Amazon Cagey About Spike In Advertising, Future Plans

Hidden in Amazon's first-quarter 2016 earnings call, Brian Olsavsky, SVP and CFO for the online retailer, confirmed that the company is moving away from text ads and product ads in favor of "some of the other newer products."

In this plan the online retailer will give "opportunities" to third-party sellers and other vendors on the site, but Olsavsky declined to break out the number for analysts and investors on the call after Raymond James & Associate Analyst Aaron Kessler asked for a little more information about how Amazon's sponsored links are performing.

Amazon hides the number in the line item "Other," which primarily reports revenue for advertising and its branded credit card.  Kessler points to the fact that "Other" rose 48% YoY in North America compared with a decline of 6% in the fourth quarter of 2015, and 11% YoY for International.  



The types of pay-per-click ads offered through Amazon Marketing Services include headline text-based ads with an image, sponsored products (not to be confused with the discounted product) and display product display ads.

David Grow, digital media manager at Chacka Marketing, said clients using Amazon's advertising products overall have success.

Overall, North America retail sales rose 26.8% in the first quarter of 2016, compared with the year-ago quarter. Worldwide sales rose 29% to $29.1 billion in the quarter.

Another line item worth mentioning is service sales, which represents third-party seller fees earned including commissions and related shipping fees, Amazon Web Services, digital content subscriptions, advertising services, and cobranded credit card agreements.

For the quarter in 2016, Amazon earned $8.5 billion in this category, up from $5.6 billion YoY, according to the company's 10Q earning's statement filed Friday with the Securities Exchange Commission.

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