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Amazon’s new ad strategy is increasingly aggressive—and effective

Amazon’s new ad strategy is increasingly aggressive—and effective

Whether you realize it or not, you’re probably seeing more ads on Amazon lately. The online retailer’s new ad strategy involves filling search result pages with ads. It seems to be an effective technique.

In a recent test, Recode examined the number and types of ads that come up in various searches on the site. The results were interesting and hyper-targeted based on whatever you specifically search. The exact number and layout of ads varied by search, but the sponsored items always crop up at the top of the first page of search results, where users are most likely to make their selections from.

The ads are a mix of products from third-party advertisers and Amazon’s own in-house brands. For the former, companies pay Amazon for product placement for specific searches. This nets Amazon revenue when the ad is clicked, and then again if the product is purchased. Currently, Amazon’s ad revenue forms a very small percentage of its profits, but the segment is growing fast. In its second quarter earnings statement in July, Amazon shared that ad sales were up 129 percent over last year, worth a total of $2.2 billion.

“[Advertising is] now a multibillion dollar business, and we’re seeing strong adoption across Amazon vendors, sellers, authors and third party advertisers,” Amazon’s chief financial officer, Brian Olsavsky, said during the company’s earning call that month.

With regards to the apparent increase in ads in its search results, Amazon issued a general statement to Recode.

“At Amazon we work hard to continually invent new ways for customers to find the right products to meet their needs,” Amazon said. “We take the same approach with sponsored products and sponsored brands. We are focused on creating value for customers by helping them discover new brands and products.”

This Amazon ad strategy isn’t always a bad thing. Yes, oftentimes large companies buy this ad space, but it also gives smaller, newer companies the opportunity to get their product in front of more eyes. In either case, as a consumer it’s important to realize that the first few slots product are ads and not organic search results—even if it makes your product searching less time-consuming.

H/T Recode

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