Phone," Szkutak said. "Many [of you have asked] if this can exist on its own or if this [will only be] part of the [Amazon] family to drive other usage. I think it can be both."
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