BARCELONA, SPAIN – MARCH 2: Amazon advertising logo, an advertising solutions service formerly known as AMD or Amazon Marketing Services, during the 2023 Mobile World Congress on March 2, 2023 in Barcelona, Spain. (Photo by Joan Cros/NurPhoto via Getty Images)
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Amazon turned into online to juggernaut in recent years, with brands paying big bucks for premium placement on retailer websites. Now Amazon is allowing other sites to use its advertising technology in their own stores.
Amazon said Thursday that a new offering called Amazon Retail Ad Service allows companies to display “contextually relevant ads at the right place and time” in search results, on product pages and other areas of the site.
It is initially available to US retailers who pay usage-based fees. Prices have not been disclosed.
Amazon in 2022 began reporting advertising revenues in its quarterly earnings reports, showing that the company was making a significant contribution to the company's performance and profits. Advertising revenue in the most recent quarter was $14.3 billion, third in the ranking Alphabet AND Meta in digital advertising.
That's still significantly less than the sales Amazon generates from online stores and cloud computing, which totaled $61.4 billion and $27.4 billion, respectively, last year. quarter which ended in October.
The majority of Amazon's advertising revenue comes from sponsored product ads, which are keyword-targeted ads that allow brands to promote specific products. Amazon stuffed more sponsored items over time to search results and product pages. It also generates some advertising revenue through streaming.
With Amazon Retail Ad Service, users will be able to customize the appearance, placement and number of ads displayed on their sites, as well as take advantage of Amazon's ad measurement and reporting tools.
Amazon says the service runs on systems separate from its own retail operations, and that retailers manage their data through AWS accounts.
The service could provide Amazon with valuable data it can use to improve its ad prediction and recommendation technology. The company said its first customers include health and wellness retailer iHerb and Asian food startup Weee! and Oriental Trading Co., which sells toys, party supplies and crafts.
“We designed this to benefit retailers, advertisers and shoppers, and we can't wait to see how it will improve results, increase sales and enhance the shopping experience,” said Paula Despins, vice president of Amazon Ads Measurement, in a press release.
The announcement comes days before the National Retail Federation's announcement annual fair.
This isn't the first time Amazon has sold its technology and services to third parties.
Amazon Web Services began as a cloud infrastructure supporting online retail operations. The company launched AWS as a company in 2006. In 2022, the company launched the Buy with Prime optionthat connects Amazon's payment and fulfillment services to other retailers.
