BARCELONA, SPAIN – MARCH 2: The Amazon ads logo, the advertising solutions service formerly known as AMD or Amazon Marketing Services, during the Mobile World Congress 2023 on March 2, 2023, in Barcelona, Spain. (Photo by Joan Cros/NurPhoto via Getty Images)
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Amazon has turned into an online ad juggernaut in recent years, with brands paying big bucks for premium placement on the retailer’s websites. Now, Amazon is letting other sites use its ad technology for their own stores.
The new offering, called Amazon Retail Ad Service, allows companies to show “contextually relevant ads in the right place and at the right time” in search results, product pages and other areas of their site, Amazon said Thursday.
It’s initially available for U.S. retailers, which will pay fees based on usage levels. Prices weren’t disclosed.
Amazon in 2022 began breaking out ad revenue in its quarterly earnings reports, showing that the business had become a significant contributor to the company’s top and bottom lines. Ad revenue in the latest quarter came in at $14.3 billion, third to Alphabet and Meta in digital advertising.
That’s still much less than the sales Amazon generates from online stores and cloud computing, which came to $61.4 billion and $27.4 billion, respectively, in the quarter that ended in October.
The bulk of Amazon’s ad revenue comes from sponsored product advertisements, which are keyword-targeted ads that let brands promote certain items. Amazon has stuffed more of these sponsored items into search results and product pages over time. It also generates some ad revenue through streaming.
With Amazon Retail Ad Service, users will be able to customize the design, placement and number of ads shown across their sites, as well as use Amazon’s ad measurement and reporting tools.
Amazon said the service operates on systems that are separate from its own retail business, and retailers manage their data via AWS accounts.
The service could provide Amazon with valuable data it can use to bolster its ad prediction and recommendation technology. The company said early customers include health and wellness retailer iHerb, Asian grocery startup Weee! and Oriental Trading Co., which sells toys, party and craft supplies.
“We’ve designed this to be a win for retailers, advertisers, and shoppers, and we look forward to seeing how it improves outcomes, drives sales and enhances the shopping experience,” said Paula Despins, vice president of Amazon Ads Measurement, in the press release.
The announcement comes a few days before the National Retail Federation’s annual trade show.
It’s not the first time Amazon has sold its in-house technology and services to third parties.
Amazon Web Services began as cloud infrastructure to support its online retail business. The company launched AWS as a business in 2006. In 2022, the company launched Buy With Prime, which combines Amazon’s payment and fulfillment services for other retailers.
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