Amazon’s losses widen as it ups marketing investment

Amazon upped its marketing investment by 40 per cent in the second quarter as it promoted new services including its first connected TV and content, leading to an increase in revenues but driving down profits.

In the second quarter, marketing spend was $911m, or 4.7 per cent of revenue, compared with 4.1 per cent in the same period a year ago. The increased marketing spend was one of the reasons why Amazon posted a wider-than-expected loss of £126m for the quarter, up from a loss of $7m a year ago.

Revenues came in at $19.3bn, up 23 per cent year on year, however its operating expenses rose 24 per cent to $19.bn. The firm has increasingly focused on investing in its business, with much of its revenue last quarter going on buying content for its video streaming service, as well as building out its cloud computing business in the face of growing competition from rivals such as Google.

Speaking on an earnings call, Amazon chief financial officer Tom Szkutak defended the company’s strategy, saying it is focusing on innovation and investing to improve the customer experience. He warned that Amazon is unlikely to make a profit in the third quarter either as it ups investment in areas including delivery, video content and devices.

He said: “The team has done a fantastic job innovating on behalf of customers. We’re encouraged by just the sheer magnitude of opportunities we have and we’re investing in those opportunities.”

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