Skip to main content

As (AMZN) - Get Free Reportdials up its investments in its fast-growing advertising business, the company definitely hasn't been ignoring video.

On Tuesday, The Wall Street Journal reported that Jeff Bezos' firm has begun seeking exclusive licenses to movies and TV shows for its ad-supported IMDb TV streaming service, which is available via the web, mobile apps and (notably) devices running Amazon's Fire OS. The WSJ added that Amazon is thinking about creating linear TV channels for IMDb TV that "could be focused on genres such as crime and lifestyle, or dedicated to specific outside media outlets."

Launching IMDb TV is just one of several moves Amazon has made to grow its video ad sales. Among other things, the company has:

    Begun running autoplay video ads on its main website and shopping apps, as well as on the wake screen for Fire tablets. The ads run without audio until users interact with them.

    Obtained streaming rights for Thursday Night Football games (they're streamed via Prime Video), along with their related video ad inventory.

    Begun requiring (much as rival Roku does for its Roku OS platform) that ad-supported channels running on Fire OS devices provide Amazon with 30% of their ad inventory.

    Partnered with The Trade Desk and private DataXu to let advertisers use each company's ad-buying platform to purchase video ads streamed to Fire OS devices.

    In addition, though it remains to be seen what Amazon's next move will be here, the company has bought a minority stake in the YES Network, which has exclusive broadcast rights in the NYC metro area for New York Yankees and Brooklyn Nets games.

    The rapid growth of the online video ad market -- a trend that has benefited everyone from Roku and The Trade Desk to Facebook  (FB) - Get Free Report and Alphabet's (GOOGL) - Get Free Report YouTube -- is by itself a major incentive to invest in growing its video ad business. As traditional TV viewing continues seeing large declines, particularly among younger demographic groups, advertisers have more and more reason to up their spending on video ads delivered via web browsers, mobile apps and living room devices., Facebook and Alphabet are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AMZN, FB or GOOGL? Learn more now.

    Another incentive for Amazon, however, is that video ads can help the company win over some advertisers who might not necessarily be major buyers of its non-video ads, all while continuing to leverage its shopping data to target the right consumers. Whereas the non-video ads that often appear within search results and product pages on Amazon's website and shopping apps are typically direct response ads that aim to drive the sale of products sold on Amazon, video ads could be used for brand advertising.

    Between its revenue growth and the relatively high margins it's believed to possess, Amazon's ad business has started to become a needle-mover for the company. Amazon's "Other" revenue, which is now dominated by ads, rose 37% annually in Q2 to $3 billion, and is forecast on average by analysts to grow 36% this year to $13.8 billion.

    For the moment, video ads appear to be a much smaller part of this business than the various non-video ads used to drive e-commerce transactions. But given how interested Amazon seems to be in selling more video ads, the story could be quite different in a few years' time.

    Save 57% With Our Labor Day Sale. Join Jim Cramer's Action Alerts PLUS investment club to become a smarter investor! Click here to sign up!