Amazon’s rapid growth during the COVID-19 pandemic has been evident to all, with stay-at-home orders and lockdown measures further pushing consumers into the online retail space, driving Amazon’s 2020 total net sales up to $386bn from $281bn in 2019. Flying more under the radar is Amazon’s burgeoning advertising business. Amazon does not break out its advertising revenues, but its “other revenue” category “primarily includes sales of advertising services”. It is this category that was Amazon’s fastest growing business segment across 2020. Revenues increased 52% from $14bn in 2019 to $21bn in 2020, outpacing all of Amazon’s other reported revenue lines including online stores, subscriptions services, and AWS. With the assumption that all this “other” revenue is advertising revenue, Amazon’s relatively nascent ad business could be up to 15% the size of Alphabet’s (Google’s) in 2020.  Moreover, as Amazon's "other" revenue continued to grow healthily through 2021, its share of the wider online ad market is set to increase further.

Amazon’s ubiquity is driving more users to search within its own storefront, and Amazon is reaping the reward. With customers beginning searches within Amazon, its position at both the start and end of the buying process is causing a shift in advertiser strategy towards campaigns directly through Amazon’s storefront. Amazon is thereby increasingly cutting out the middleman – the search engine. Key to this is the proliferation of their mobile app, with users staring their product discovery journey within the app Amazon can control this product discovery on an increasingly pay-to-play basis. This trend is not unique to Amazon, but is indicative of a shift in the wider advertising market, with the pandemic acting as a catalyst for change. Major US retailers such as Walmart and Target are also increasing their online advertising presence and beginning to take advantage of their position at the bottom of the marketing funnel.

Advertising is typically a high margin sector, so the growth of e-commerce advertising is potentially a key driving factor behind Amazon’s overall growing profitability. Yet Amazon’s advertising scope reaches beyond e-commerce. Platforms such as Fire TV, Twitch, and Prime Video give diversified outlets for advertisers looking to use Amazon’s ad platform. Amazon’s continued acquisition of sports rights, such as Thursday Night Football in the US, and English Premier League, further opens the door to a share of ad revenue usually reserved to TV advertisers.