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Why Amazon Investors Should Keep an Eye on Its Ad Segment

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Investors looking for Amazon's next big profit center should pay close attention to the advertising business. 

Amazon's (AMZN) "Other" segment, which includes primarily advertising revenue, grew 37% in Q2 to $3 billion -- and Amazon's on a mission to spread the word about new options for marketers.

eMarketer estimates that by the end of the year, Amazon could capture 9% of the overall digital ad market, second only to Google GOOGL (37%) and Facebook FB (22%).

And Amazon bulls feel pretty good about this. Why? The margins are very attractive.

PiperJaffray analyst Mike Olson estimated last year that Amazon's ad business has operating margins of 60% to 70%, and that by 2021, it could be bigger contributor to Amazon's bottom line than AWS. 

Alphabet, Facebook and Amazon are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells these stocks? Learn more now.

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