Amazon looks to cement its retail media lead in 2025 despite headwinds

Article by Jeremy Goldman, and Daniel Konstantinovic | Feb 7, 2025

The news: Amazon posted Q4 earnings that beat expectations and showed strong growth for its advertising business, cementing its lead in the retail media sector. However, the company offered a soft outlook for the current quarter, signaling challenges ahead.

By the numbers:

Revenues: $187.8 billion, up 10.5% YoY and above expectations.
Advertising revenues: $17.28 billion, up 18% YoY but slightly below expectations.

Zooming out: Amazon is the most powerful force in retail media, with retail media ad revenues forecast to reach $69.3 billion this year—or 39.8% of all retail media ad spending. For context, that’s more than double its $29 billion ad revenues from just four years ago, as CEO Andy Jassy noted on the earnings call.

The company is seeking to expand its retail media dominance through Amazon Retail Ad Service, an in-testing ad tech product the company plans to license to other retailers. That service would put Amazon in competition with other major ad tech providers that have benefited from the retail media advertising boom.

Streaming/sports success: Retail media isn’t the only part of Amazon’s ad empire, as 2024 also marked the launch of ads on Prime Video, propelling Amazon to the forefront of the ad-supported streaming race. Jassy called the company “quite pleased with the early progress.”

Prime Video with ads gave Amazon a healthy revenue boost throughout the year, and that streak is set to continue in 2025 with increased ad loads.
“Thursday Night Football” (TNF) continues to be a key pillar of this strategy, attracting both viewers and advertisers with exclusive sports content. The NFL deal has strengthened Prime Video’s position as a premium ad-supported platform, increasing engagement and driving ad sales.
As streaming ad inventory grows, Amazon is focusing on allowing brands to connect with audiences through AI-powered targeting and multitouch attribution tools.

Our take: While Amazon’s ad prices are increasing, per our Industry KPI data provided by CommerceIQ, consistently high ROAS has enticed merchants to continue to spend on its marketplace.

Amazon’s streaming and live sports content is turning into a high-margin media empire and becoming a major driver of its advertising expansion.
Advertising has become a fast-growing component of the company’s overall revenues—approaching 10% of Amazon’s total—and despite headwinds, it is poised to capture an even greater share.