Amazon is the world’s largest retailer, and it’s no secret that the company has been making a push into the advertising space in recent years. What you may not know, however, is just how big Amazon’s media business has become—or how quickly it’s growing.
Amazon in the Retail Media Space
With its vast trove of customer data and growing portfolio of ad products, there’s no doubt that Amazon is a force to be reckoned with in the realm of digital advertising.
Amazon will continue to be the biggest player in the space, accounting for 60% of retail media. Behind Amazon a few major retailers, such as Walmart and Target, will mount media networks in excess of $1 billion, accounting for 25% of the space.
- “It is estimated that the retail media market will grow by 25% per year to $100 billion over the next five years and will account for over 25% of total digital media spending by 2026”
- Retail media advertising is becoming essential to increase product awareness. 42% of consumers have clicked on a sponsored or promoted ad that they saw on a marketplace or retail site in the past 12 months. This activity is higher among younger shoppers (59% of consumers aged 18-25 and 55% of consumers aged 26-35)
- 44% of consumers have purchased an item on Amazon after seeing an ad for that product on Amazon
“GroupM’s projected 60% growth rate for retail media over the next five years would likely outpace digital advertising’s overall growth rate, which was 24% in 2021. Since retail media is growing at a faster clip than the rest of digital, retail media will continue to earn a larger share of total ad spend.” – Kate Scott-Dawkins
Big Players in Digital Advertising
In 2012, Amazon launched its own retail media platform, now called Amazon Advertising, to leverage its large e-commerce audience.
Ten years later, the internet giant has become the largest digital advertising platform in the U.S., right behind fellow internet giants Google and Facebook. Amazon’s competitive advantage is to be closer to the moment of purchase: the company retains a huge market share in e-commerce retail.
In 2021, Google accounted for an estimated 28.6 percent of the total digital advertising revenue generated in the United States and was the largest digital ad publisher in the country. Facebook and Amazon followed, with 23.8 and 11.3 percent, respectively.
Amazon is unique among its competitors in that it offers both search and display advertising, as well as access to its massive customer base through Amazon.com and other Amazon properties.
Amazon Advertising Overview
Amazon Advertising is a suite of self-serve ad products that allow brands to reach shoppers on Amazon.com and other Amazon-owned properties. There are multiple types of ads available on Amazon…
- Sponsored Products
Showcase products with ads that appear in Amazon search results
- Sponsored Brands
Showcase your brand with ads that appear in Amazon search results
- Sponsored Display
Reach customers on and off Amazon’s platform with self-service display ads
Run ads on and off Amazon with the demand-side platform
- Video ads
Utilize Streaming TV ads and online video ads
- Audio ads
Place audio ads on Amazon Music’s free ad-supported tier
- Custom advertising solutions
Custom campaigns across online and offline channels
The Size and Reach of Amazon Advertising
Amazon Advertising reaches millions of shoppers across the globe—in fact, comScore estimates that approximately half of all internet users in the US visit an Amazon property at least once per month. And with over 300 million active customer accounts worldwide, there’s no shortage of potential customers for brands to reach on Amazon.
In addition to its massive customer base, Amazon also has a vast amount of data that it can use to target shoppers with relevant ads. For example, Amazon knows what products shoppers have purchased in the past, what they’re currently shopping for, and what they might be interested in purchasing in the future. This wealth of data gives Amazon a major advantage over its competitors when it comes to targeted advertising.
Recent Growth of Amazon’s Media Business
While Amazon has been selling advertising space for many years, the company only began publicly disclosing its ad revenues in 2017. In the first quarter of 2017, Amazon reported $1.7 billion in “other” revenues—a category that includes advertising—which was up from just $580 million in the first quarter of 2016. This represents year-over-year growth of nearly 200%.
eBay, by comparison, reported $894 million in total advertising revenues for 2017—a figure that includes both desktop and mobile ad revenues. Looking at these figures side by side, it’s clear that Amazon is quickly closing the gap with its rivals when it comes to ad revenues.
Why Invest in Amazon Advertising?
There’s no doubt that Amazon is a major player in the realm of digital advertising. For brands looking to reach shoppers on Amazon, now is the time to invest in Amazon Advertising. With its massive customer base and wealth of data on shopper behavior, there’s no better platform for reaching potential customers and driving sales.
Envision Horizons Advertising Services
Build your full strategic media plan with experts in the Amazon space. Founded in 2017 as a full service Amazon Agency, Envision Horizons has helped hundreds of brands grow and succeed on Amazon managing over $150M in Amazon sales annually. In 2020 Business Insider recognized Envision Horizons as one of the Top Amazon Advertising Agencies to work with. In 2022, Envision Horizons was recognized as a US finalist in the Brand Building category from the Amazon Ads Partner Awards.
Envision Horizons specializes in designing full strategic media plans, bringing clients the best return on every incremental dollar. Reach out to us to learn more about why you should be utilizing Amazon advertising.
Sources:
https://www.bcg.com/publications/2022/how-media-is-shaping-retail
