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TL;DR: Have you noticed that there seems to be an increasing number of sponsored products at the top of Amazon's search results? You're not imagining it. The retail giant is showing users up to six of these items—it used to be two or three—and is charging companies more money to appear in the top slots.
There are a lot of items on Amazon, which is why many sellers are willing to pay for their goods to appear prominently in search results. CNBC reports that instead of the usual two to three sponsored products, users are now more likely to see five to six. In some cases, online shoppers using the mobile app have to swipe past two screens of results before encountering any unpaid listings.
Not only is Amazon showing more ads, but it's also charging companies extra for them. According to a survey of more than 300 Amazon sellers conducted by Canopy Management, the cost per click for search advertising on Amazon was $1.27 in August. A year ago, it was just 86 cents.
Which sponsored product to choose?
"It's not uncommon now for brands to be spending 50% or more of their product price on various fees to be selling on Amazon," said Marketplace Pulse's Juozas Kaziukenas.
The winner in all this, of course, is Amazon's bottom line. In its most recent quarterly report, the "other" sales segment, most of which is advertising, was the company's fastest-growing in Q2. Revenue was up 87% year-on-year to over $7.9 billion.
Two years ago, the formerly anti-advertising Amazon moved ahead of Microsoft to become the third-largest US ad platform behind Google and Facebook. eMarketer predicts it will control over three-quarters of the $24 billion e-commerce ad market by 2023.
In 2021, Amazon's 5.8% share of the worldwide ad revenue put it behind Ali Baba's 8.7%, with Facebook at 23.7% and Google on top with 28.6%.
Amazon told CNBC that it has no dedicated ad slots within search results, meaning users could see just one ad or even none. It said advertising is an optional service that helps improve products' visibility.