On the first day, Amazon said “let there be books”; and there were books. On the third day, Amazon said “let there be cloud computing platforms”; and there were cloud computing platforms. On the fifth day, Amazon said “let there be same-day delivery groceries”; and there were store-to-door Whole Foods deliveries.
And now, on the seventh day, Amazon says “let there be ads”; and there are ads. In its latest push to dominate yet another sector of the internet economy, Amazon has ratcheted up the ad listings on its search results—in many cases, doubling the previous amount of promoted products. And so now there are ads. Lots and lots and lots of ads.
Adding Up The Ad Revenue
Search Amazon for “toilet paper,” and you’ll find endless listings of every name brand product, available in every imaginable quantity and packaging (2-roll, 4-roll, mega Costco-sized 32-roll, etc), organized by a mysterious algorithm calculating relevancy based on price, availability, and consumer reviews. Search for “dish soap,” and you’ll find a similar endless trove of results with infinite variance. But Amazon has long allowed consumer goods producers to cut through the noise, reserving the top search result slots to showcase paid-for sponsored product listings.
In the past, Amazon held two to three top spots for advertising. Recently, however, that number is more often five-to-six sponsored listings, 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 the digital shelves:
- According to a survey of Amazon sellers conducted by Canopy Management, the cost per click for Amazon search advertising leaped to $1.27 in August from 86 cents a year ago.
- In its most recent quarterly earnings report, Amazon’s “other” segment, the majority of which is ad revenue, skyrocketed 87% year-over-year, with a total revenue of $7.9 billion.
By 2023, a report by eMarketer predicts Amazon will control over three-quarters of the $24 billion e-commerce ad market.
If You Come At The King(s): Still, Amazon has a long way to go to enter into a total digital advertising triopoly of sorts with Google and Facebook. By share of worldwide ad revenue in 2021, Amazon sat in fourth place with 5.8%, just behind Ali Baba’s 8.7%. Google and Facebook, meanwhile, control 28.6% and 23.7% respectively.