Amazon Makes Millions of Dollars Thanks to Consumer Brands

A lot of people are familiar with a feeling when they search for “toothpaste” on Amazon, and the top of the page will show them a mix of popular brands like Colgate or Crest. It is quite easy to notice that those listings are advertisements with “sponsored” label affixed to them. The e-commerce giant is generating hefty revenue from the top consumer brands because getting valuable placement on Amazon comes with a rising price tag.

For people looking for toothpaste on Amazon, getting to unpaid results requires two full swipes up on the mobile app. Until recently, the e-commerce giant put two or three sponsored products at the top of search results. 

However, now, there may be as many as six sponsored products that appear ahead of any organic results, with more promotions elsewhere on the page. The number of ads that appear on the biggest e-commerce site differs depending on the exact search term and other factors.

The company traditionally does not break out advertising revenue, ads account for the majority of Amazon’s “other” sales. The category stated above was the fastest-growing part of the company’s overall business in the second quarter. The revenue jumped 87% from a year earlier to more than $7.9 billion.

Amazon and its competitors

The company leapfrogged Microsoft to become the third-largest ad platform in the U.S. in 2018, trailing only Google and Facebook. It is capitalizing on its market control, knowing that its website or app is where many consumers begin their online shopping journey. 

Amazon as well as its founder billionaire Jeff Bezos completely transformed from being anti-advertising. The company generates a lot of money from ads, and it replaced most of the functionality on the site. 

The company’s spokesperson said there are no dedicated ad slots within search results. That means a user may see one ad, multiple ads, or none at all. According to the company, advertising is an optional service for brands and sellers. But ads can improve the visibility of their products. 

Famous consumer products are not the only ones taking up the most valuable virtual real estate. The e-commerce giant is also populating search results with its own products. For instance, a search for “shampoo” pulls up a promotion for a bottle of Amazon brand Solimo before ads for products from Pantene, L’Oreal, and others.