Advertising is not Amazon's main source of revenue, but still in 2017, the company's ad business generated $2.8 billion. This is larger than most platforms and websites out there, even more than Twitter which made $2 billion and Snapchat which made $800 million.
Much of Amazon's ad revenue is generated by ad placements within its website. Like for example, a seller that pays to appear in the search result.
And because an increasing number of retail and big businesses are starting to buy ads to reach the wider web, as well as within Alexa and Prime Video, this further increases Amazon's ad revenue by margins, closing in to other giants on the web that truly live on ads.
Only three online ad platforms outrank Amazon. They are Google, Facebook, and Oath.
While Amazon's ad targeting abilities are nowhere near as precise as those of Google or Facebook, but Amazon has its own advantages:
First of all, Amazon's ad products have much potential for the same reason Google ads are valuable. More and more people are searching Amazon for products every day, broadcasting their intentions to buy something from the website.
Second, as the largest retail on the web, Amazon knows when its viewers are human. The company has real people that it profiled on cross-device. This makes it able to understand what they're purchasing, and this is seen as a powerful advantage for Amazon if compared to others.
Because ads on Amazon can create stronger purchase intentions from people. since Amazon is a shopping platform, Amazon's ads can be more appealing to marketers than Google's ads.
And third, the trend gets larger considering that more and more people are searching for things on Amazon. In 2017, about 55 percent of online shoppers began their product search on Amazon. This is up from 44 percent the year before.
Here, Amazon with its growing trove of valuable ad inventory, has started to capitalize on it.
