Amazon Is Quietly Building a Massive Advertising Business
Key Takeaways
From an analytical perspective, For years, Amazon's (AMZN -0. 33%) story has centered on e-commerce and cloud computing. But another engine is gaining speed -- one that's high-margin, fast-growing, and...
Article Overview
Quick insights and key information
5 min read
Estimated completion
real estate
Article classification
July 28, 2025
05:23 AM
The Motley Fool
Original publisher
From an analytical perspective, For years, Amazon's (AMZN -0. 33%) story has centered on e-commerce and cloud computing
But another engine is gaining speed -- one that's high-margin, fast-growing, and still underappreciated (this bears monitoring)
Moreover, What makes this so powerful is its strategic position at the intersection of intent, data, and transaction
On the other hand, With Prime turning on ads, Amazon is unlocking a powerful new layer of monetization, given the current landscape
Additionally, This new isn't just an additional revenue
Nevertheless, It's a strategic opportunity, and it could significantly reshape Amazon's long-term outlook
Image source: Getty Images
Why advertising makes perfect sense for Amazon Founded as an online bookstore, Amazon has evolved into a massive conglomerate with multiple engines (something worth watching), in light of current trends
One of the most mising of these es is Amazon Ads
Advertising makes strategic sense for Amazon because it leverages what the company already does best: capturing intent and converting it into action (an important development), considering recent developments
That creates rare, high-intent digital real estate that brands are eager to pay for
Amazon doesn't need to build new traffic sources or create new content -- it simply monetizes what's already happening on its platform, in light of current trends
Besides, what sets Amazon apart is closed-loop attribution, marketing speak for tracking every part of the customer's experience with an ad
It doesn't just show ads; it sees what converts -- down to the duct, basket size, and reorder frequency
That makes its ad platform one of the most efficient in the world
So, at the core of Amazon's ad model is the ability to monetize consumer intent using vast amounts of shopping, and behavioral data (something worth watching)
It's part of the broader retail media trend in which retailers use first-party data to help brands target customers more effectively than traditional platforms can (this bears monitoring), in this volatile climate
Amazon's scale and data make it one of the most powerful players in this space
Amazon Ads by the numbers Amazon's advertising arm isn't just a side hustle; it's becoming a significant driver of revenue growth, in light of current trends
Nevertheless, In 2024, Amazon generated $56 billion in advertising revenue, an 18% increase from the prior year
That makes it the third-largest digital advertising company in the world, behind only Alphabet's Google and Meta Platforms
This analysis suggests that momentum continued in the first quarter of 2025, when Amazon Ads generated $13. 9 billion, an increase of nearly 18% year over year, while total company revenue rose by just 9%
That gap highlights how advertising is scaling up faster than Amazon's traditional, considering recent developments
While Amazon doesn't break out ad fitability, this carries an operating margin higher than its e-commerce or logistics operations (an important development), amid market uncertainty
In other words, advertising will gradually raise the company's operating margin over time (noteworthy indeed)
Looking ahead, marketing consultancy WARC jects that Amazon's retail media ad revenue could exceed $67 billion this year and reach $79 billion by 2026 (quite telling)
On the other hand, If Amazon Ads can sustain this momentum, it won't be long before advertising becomes a $100 billion
Where Amazon Ads goes from here Amazon's advertising may already be substantial, but it's still in the early stages of development
The bedrock of Amazon Ads consists of sponsored ads tied to high-intent shopping behavior
As long as the e-commerce continues to grow, the advertising will also expand
However, Amazon is expanding well beyond its e-commerce duct pages to other parts of its ecosystem
One key growth driver is ing (noteworthy indeed)
In 2024, Amazon introduced ads into Prime, instantly gaining access to more than 200 million viewers worldwide
Bank of America jects that Prime could generate $3. 5 billion to $5 billion in ad revenue in 2025 (noteworthy indeed), given the current landscape
Combine that with Twitch, Fire TV, and sports, and Amazon could build one of the most valuable connected TV ad platforms in the market
Additionally, But Amazon isn't stopping there
Its new Retail Ad Service initiative opens up its ad nology to other retailers, turning internal tools into a software-as-a-service (SaaS)
This's similar to how it ext its internal cloud computing expertise to external users, building the massive Amazon Web Services (AWS)
In other words, as more ad formats roll out and more advertisers join in, Amazon's ad flywheel will continue to spin, building a comprehensive advertising ecosystem that encompasses every part of the consumer journey
What this means for investors Amazon may be best known for its e-commerce and cloud computing es, but its advertising is quickly becoming a significant force
If the momentum continues, ads could become one of Amazon's most valuable fit engines: high-margin, fast-growing, and deeply strategic
However, If you're a long-term investor, this is a segment worth watching closely, as it will affect your decisions Amazon (noteworthy indeed).
Related Articles
More insights from FinancialBooklet