AMAZON SHAKES UP RETAIL ADTECH
Amazon Shakes Up Retail Media with New Adtech Offering
In a bold move to reshape the retail media landscape, Amazon is taking its ad business beyond its own platform and into the hands of other retailers. Announced at CES 2025, Amazon Retail Ad Service is a groundbreaking offering that allows retailers to leverage Amazon’s advanced ad technology to power their own ecommerce advertising efforts.
But what does this mean for the broader industry? Dave Glaza of DIGITS weighs in on the potential outcomes and implications.
Amazon’s First Step into External Adtech
Traditionally, Amazon’s $50 billion ad business focused on sponsored placements within its own ecommerce ecosystem. Now, the Amazon Retail Ad Service expands that model, providing other retailers with Amazon’s ad tools to sell product ads directly on their own sites. This represents a significant shift in strategy and positions Amazon as a direct competitor to adtech companies like Criteo, Epsilon, and Instacart.
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Retailers using Amazon Retail Ad Service can integrate ads into their ecommerce properties, including search, browsing, and product pages. The system operates through AWS, ensuring that retailers maintain control of their data in secure AWS accounts, separate from Amazon’s own data.
Advanced Ad Formats and Customization
Retailers can select from a range of Amazon’s proven ad formats and decide exactly where ads will appear on their sites. Customization options, like enabling shoppers to add items to their carts directly from an ad, further enhance the user experience and drive conversions.
A Beta Program with Big Implications
Amazon has started rolling out this service to select small and midsize retailers, including Oriental Trading Company, iHerb, and Weee! These retailers now have access to Amazon’s powerful adtech and its vast advertiser base, potentially driving significant revenue and shopper engagement.
A Focus on Personalization
With tools to deliver highly relevant, personalized ads, the service gives retailers a competitive edge. For example, iHerb’s SVP of global marketing highlighted how the solution enhances shopper engagement and conversions, helping retailers maximize ad performance.
Dave Glaza: Insights on the Potential Impact
According to Dave Glaza, the implications of Amazon Retail Ad Service could play out in several scenarios:
- A Mid-Scale Adoption (Likely Outcome):
“Amazon retail media could mirror Instacart Carrot Ads. It’s a good alternative for retailers or marketplaces who want to offer solutions with minimal effort while generating revenue,” Glaza explains. For retailers focused on simplifying operations, this solution could provide a quick and effective entry into retail media without requiring significant investment or staffing. - A Large-Scale Shift (Transformative Outcome):
Glaza sees a “non-zero chance” that some mid-sized retailers could adopt Amazon’s plan more broadly. If that happens, it could scale into a significant consortium of retail media. “Retail media is hard work,” Glaza notes. “For companies who see themselves as retailers first and media companies second, this could be an attractive option. No capital expense, no staffing or recruiting, more focus on the core merchant business and you’re always near the forefront of ad tech.”
Glaza also highlights industry thought leaders like Lauren Wiener of BCG, who have been sharing potential outcomes for such outsourcing strategies. Amazon’s offering might catalyze a shift toward this model.
What This Means for Retail Media
Amazon’s entry into third-party retail media signifies a major industry shift:
- Democratizing Retail Media: By offering small and midsize retailers access to Amazon’s powerful ad technology, Amazon is opening up retail media opportunities for businesses that previously relied on third-party platforms.
- Data Control and Customization: Amazon’s tools allow retailers to control their ad strategies while maintaining full ownership of their data, a critical factor in today’s privacy-conscious environment.
Enhanced Advertiser Reach: Retailers tapping into Amazon’s advertiser base could see increased ad revenue and broader engagement from brands looking to expand their reach.
Source: https://www.adweek.com/commerce/amazon-selling-adtech-retailers/
Dave Glaza, Founder & CEO of DIGITS, remains committed to bringing digital capabilities to physical stores!
LinkedIn: https://www.linkedin.com/in/