The People vs. Amazon’s Sponsored Search Market
Think back to the last time you searched for something on Amazon. What came up at the top of the page? Let’s say you searched for “shampoo.” Likely, you were initially presented with a list of prevalent brands like Pantene, Garnier, and Dove. This is no coincidence.
Amazon has been increasingly incorporating ads into its search results as more and more big brands are willing to pay for placement. Their ad revenue is the fastest growing part of their business—hiking 87% from 2020 to 2021. This has led to concerns from smaller brands and business owners that the search results are becoming less relevant and that the user experience is suffering as a result. In addition, this has led to some criticism, as some believe that it undermines the search engine’s impartiality.
As a market leader, Amazon is an extremely strongly connected and influential node in the massive connected component network of the web. Many consumers begin their online shopping journey on Amazon.com, and the company has been able to capitalize on this market control with little to no competition. From 2020 to 2021, Amazon ad prices increased 86 cents to $1.27 per click. Despite rising ad prices, big brands are willing to pay more for Amazon placement than other platforms. Unfortunately for smaller companies, they cannot keep up with the toll and their listings increasingly continue to fall down the page. However, it is still being determined how long this will last, as users may eventually become frustrated with the increasing number of ads and start using other platforms instead.
Link to article: https://www.cnbc.com/2021/09/19/amazon-piles-ads-into-search-results-as-big-brands-pay-for-placement.html