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Amazon CEO Calls Ad Business 'Key Contributor' For Growth

Eleven straight quarters of profitability must have Amazon CEO Jeff Bezos pretty elated. The company said net income for the fourth quarter was $1.9 billion -- or $3.75 a share -- on revenue of $60.5 billion, up 38% from a year ago, marking the eleventh straight quarter of positive net income.

During the earnings call with analysts and investors, Amazon Chief Financial Officer Brian Olsavsky pointed to the company's advertising business as a "key contributor" to strong growth. After being pressed by analysts, he said during the analyst call that the company will continue to make the advertising offering more valuable.

A the last MediaPost Search Insider Summit in Deer Valley, Utah, marketers said brands use Amazon Marketing Services (AMS) as a branding channel with the ability for brands to process the payment through Amazon so they can build loyalty and relationships with consumers.

 

When asked about the headline search ads and sponsored product ads, Brian Olsavsky, senior vice president and chief financial officer, said the strategy is to make the customer experience additive by the ad process.

"We want customers to be able to see new brands and have an easier time discovering products they're looking for," he said. "For brands, we think the value proposition is that we can find ways for them -- especially emerging brands -- to reach new customers. So we're working with advertisers of all types and sizes to help them reach our customer base and the goal of driving brand awareness, discovery, and better purchase decisions by the customer."

Earlier in the day, Raymond James analysts estimated total advertising and other revenue of about $1.6 billion or 50% year-on-year with strong ad growth, particularly for Sponsored Products. "Other" came in at about $1.7 billion, and subscription services at nearly $3.2 billion.

Olsavsky also said Amazon will continue to make investments in Amazon Web Services. AWS is in a $20 billion run rate in top-line revenue, up from $18 billion last quarter.

Amazon will also continue to expand geographically, building out tech teams and sales teams so expenses are likely to increase. Prime Video, Prime Now, Amazon Fresh, all of our major Prime benefits will continue to expand globally. 

There are more than 30,000 skills for Alexa; 4,000 plus smart-home devices from 1,200 unique brands; Alexa use on Fire TV rose nine times year-over-year, and music listening time on Alexa was three times higher this holiday season compared with the past.

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