Amazon’s Retail Media Shake-Up: A New Player in the Game
Amazon’s recent announcement of its Retail Ad Service marks a significant development in the retail media landscape. By offering its ad-tech to power other retailers’ media networks (RMNs), Amazon is poised to disrupt how retail media operates, impacting retailers, advertisers, vendors, and consumers.
“Because Amazon’s owned-and-operated channels are nearing a point of saturation, sustained growth will increasingly depend on the company’s ability to identify additional growth engines. Amazon Retail Service theoretically enables Amazon to get more mileage out of its well-honed capabilities and expertise,” said Sarah Marzano, an analyst at EMARKETER. “What remains to be seen is whether a meaningful volume of retailers can be convinced to partner with a direct competitor.”
Paula Despins, vice president of Amazon Ads Measurement, stated in a press release, “We’ve designed this to be a win for retailers, advertisers, and shoppers, and we look forward to seeing how it improves outcomes, drives sales and enhances the shopping experience.”
Retailers Face a Choice
Retailers that adopt Amazon Retail Ad Service gain the ability to sell via the Amazon Ads console, reaching Amazon’s advertisers and scaling their media networks. These retailers stand to benefit from Amazon’s robust ad tech, which generated $47.52 billion in ad revenues in 2024, according to EMARKETER’s forecast.
This is the motivation of iHerb, which has implemented Retail Ad Service into its media network in beta. “With over 1,200 shared brands already active on Amazon Ads, this creates a frictionless opportunity for advertisers to connect with iHerb’s highly motivated audience and drive measurable results,” said Neil Folgate, senior vice president of global marketing at iHerb, in Amazon’s press release.
However, retailers must weigh the benefits against the implications of partnering with a direct retail media rival. They’ll need to pay Amazon and entrust the company with consumer data, although Amazon claims it will not have access to that data.
Streamlined Experience for Brands
Brands already advertising on Amazon will now have access to an even wider network of RMNs. The ability to invest in these networks without the complexities of managing analytics across different platforms is a major advantage. More than half of brands (55%) identify the lack of standardization across platforms as the biggest challenge related to RMNs, according to the Association of National Advertisers.
This move could increase brands’ reliance on Amazon, which some may view as a potential drawback. However, the prospect of standardized analytics across RMNs may outweigh any negatives.
Vendors Potentially on the Outs
Ad tech providers, such as Criteo, are likely to see Amazon’s move as a challenge. For companies that have built their businesses on providing tech infrastructure for RMNs, the launch of Retail Ad Service will provide an immediate challenge.
Vendors unwilling to work with Retail Ad Service will need to double down on their efforts. Remaining competitive will require vendors to help streamline ad-buying and analytics for their clients, a fact that is more important now than ever.
More Ads for Consumers?
Consumers may not benefit from this new service. Many are already inundated with ads on Amazon and could potentially face the same experience on other retailers’ sites. While Amazon states these ads will be more personalized and relevant, consumers may find them to be disruptive.
Amazon: The Undisputed Winner
As the leading player in U.S. retail media, Amazon already accounts for 76.2% of all retail media ad spend, according to EMARKETER’s November 2024 forecast. While Amazon is losing some share of the total retail media market, its ad revenues are still seeing double-digit growth.
Retail Ad Service is expected to further cement Amazon’s position as synonymous with retail media, even beyond its own properties. Future integrations may include Amazon Prime Video as well as complex analytics for advertisers.
