Amazon built a $50 billion ad business by selling sponsored placements on its website and app. Now, the ecommerce giant wants to do the same for other retailers.
Today at CES, Amazon Ads announced a new ad product called Amazon Retail Ad Service, allowing retailers to use Amazon’s tools to sell product ads appearing on their ecommerce sites.
The idea is to pitch retailers the same performance-heavy ad technology and machine learning models that Amazon offers advertisers. Amazon Retail Ad Service is built on Amazon Web Services. Amazon’s ads can appear on retailers’ websites’ search, browsing, and product pages.
Amazon’s new ad product marks a significant shift in Amazon’s ad strategy. Amazon will directly compete with retail adtech giant Criteo, Publicis Groupe-owned Epsilon, and startups like Koddi that sell ad technology to retailers. Instacart also sells advertising services to grocers.
Retailers typically rely on these third parties to build the technology and sales staff needed to sell ads. Still, Amazon is largely credited with building its ad business internally, including its own engineering and a growing salesforce.
Amazon has built out adtech products like a demand-side platform over the past few years that lets advertisers buy programmatic ads on publishers’ websites and competes with The Trade Desk and Google.
But Amazon has notably stayed away from selling ads on behalf of other retailers until now. Party-supply retailer Oriental Trading Company, health and wellness store iHerb, and Asian supermarket Weee! are part of Amazon’s beta program, suggesting that Amazon is initially signing up small and midsize retailers.
Amazon’s move opens up the company’s thousands of advertisers as potential advertisers for other retailers. Neil Folgate, SVP of global marketing at iHerb, said in a statement that more than 1,200 brands sold by the retailer advertise on Amazon.
“This innovative solution and proven technology allow us to deliver more relevant and personalized ads to our shoppers, enhancing their experience while driving stronger engagement and conversions,” Folgate said.
Giving retailers control
Amazon is trying to differentiate itself with tools that let retailers control which parts of their ad businesses use Amazon’s technology.
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