Amazon extends retail ad technology to other retailers with new service
Amazon launches ad tech service for retailers to monetize their sites using its advertising technology and advertiser network.
A day after Amazon announced its new Retail Ad Service at CES 2025, the implications of this strategic move are becoming clearer for the retail advertising technology landscape.
The retail media technology landscape is experiencing significant changes as Amazon launches its new advertising service for retailers, while Microsoft shut down its PromoteIQ platform.
On January 9, 2025, Amazon Ads revealed a cloud-based advertising technology service that allows retailers to implement sponsored product advertisements on their websites and applications. The service, built on Amazon Web Services (AWS), enables retailers to display contextually relevant ads across their digital properties while maintaining control over ad placements and formats.
According to Paula Despins, Vice President of Ads Measurement at Amazon, "Amazon Retail Ad Service helps retailers enhance their shopping experience with highly relevant advertising that guides customers through the shopping journey, helping their shoppers with product discovery and making informed purchase decisions."
The service operates by processing contextual information, such as search queries and product attributes, to serve relevant advertisements. When shoppers click on these ads, they complete their purchases within the retailer's online store rather than being redirected elsewhere.
The technology implements machine learning models trained on shopping signals to deliver contextual advertising. Retailers can display sponsored product advertisements across three main areas: search results pages, product detail pages, and browsing pages.
Retail Ad Service
The system incorporates real-time data about product availability and pricing, combined with contextual signals such as shopper search queries and viewing history, to ensure advertisements showcase available products.
Several retailers have already joined the beta program, including iHerb, Oriental Trading Company, and Weee!, with Tilly's announced as an upcoming participant. Neil Folgate, SVP of Global Marketing at iHerb, noted that over 1,200 shared brands currently active on Amazon Ads creates opportunities for advertisers to connect with their audience.
Amazon has implemented strict data separation protocols. The service operates on dedicated systems with stringent access controls, ensuring retailer information remains separate from Amazon Ads and other Amazon businesses. Ad measurement takes place within AWS Clean Rooms, facilitating privacy-enhancing collaboration to generate aggregated, anonymized reports.
This development marks a significant shift in Amazon's advertising strategy, positioning the company in direct competition with established retail advertising technology providers. The service allows retailers to access Amazon's advertiser network while managing their direct advertisers through the Amazon Ads console.
Drew Habeck, SVP of Media at Flywheel, commented on the potential impact: "Amazon's Retail Ad Service has the potential to be transformative for advertisers. It leverages high-performance advertising technology to simplify campaign management with access through a single service provider."
A key aspect of the service is the level of control provided to retailers. They maintain authority over:
- Ad creative formats
- Advertisement placement across their digital properties
- Number of displayed advertisements
- Post-click customer experience, including options for direct cart addition or product page navigation
Ad Formats in Retail Ad Service
The service streamlines campaign management for brands already using Amazon Ads. Advertisers can discover additional opportunities to expand their reach and manage campaigns across multiple retailers through familiar interfaces. The centralized approach aims to simplify reporting and optimization processes.
Built on AWS, the service inherits the cloud platform's security architecture. Retailers manage their data within their AWS accounts, providing them with standard AWS security benefits. The machine learning models process contextual information to serve relevant advertisements, while measurement occurs within AWS Clean Rooms.
The service is currently available to multi-brand retailers in the United States with operational e-commerce sites or applications. Amazon has indicated plans for expansion but has not announced specific timelines or markets.
This development represents a significant expansion of Amazon's advertising technology offerings, potentially reshaping how retailers approach digital advertising implementation and management. The long-term impact on the retail media landscape and existing advertising technology providers remains to be seen as the service moves beyond its initial beta phase.