Amazon’s retail media ad tech news: Good for brands, bad for vendors, mixed for retailers

Amazon’s new Retail Ad Service, announced last week, is certainly the biggest retail media news of the year so far. In offering its ad-tech to power other retailers' media networks (RMNs), Amazon could disrupt how retail media operates for retailers, advertisers, vendors, and consumers alike.

“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 our analyst Sarah Marzano. “What remains to be seen is whether a meaningful volume of retailers can be convinced to partner with a direct competitor.”

“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,” said Paula Despins, vice president of Amazon Ads Measurement, in a press release.

Retail Ad Service will certainly impact each of these stakeholders. Here's how it will affect them.

Retailers have a choice

Retailers that adopt Amazon Retail Ad Service will be able to sell via the Amazon Ads console, allowing them to reach Amazon’s advertisers and scale their media networks. These retailers may also have a high level of trust in Amazon’s ad tech, which is the same technology it’s using to bring in $47.52 billion in ad revenues this year, per our November 2024 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.

But for retailers, adopting Amazon’s ad tech also means teaming up with a retail media rival. Clients will need to pay up to Amazon, and they’ll have to trust Amazon with consumer data, though Amazon should not be able to access that data, per the announcement.

Brands have a chance to streamline

Brands already advertising on Amazon will now have access to even more RMNs, and they’ll be able to invest in them without the challenge of managing analytics across platforms. That’s a huge pro for brands, considering more than half of brands (55%) consider lack of standardization across platforms the biggest challenge related to RMNs, per the Association of National Advertisers.

This move may make brands even more reliant on Amazon than they actually are, which is a potential downside for companies that don’t want to be at the whim of a single giant. But the potential for standardized analytics across RMNs could outweigh the cons.

Vendors could be in trouble

Ad tech providers like Criteo will likely see Amazon’s moves as a clear challenge. For companies that have built their businesses around providing tech infrastructure for RMNs, there’s probably not any upside to Amazon launching Retail Ad Service.

That said, companies that do not work with Retail Ad Service will need to remain competitive with those that do, which means working with vendors that help streamline ad-buying and analytics for clients is more important than ever.

Shoppers can expect even more ads

Another group that may not see any positives in Amazon’s latest move is consumers. Many are already sick of seeing so many ads on Amazon’s feed, and now they may see an identical model on other retailers’ sites. While Amazon said these ads will be more relevant and personalized, consumers may simply see them as clutter.

Amazon wins no matter what

Amazon is already the biggest US retail media player by far, accounting for 76.2% of all US retail media ad spend, per our November 2024 forecast. Amazon’s ad revenues will continue double-digit growth through the end of our forecast period next year, and while it's losing share of the overall retail media pie, those losses are slowing.

Retail Ad Service will help make Amazon synonymous with retail media, even off its properties. In the future, we may see integrations with Amazon Prime Video and detailed complex analytics for advertisers.

This was originally featured in the Retail Media Weekly newsletter. For more marketing insights, statistics, and trends, subscribe here.