BARCELONA, SPAIN – MARCH 2: The Amazon Advertising logo (formerly known as AMD or Advertising Solutions Services by Amazon Marketing Services) during Action World Congress 2023 on March 2, 2023 in Barcelona, Spain. (Photo by Joan Cross/NurPhoto via Getty Images)
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Amazon has become a giant in online advertising in recent years, with brands paying big bucks for premium placement on retailer websites. Amazon now allows other websites to use its advertising technology in their own stores.
Amazon said Thursday that the new product, called Amazon Retail Ad Services, allows the company to “show contextually relevant ads in the right place and at the right time” in search results, product pages and other areas of the site.
It’s initially available to U.S. retailers, who will pay based on usage levels. Price was not disclosed.
Amazon began disclosing advertising revenue in quarterly earnings reports in 2022, showing that the business has become a significant contributor to the company’s revenue and profits. Advertising revenue in the latest quarter was $14.3 billion, ranking third letter and Yuan in digital advertising.
That’s still well below the sales Amazon generates through its online stores and cloud computing, which were $61.4 billion and $27.4 billion respectively in the quarter ended in October.
Most of Amazon’s advertising revenue comes from sponsored product ads, which are keyword-targeted ads that allow brands to promote certain products. Over time, Amazon stuffed more of these sponsored products into search results and product pages. It also generates some advertising revenue through streaming.
With Amazon Retail Ads, users will be able to customize the design, placement and number of ads that appear on their sites, as well as use Amazon’s ad measurement and reporting tools.
The service can provide Amazon with valuable data to support its advertising prediction and recommendation technology. The company said early customers include health and wellness retailer iHerb, Asian grocery startup Weee! and Oriental Trading Ltd, which sells toys, party and craft supplies.
“We’ve designed it to be a win-win for retailers, advertisers and shoppers, and we look forward to seeing how it improves results, drives sales and enhances the shopping experience,” said Paula Despins, Vice President of Advertising Measurement at Amazon, in a press release.
The announcement comes just days before one from the National Retail Federation. annual trade show.
This isn’t the first time Amazon has sold its in-house technology and services to third parties.
Amazon Web Services began as the cloud infrastructure to support its online retail business. The company launched its AWS business in 2006.
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