Amazon does not need to know what you want to advertise to you , it already knows what you are about to buy. That is the structural advantage no other advertising platform can replicate: purchase-intent data captured at the moment of decision, tied to a checkout button, inside a closed ecosystem where the ad and the transaction happen in the same place. It is the reason Amazon’s advertising division is growing faster than any other line of business in the company.
Amazon does not break out advertising revenue separately in its financial reporting, instead including it within the &“Other&” category of the company&’s results. Industry analysts estimate that Amazon&’s advertising business generated between $60 billion and $70 billion in revenue during 2025, making it comparable to or exceeding the advertising revenue generated by individual segments of Meta. The business has been growing at double-digit rates year-over-year, outpacing growth in Amazon&’s core e-commerce business. As a proportion of Amazon&’s total revenue, advertising represents an increasingly important driver of profitability, as advertising typically carries gross margins in excess of 50 percent.
The Retail Media Network Model
Amazon&’s competitive advantage in advertising stems from its position as a seller of physical goods. Unlike Google or Meta, which sell advertising access to users, Amazon sells access to shoppers actively engaged in the purchasing process. Brands spend on Amazon&’s advertising platform to ensure their products appear prominently in search results and on product detail pages. Consumers browsing Amazon to purchase products see advertisements from competing brands. This context makes Amazon&’s advertising highly effective for driving direct sales, which is why brands allocate budgets to the platform.
PwC’s analysis of financial services trends through 2025 highlights the convergence of technology and media as a defining dynamic, with data-driven personalisation becoming the primary competitive differentiator.
Data from Statista’s digital market outlook shows that global digital spending continues to grow at double-digit rates, with mobile channels accounting for an increasingly dominant share of total transactions.
Amazon operates the largest retail media network in the world. The network includes multiple ad formats and placements: sponsored product ads that appear in search results, display ads that appear on product pages and other locations, and video ads that appear in Amazon Prime Video and other video properties. Amazon has expanded the platform to include off-Amazon retailers and media partners, allowing advertisers to reach audiences beyond Amazon&’s own properties.
The economics of retail media networks are attractive to retailers and to Amazon. Retailers benefit from incremental traffic and sales driven by online advertising. Advertisers benefit from the ability to reach consumers actively engaged in shopping. Amazon benefits from the ability to monetize traffic and consumer attention that would otherwise generate no revenue. The model has proven so successful that traditional retailers are developing their own advertising networks, creating competition for Amazon&’s dominance in retail media advertising.
Advertiser Base and Vertical Distribution
Amazon&’s advertising platform is used by brands across virtually every category that Amazon sells. The largest advertiser categories include consumer electronics, home and garden products, beauty and personal care, apparel and accessories, and food and beverages. Third-party sellers who use Amazon&’s Fulfillment by Amazon service are required to compete with both Amazon&’s own private label products and with other third-party sellers, creating a strong incentive to advertise on the platform.
Amazon&’s advertising platform has become essential infrastructure for brands selling on Amazon. Brands report that the cost of customer acquisition through Amazon advertising has been rising as competition for ad placements has increased. The result has been margin compression for some sellers, but also increased advertiser spending on the platform. Brands that do not advertise on Amazon report that their products are increasingly difficult to discover relative to competitors who are investing in paid placements.
Large multinational consumer brands use Amazon&’s advertising platform to reach end consumers directly and to ensure that authorized retailers selling their products on Amazon are competitive in search results and sponsored placements. This demand from large brands complements the demand from individual sellers, creating broad advertiser demand across the spectrum of product categories.
Technical Infrastructure and AI Optimization
Amazon&’s advertising platform relies on substantial technical infrastructure and sophisticated machine learning systems. The company uses AI-driven optimization systems to determine which products to display for each search query and which ads to display to each customer. These systems process signals about customer behavior, purchase history, product attributes and advertiser bids to make real-time decisions about ad placement.
Amazon&’s Data Exchange and advertising platform integrations allow advertisers to incorporate their own data and performance metrics into bidding strategies. Advanced advertisers use Amazon Marketing Cloud, a tool that allows them to analyze performance of their advertising campaigns using Amazon&’s compute infrastructure. This capability allows sophisticated advertisers to optimize their advertising spending and to understand which customer segments respond most effectively to their advertising.
Amazon has invested in converting advertising inventory across its properties into standardized formats that can be bought programmatically. This standardization has reduced friction in the buying process and has allowed advertisers to run campaigns across multiple Amazon properties using unified tools and reporting. The investment in advertising technology infrastructure provides competitive advantages that are difficult for competitors to replicate.
Geographic Expansion and International Growth
Amazon&’s advertising business has been expanding internationally as the company has grown its e-commerce operations in international markets. The company operates e-commerce platforms in numerous countries, and advertising has been added to these platforms as the company gains market share and attracts advertiser budgets. In some international markets, Amazon&’s advertising business is less mature than in the United States, indicating opportunity for growth.
The geographic distribution of Amazon&’s advertising revenue reflects the distribution of e-commerce spending across regions. North America generates the largest portion of revenue, followed by Europe. Asia-Pacific represents the highest-growth region, though Amazon&’s position in some major Asian markets like China and India is limited relative to regional competitors. The company has indicated that international expansion remains a priority, which should drive incremental advertising revenue growth.
Competition from Retailers and Other Platforms
Amazon faces increasing competition in retail media advertising from other retailers and from technology platforms. Walmart, Costco and other large retailers have developed their own advertising networks, allowing brands to reach their customers directly. These competitive advertising networks have attracted advertiser budgets that might otherwise have flowed to Amazon. Some analysts estimate that Walmart&’s advertising business has been growing faster than Amazon&’s in recent periods.
Amazon also faces competition from non-retail advertising platforms. Google and Meta continue to compete for advertiser budgets, offering access to users at different points in the purchase journey. Amazon&’s advantage is that it reaches users actively engaged in purchasing, while Google and Meta reach users in earlier stages of the purchasing journey. Different advertiser objectives,awareness, consideration, conversion,are better served by different platforms, creating segmentation rather than winner-take-all competition.
Margin Profile and Profitability
Amazon&’s advertising business carries substantially higher gross margins than the company&’s retail business. Industry estimates suggest gross margins in the advertising business exceed 50 percent, compared to low single-digit margins on retail sales. This margin profile has made the advertising business increasingly important to Amazon&’s overall profitability. The company has stated that expanding high-margin revenue streams like advertising is a priority, indicating that the company intends to grow advertising revenue faster than revenue from its lower-margin retail business.
The profitability of Amazon&’s advertising business has attracted investor attention and has been reflected in the company&’s valuation. Investors view advertising as a more defensible revenue stream than e-commerce, which faces commodity pricing pressure and significant competition. Amazon&’s dominant position in retail media advertising provides a source of revenue that is difficult for competitors to displace.
2026 Strategic Priorities
For 2026, Amazon&’s advertising business priorities include expanding advertising placements across Amazon&’s properties, including Amazon Prime Video and other digital properties; improving measurement and attribution for advertisers using Amazon&’s platform; and expanding the breadth of advertiser types using the platform. The company is also investing in international expansion of its advertising business, particularly in Asia-Pacific regions.
Amazon&’s role as one of the three largest advertising platforms globally,alongside Alphabet and Meta,provides a stable foundation for continued revenue growth. The company&’s position in e-commerce and retail shopping provides a structural advantage that is difficult for competitors without similar e-commerce positions to replicate. As e-commerce spending continues to grow, and as brands increasingly use advertising to reach consumers during the shopping journey, Amazon&’s advertising business is expected to continue its rapid growth trajectory. The company operates within a retail media advertising market worth approximately $69 billion globally, with significant opportunity for expansion as brands recognize the effectiveness of reaching consumers during active shopping moments.
