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On the first day, Amazon said “let there be books”; and there were books. On the third day, Amazon said “there are cloud computing platforms”; and there were cloud computing platforms. On the fifth day, Amazon said “that there are races delivered on the same day”; and there were Whole Foods store-to-door deliveries.
And now, on the seventh day, Amazon says “let there be advertisements”; and there are ads. In its latest attempt to dominate another sector of the internet economy, Amazon has increased the number of ads in its search results, in many cases doubling the previous number of products promoted. And now there are advertisements. Lots and lots and lots of announcements.
Add up advertising revenue
Search Amazon for “toilet paper” and you’ll find endless lists of every brand name product, available in every imaginable quantity and packaging (2 rolls, 4 rolls, 32 roll mega Costco, etc.), curated by a mysterious algorithm. calculating relevance based on price, availability and consumer reviews. Search for “dish soap” and you will find an endless mine of similar results with infinite variance. But Amazon has long allowed producers of consumer goods to cut the noise, reserving the best search results locations to showcase paid sponsored product listings.
In the past, Amazon had two to three top spots for advertising. Recently, however, that number is more often five to six sponsored ads, according to e-commerce research firm Marketplace Pulse. And, for America’s largest online retailer of all things, brands and sellers are willing to pay big bucks for premium placement on digital shelves:
- According to a Canopy Management survey of Amazon sellers, Amazon search advertising cost per click jumped to $ 1.27 in August, from 86 cents a year ago.
- In its latest quarterly earnings report, Amazon’s “other” segment, the majority of which is advertising revenue, climbed 87% year-on-year, with total revenue of $ 7.9 billion .
By 2023, an eMarketer report predicts that Amazon will control three-quarters of the $ 24 billion e-commerce advertising market.
If you come to the king (s): Yet Amazon still has a long way to go to enter a sort of total digital advertising triopoly with Google and Facebook. In terms of global ad revenue share in 2021, Amazon was in fourth place with 5.8%, just behind Ali Baba’s 8.7%. Google and Facebook, meanwhile, control 28.6% and 23.7% respectively.
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