The new tool gives merchants selling on Amazon’s online marketplace the ability to purchase ad spots that follow shoppers around as they surf the internet. The e-commerce giant’s offering has been designed to help merchants target shoppers who have viewed their products or similar ones, following them around as they visit different websites and apps in a bid to lure them back to Amazon’s website to make a purchase. (See also: Facebook, Google Digital Ad Market Share Drops as Amazon Climbs)
Amazon plans to begin testing the tool with some of its merchants later this month. Details about which websites and apps will carry the ads remain unclear, although it has been confirmed that customers will only be required to pay for the ads after shoppers click on them.
French firm Criteo generated $2.3 billion in revenue last year from its similar re-targeting technology, according to Bloomberg. The company’s shares fell 2.62% in New York trading on Monday.
Alphabet’s valuation was not impacted by the news, even though many analysts believe that Google is likely to be impacted over the long-term by Amazon’s increasing presence in the mushrooming digital ad space.
Amazon generated $1.7 billion in ad revenue last year, significantly lower than the $95 million and $40 million that Google and Facebook Inc. (FB) made, respectively. However, some analysts believe that Google and Facebook’s dominance of the digital advertising market could come under threat from Amazon, arguing that the ecommerce giant is more attractive because people go on its website to shop.
Amazon has been steadily developing its advertising business to supplement growth elsewhere. Speculation recently started to build that the online retailer was plotting a major move to increase its exposure to the market after Bloomberg reported that it halted its Google Shopping campaigns, which it had been bidding for since late 2016. (See also: Amazon Halted Google Shopping Ads in April.)
By 2021, advertising on websites and mobile devices will account for half of all ad spending in the U.S., according to eMarketer. (See also: Online Advertising Takes The Lead.)