The ecommerce giant is starting a new Local Ads division that could be a boon to small businesses and a blow to competitors.
Amazon’s burgeoning ad business is already raking in tens of billions of dollars for the company annually, and it looks like that number’s about to get bigger. The e-commerce giant has begun quietly hiring for roles in a newly created Local Ads team, a move that will likely rankle some of its biggest competitors (read: Facebook and Google), Insider reported Wednesday.
This browser does not support the video element.
Like the name implies, Amazon is tasking this team with working alongside smaller, city-specific ad companies—the kind that run ads for local mom-and-pop shops or smaller local chains, the kind of ads you would see in a local newspaper. Insider’s report is largely based on a handful of job openings across cities like New York and Chicago for a new “Local Ads” team as well as interviews with Amazon employees. In postings like this one, Amazon calls the effort “a rare opportunity to join a start-up business” within the Amazon Ads team, and will help “create a brand new business and revenue stream for Amazon Advertising.”
Amazon’s ad biz makes up a tiny slice of the company’s mammoth revenues, but that slice is getting bigger by the day. Just over a year ago, the company told investors that its “Other” unit—of which ads is a major part—was pulling in roughly $7 billion per quarter. Then in 2022, Amazon announced in its first-ever report on its ad numbers that it pulled in more than $31 billion in ads alone over 2021.
Just to put that in perspective, Amazon’s 2021 ad profits alone were worth more than six times what Twitter’s entire platform pulled in that year. You could pay off the medical bills of close to 2.5 million Americans with that much cash. Amazon’s ad business is big enough that analysts in the ad space have mostly nixed talking about the Google-Meta ad duopoly in favor of talking about the Google-Meta-Amazon triopoly, since Amazon’s figures are quickly reaching those other giants’ caliber.
This Local Ads team seems to be a new gambit to eat more of those two companies’ lunches. Right now, the primary marketing on the platform—much to the chagrin of the average Amazon shopper—are sponsored search results. Those slots are becoming more and more expensive to buy, which means when you’re looking up something like “toothpaste,” you’re probably getting sponsored results from Crest and Colgate instead of a smaller brand.
So instead, those smaller brands go to other platforms—often Meta’s properties like Facebook or Instagram—to do that advertising instead. Meta is fully aware that these small businesses depend heavily on its platforms, and is fond of using that fact as a cudgel against competitors, or calls for regulation from lawmakers. At one point early last year, the company even rolled out a full ad campaign of its own (starring Grace Frickin’ Jones) just to remind people that small businesses rely on Facebook ads to reach customers.
So when Amazon says it’s going to target smaller, local advertisers with this new department, it’s not just a bid to start a new business wing for Amazon, and it’s not just a sign that Amazon’s looking to court the millions of small businesses that are still standing on shaky ground in our new post-pandemic hellscape. It’s a shot across the bow to its competitors, too.
We’ve reached out to Amazon about the listings and will update this story when we hear back.