Amazon’s business unit that primarily consists of advertising revenue registered another booming quarter this summer, growing to nearly $2.5 billion in sales during the three-month period, as Amazon announced yesterday in its third-quarter results.
The ad division’s fat profit margin — analysts estimate it could be as large as 75 percent — is a big reason why Amazon posted its largest quarterly profit ever in the third quarter. It’s also a big reason why the slowing growth of Amazon’s core online retail business isn’t a giant story in tech right now.
But Amazon’s ad business, for all its glitz and hype, does not come without significant risk: Namely, that an over-reliance on ads will ruin the Amazon shopping experience.
It’s already ruined. It’s been some time since search results on Amazon are helpful. If I search for, say, an author, I get one or two of their books, then ads for random self-published romance novels, then another book by the author, then more ads. If I click one of the books to view its page, I see more ads on the page. It’s the same for all types of products. When I look for something on Amazon now, I have to know what I want and by what brand. They’re killing the site.
Another example: I just searched for baking powder on Amazon UK. I wanted to buy some in bulk because it’s cheaper. The first two results are sponsored results for “Matcha green tea powder,” nothing at all what I’m looking for. They’re probably looking for “powder” as the keyword, which is, quite simply, stupid. Further down the page I get “No Egg (Egg Replacer),” then stevia, then face powder and silicone ice cube trays. Also lots of bicarbonate of soda, which, while close, is not what I’m looking for. Out of 22 results, only ten match my search. (Here is a link to the page; I’m not sure if everyone’s search results will be the same, or whether some of this has to do with my Amazon purchases.)
Source: Amazon’s ad business is both alluring and dangerous – Recode