Will Amazon Expand Its Retail Media Lead With Off-Site Ads?

Amazon is expanding its ad offerings by extending Sponsored Products campaigns to other sites, including Pinterest, BuzzFeed, and Lifehacker. The offsite ads will still link to a product page to enable one- or two-click buying and only appear for products that are in stock to ensure a seamless, frictionless experience for customers who make a purchase through the ads.

Sponsored Product ads will automatically appear on contextually relevant pages based on both the campaign and the cost-per-click parameters set by the seller. The e-commerce giant plans to start small with the expanded version of the program before taking its learnings to further grow the options.

Retail media networks are increasingly important across retail, and Amazon’s services are among the biggest of them all. Amazon received 37% of the total investments in retail media made in 2022, according to data from MediaRadar. In total, over 14,000 companies promoted more than 17,000 brands on the platform, and now many of these brands will be appearing in other highly viewed spaces across the web.

It’s hard to overstate the power of the Amazon retail media network, even compared to its major competitors. Walmart, which has a retail media network befitting a retailer of its size, generated $2.7 billion in ad revenue for all of 2022. That’s significant, and well ahead of competitors like Target that have yet to crack $2 billion, but puts it in a distant second place.

Amazon isn’t just maintaining its lead, but looking to expand further. The e-commerce giant has reported advertising revenue growth of over 20% for more than four quarters straight. The retailer reported 22% year-over-year growth to $10.6 billion for Q2 2023 — somewhat slower than the previous few quarters, which topped out at 30% growth in Q3 2022, but it’s still proof that the offering is going strong.

The power of this growth becomes especially obvious when compared to one of Amazon’s other major non-retail investments, AWS. The web hosting service is still an enormous moneymaker, bringing in $22.1 billion in revenue for Q2 2023 alone, but growth has been on a steady decline for some time. AWS recorded a 12% year-over-year increase in its latest quarter, compared to 33% growth in Q2 2022.

Amazon’s ad-based efforts go beyond offering the same purchases on different platforms. The retailer has released studies to help its advertisers better reach specific audiences and offers guidance for how brands can use AI to power their campaigns. The retailer is also building out a team that can further develop its in-house AI offerings and help the company keep pace with tech rivals like Microsoft and Google in the rapidly changing world of marketing.

Return on ad spend for Amazon Sponsored Ads declined somewhat in 2023, according to data from Jungle Scout, but expanding reach to new platforms could help reverse that trend. Amazon recognizes that it is operating from a place of strength, and pushing ads on other platforms could help it grow even further.