Amazon Retail Ad Service allows retailers to monetize their online web and app traffic by displaying contextually relevant sponsored product ads to shoppers on their search, browse, and product pages. It is currently being tested by a variety of retailers, including party supplies seller Oriental Trading company. Ad tech companies like Criteo and Publicis are on alert, as this news puts Amazon in direct competition with them. So what does it all mean - for brands, the competition and the retail media landscape as a whole? We’re breaking it all down below.
Breaking Down Amazon’s Ad Tech Offerings
Amazon’s ad platform has long been a cornerstone of its retail ecosystem. Through their robust insight into consumer behavior, targeting capabilities, and real-time optimization, Amazon has empowered advertisers to deliver highly relevant campaigns. Now, by licensing its technology to external retailers, Amazon is essentially becoming an ad tech provider, competing more directly with players like Criteo. But what exactly is Amazon offering? The answer lies in the same tools that have fueled Amazon's own ad success: machine learning-driven optimization tools and precise audience segmentation. This move positions Amazon as a key enabler of retail media networks, a sector that’s expected to surpass $50 billion in ad spend by 2025.
Why This Matters for Retailers
Retailers stand to gain from Amazon’s ad tools, but it’s a double-edged sword. On one hand, retailers, especially smaller ones without big budgets, can now access a powerful ad infrastructure without building proprietary platforms. On the other, partnering with Amazon means playing by its rules and facing more competition for ad dollars.
Here’s what this means for retailers:
- Faster time-to-market: Skip the lengthy process of developing in-house solutions.
- Enhanced ad relevance: Leverage Amazon’s machine-learning capabilities to optimize targeting.
- Increased scalability: Expand reach through access to a broader ad ecosystem.
However, reliance on Amazon’s tech could pose challenges. Ownership over customer data and the potential for fee structures mirroring Amazon’s traditional ad business may give some retailers pause.
The Brand Perspective: What Advertisers Should Know
If you’re an advertiser, this shift signals more places where your ads can appear and more ways to engage shoppers. But it also means more complexity in the retail landscape. However, keep in mind that at its core, Amazon Retail Ad Services is familiar: the same things you’re used to seeing in the Sponsored Ads console will be available, just with different retailers.
Brands can also choose what other retailers you’ll show up on, as long as those retailers are working with Amazon. This offers your brand additional control as a wider variety of retailers join the Amazon network. While this new product was just announced, it’s sure to make an impact quickly. Brands should ask themselves:
- How can we use this expansion to maximize visibility and performance? By tapping into multiple retail media networks that use Amazon’s tech, you can extend campaigns to new audiences.
- Is the targeting as effective outside Amazon’s ecosystem? While Amazon’s tools are strong, performance might vary based on the implementation.
- Are we prepared for increased data fragmentation? With more platforms offering ad placements, maintaining unified reporting and optimizing spend across networks becomes crucial.
Key Takeaways for Brand Strategy
So, what does this all mean for your brand? Here’s our hot take:
- Test and Learn: If your retail partners adopt Amazon’s ad tech, run pilot campaigns to gauge performance.
- Assess Data Sharing Risks: Understand what data you’re sharing with Amazon and whether it aligns with your privacy standards.
- Diversify Your Ad Spend: While Amazon’s tools offer precision, don’t put all your eggs in one basket.
Maintaining presence across multiple platforms can hedge against performance variability. Amazon’s foray into ad tech licensing is a clear signal that retail media is evolving — fast. Whether you’re a retailer or a brand, staying ahead means understanding these shifts and adapting your strategies accordingly.