Amazon (NASDAQ:AMZN) has introduced its Retail Ad Service, a platform designed to enable retailers to integrate targeted advertisements into their digital storefronts effectively. Powered by Amazon Web Services (AWS), the solution allows ads to be displayed on product, search, and browse pages, while transactions continue on the retailers’ own websites. This approach could appeal to retailers aiming to maintain control over customer experiences while leveraging Amazon’s advertising infrastructure. Additionally, the service is currently in beta testing with retailers such as iHerb and Oriental Trading Company, positioning it as a competitor to similar offerings, such as Walmart Connect.
How does this feature work?
Amazon’s Retail Ad Service utilizes AWS’s technological capabilities to streamline the advertisement process. Retailers can host various ad formats, including sponsored product listings, allowing them to monetize their platforms further. Unlike other advertising platforms that keep transactions within their ecosystems, this service offers retailers the flexibility to integrate advertisements without redirecting customers offsite. By sharing ad revenue, Amazon encourages retailers to adopt the platform, potentially broadening its influence in the retail media sector.
How does this compare to Walmart Connect?
Similar to Amazon’s offering, Walmart Connect enables advertisers to target consumers via placements like sponsored products, display ads, and video advertisements across Walmart’s online ecosystem. However, Walmart’s platform primarily focuses on in-store and internal ecosystem ads, while Amazon’s approach extends to external third-party websites. Experts suggest that each platform’s suitability depends on a retailer’s specific audience and technological infrastructure preferences.
Amazon’s entry into retail media isn’t entirely unprecedented. In earlier years, the company had explored ad formats within its own ecosystem. However, this new service marks a shift toward enabling external retailers to utilize Amazon’s ad framework, potentially reshaping how retail media services operate. Concurrently, Walmart has continued to refine its advertising strategies, with Walmart Connect emphasizing the integration of in-store promotions not provided by Amazon.
Industry experts have weighed in on this rivalry. According to Bellamy Grindl, founder of Retailytics, Amazon’s expertise in personalizing advertisements through advanced algorithms offers a competitive edge. Grindl explained,
“Amazon’s Retail Ad Service can integrate seamlessly within its broader ecosystem, which could be an advantage for retailers aiming for broader reach.”
Similarly, Greg Zakowicz from Omnisend highlighted the value of Amazon’s ability to target consumers across multiple platforms, stating,
“Giving brands the ability to target shoppers while they compare stores adds significant value.”
Amazon’s approach also raises questions about data usage. Analysts speculate that the service might leverage off-site shopping behavior, combining it with Amazon’s first-party data to deliver more personalized advertisements. This use of data could further align consumer experiences across platforms.
The competitive landscape between Amazon and Walmart continues to evolve. Walmart recently partnered with IBM to improve its last-mile delivery solutions, while Amazon expands its efforts into retail-focused advertising. Each company’s moves reflect a broader trend of technology-driven solutions in e-commerce and retail media.
Retailers evaluating these platforms may assess their specific needs, such as audience reach, ad personalization, and ecosystem compatibility. While both Amazon and Walmart offer robust capabilities, decisions will likely depend on the alignment of these services with retailers’ unique operational goals and technological configurations. Understanding the nuances of each platform can help brands strategically position their advertising efforts for maximum impact.
