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| Amazon collects ads in search results |
Amazon makes huge profits with its big consumer brands because the best ads on the biggest e-commerce sites come at higher prices.
If you search the entire website for toothpaste, you'll see a range of popular brands like Colgate, Crest, and Comfort at the top of the page.
If you look carefully, you will see that these offers are advertisements that say "ads". There are less natural search results for the entire page. This means that the only way to gradually reach the page is through advertising.
For consumers searching for toothpaste through the website, accessing the unpaid results requires two full swipes through the mobile app.
Until recently, the company has been placing two to three sponsored products at the top of search results. But now up to six sponsored products can appear before the organic results, and there are other promotions elsewhere on the page.
The number of ads shown depends on the exact search term and other factors, such as whether the user is buying from a computer, mobile phone, or the company's app.
However, the company has not announced its advertising revenue. But ads make up the majority of the company's "other" sales. This category is the fastest growing part of Amazon's total business in the second quarter, with revenue increasing 87% year over year to more than $7.9 billion.
In 2018, Amazon overtook Microsoft to become the third largest advertising platform in the United States, after Google and Facebook.
The company is taking advantage of its dominant position knowing that many consumers start their online shopping journey with their own website or app.
The company has abandoned its anti-advertising stance. It has become a profitable business as advertisements have replaced most of the work across the site.
As competition grows, Amazon ad prices go up
An Amazon spokesperson said there are no personalized commercials in search results, which means users can see a single ad, multiple ads, or no ads at all.
The company stated that advertising is an optional service for brands and sellers. But using them can increase the visibility of their products.
Like all retailers, we design our store so that customers can easily find and discover the right brands and products. Paid advertising is one of the many methods we use. No matter how you show it to shoppers, we all want a more meaningful customer experience.
Not only the major manufacturers of consumer goods occupy the most valuable advertising space. The company also populates search results with its own products.
For example, a search for shampoo appears with an advertisement for a bottle of the brand Amazon Solimo. This is older than product versions from companies like Pantene, Nexxus and L'Oreal.
In the second quarter, sponsored product ads accounted for approximately 73% of the platform's total brand ad spend. Last year, the company began replacing product recommendations on the list with product ads.
It also adds new ad formats such as video ads and sponsored branded publications. The logo at the top of the page contains a brand and multiple product listings.
For brand owners, advertising prices will rise as the company builds its dominance in online retail. The cost-per-click on Amazon search ads was $1.27 in August, down from 86 cents at the same time last year.