Amazon is testing non-endemic ads in its search results, which link out to products on external websites. It's a move that shows Amazon’s need to demonstrate further growth and non-endemic advertising’s potential to meet that need.
Amazon has been experimenting with new growth engines for its ad business, recently making its Retail Ads Service available to other retail media networks (RMNs). Now it’s expanding its non-endemic ads business.
“Non-endemic is one of the ways that retailers are looking to really accelerate and add incremental growth,” said our analyst Sarah Marzano on a May 2024 episode of “Behind the Numbers.”
The move shows just how important advertising is to Amazon—important enough to potentially direct people away from buying on Amazon.
“Retailers who have more mature, developed retail media networks are recognizing that they might be reaching a level of saturation among their endemic brands,” said Marzano. “Even though they might be looking at growth from those programs over the next few years, it's not as significant of growth as they might like to see.”
Adding ad inventory for brands Amazon does not carry could provide some of that growth.
But it could also be a risky move for Amazon, which already offers retail search results that are cluttered with ads. “If you are allocating real estate to advertisers that feel really irrelevant to your customer base, then you run the risk of eroding the customer's experience,” said Marzano.
If Amazon opts to expand these non-endemic ads, it may also focus on services the company does not offer as well, such as travel planning or local businesses, which would be less likely to take away potential revenues from Amazon.
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