Strategic Advertising Growth

Amazon's advertising business has hit a financial milestone, driving its growth to record levels. In the second quarter of 2025, advertising accounted for a historic 9.36% of the company's total revenue, generating $15.69 billion in quarterly income. This segment is projected to surpass the 10% mark of total revenue at some point in 2025, with expectations to exceed $60 billion in revenue for the entire year.

The 22% growth in the second quarter of 2025 solidifies its position as the fastest-growing segment for the second consecutive quarter and the fourth time in the last six quarters, matched only by AWS. The record growth of Amazon's advertising business isn't just an indicator of success; it reveals a fundamental transformation in the digital retail economy. Advertising, with its high-profit margins, has become the financial engine that subsidizes and makes Amazon's retail operation viable, which would otherwise be less profitable. This sets a new standard for e-commerce: the ability to monetize the audience through ads is as crucial as direct product sales. Retail companies that fail to develop a robust "retail media" strategy risk being left behind in profitability and investment capacity. The dominance of search ads on Amazon's results pages implies a growing challenge for organic product visibility. As more advertisers invest in the platform, competition for ad space intensifies, which could lead to an increase in cost-per-click (CPC) and a decrease in return on investment (ROI) for less sophisticated advertisers. This creates a barrier to entry for smaller brands and forces all companies to invest more in digital marketing strategies to maintain relevance in the Amazon ecosystem.

Recommendations

• Development of Retail Media Optimization Tools: For companies that sell on Amazon or other retail platforms with advertising models, it is recommended to invest in the development of Artificial Intelligence and data analysis tools to optimize retail media campaigns. This includes bid automation, advanced audience segmentation, and sales attribution to maximize the return on advertising investment. For Amazon, it is crucial to continue innovating in ad formats and segmentation capabilities to maintain its competitive advantage.

• Diversification of Audience Monetization Channels: Companies with large user bases and digital platforms, such as media outlets, social networks, or even other e-commerce platforms, should consider creating their own advertising networks, inspired by Amazon's success. This involves investing in ad-tech technology, advertising sales teams, and first-party data monetization. For Amazon, it is strategic to continue its expansion through partnerships with platforms like Roku and Disney to extend its advertising reach on connected TV and other channels.