Amazon’s advertising business

Digital retail media advertisements are placed in online stores and marketplaces, reaching consumers while they shop. Being one of the most visited e-commerce websites worldwide, it is no surprise that Amazon is a dominant force in the retail media segment. The retailer is expected to attract over 75 percent of the U.S. digital retail media spending in 2023. For comparison, Walmart, which released its Walmart Connect retail media network two years earlier, had a seven percent share of the total.

Among the primary goals for advertising on Amazon, retail marketers surveyed in 2022 listed acquiring new customers and driving brand awareness. According to the same study, over half of U.S. retailers spend more than 60 thousand dollars advertising on the platform every month. During shopping events, such as Amazon Prime Day, Black Friday, and Cyber Monday, ad spending in the e-commerce platform increases even further. In 2022, brands sky-rocketed their investment in sponsored ads by 200 percent during Amazon Prime Day compared to the expenditures in the preceding two weeks.

How much does it cost to advertise on Amazon?

Amazon advertisers split their ad budget mainly between video and display ads, custom advertising solutions, and sponsored products. The cost of investing in such ads varies according to multiple factors, such as the type of ad and how it is targeted. For instance, the “sponsored products” format promotes items during shopping searches and consists of cost-per-click (CPC) ads. In 2022, its CPC reached 0.98 dollars, a price slightly higher than those of sponsored brands and sponsored display ads. The investment seems to pay off: According to a 2022 survey, U.S. marketers considered “sponsored products” the ad type with the highest return on advertising spending (ROAS).

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