As Amazon's ad business surges, some advertisers worry they are giving it the data and market power it needs to eventually run them out of business
Context & Ripple Effects
This story lands mid-arc: Amazon had already signaled its ad ambitions by planning expanded search and video offerings plus off-platform sales for 2018 (2018 ad expansion plans), and was testing display ads that let merchants buy spots across other sites while pulling back from Google shopping ads (off-platform display test). Two months later, the New York Times reported even non-endemic advertisers like Verizon, AT&T, and Geico were ramping buys into what it sized as an $88B online ad market ($88B online ad push).
The worry NBC surfaces is structural rather than cyclical: every dollar an advertiser spends on Amazon ads hands Amazon more purchase-intent data about that advertiser's own customers. The subsequent revenue disclosure — $31.2B for FY2021, broken out for the first time (first ad revenue breakout) — confirmed the business had scaled into a third pillar alongside retail and AWS.
First-order effects
- Advertisers face a bind: the channel with the richest purchase data is owned by a competitor that can use their spend and signals to sharpen its own first-party retail and private-label decisions.
- Amazon's off-platform display push moves the contest onto Google's turf, since merchants buying Amazon placements across other sites are dollars Google would otherwise capture.
Second-order effects
- Google and other incumbents must respond to a rival whose targeting improves automatically with each transaction on its marketplace — a data advantage ad spend alone cannot replicate.
- Brands that don't sell on Amazon but buy its ads (the Verizon/AT&T/Geico pattern) deepen Amazon's reach into brand budgets, pressuring agencies and ad tech intermediaries like Kargo that sit between buyers and platforms.
Third-order effects
- If the pattern holds, advertising consolidates around platforms that own both the customer relationship and the transaction data, turning advertisers' own media budgets into the funding mechanism for their largest competitor.
- The 2024 Prime Video ad launch shows the endgame: extending Amazon's ad inventory to streaming audiences lets it court large brands that still don't sell on the marketplace (Prime Video ads challenge), converting entertainment into another data-and-demand funnel.
The trend: Digital advertising is consolidating around vertically integrated platforms where media buying, transaction data, and retail competition live under one roof — with Amazon's ad growth the clearest case of advertisers bankrolling their own biggest threat.