To be clear, it's existed and been growing very quickly for awhile. But last week, the segment hosted its very own conference, called AdCon 2019 -- signaling that the company is serious about spreading the word.
Over the past year, Amazon has steadily rolled out new tools and updates to its ad offerings, which now include display ads, a marketer dashboard and, more recently, sponsored products for vendors, which debuted just last month. And the sky's the limit in terms of ad space, according to Melissa Burdick, president at Pacvue and former product manager in Amazon's display ad division.
"Amazon essentially has limitless space, with millions of new products entering the platform generating millions of new detail page ad placements," Burdick wrote in an email. "The issue in my mind is that now advertisers will have many new ad creative formats to create (that they probably don't already have) and also decide where best to invest their ad dollars."
The multiplying slate of ad tools create a learning curve and a need for education on how to best leverage the new ad options and formats. That's where conferences come in handy.
"The event was beneficial in that it highlighted Sponsored Brands, which seems to be where Amazon is really putting the focus," said Derek Demeo of ecommerce software firm SureDone, who attended the AdCon event. "The takeaway is that to get further brand exposure, sellers should plan to budget for that advertising going into 2020."
Sponsored Brands are part of a recently introduced set of ad options, and Amazon spotlighted several brands, such as mattress seller Tuft & Needle and, that have used Amazon advertising to generate demand for their products.
"Amazon has built a $10B direct-response advertising business practically overnight. But the AdCon event in Seattle last week illuminated Amazon's ambition to move up the funnel and establish itself as the best platform on which to build a brand," added John T. Shea, chief growth officer at Teikametrics, one of the event's sponsors.
Amazon's efforts are expected to pay off nicely: Amazon's ad segment is poised to grow by 50% this year, according to eMarketer.
Those looking for Amazon's next big growth driver are paying close attention to how it evolves.
Analysts view Amazon advertising as a potentially enormous opportunity coupled with high margins and years of strong growth ahead. In terms of market share, Amazon (9%) is still a distant third to Google (GOOGL - Get Report) (37%) and Facebook (FB - Get Report) (22%), according to projections by eMarketer. But Amazon is different in that it doubles as an ecommerce site and a massive search engine for products -- meaning that people visit Amazon with the deliberate intent of making purchases, and their payment details at the ready.
"We are seeing more and more brands and retailers moving to Amazon, because they know that's where the consumers are," Dani Nadel of Feedvisor told TheStreet earlier this year.
It's a compelling proposition for investors as well.
In its second-quarter earnings release, Amazon posted 37% growth in its "Other" segment, which primarily includes advertising services, and quarterly revenue of $3 billion for the segment. It also has a highly attractive margin profile that could improve over time, noted to PiperJaffray analyst Mike Olson in a report published last year. Placing the segment's operating margin at between 60% and 70%, he estimated that Amazon's advertising could exceed its Amazon Web Services (AWS) cloud-computing business as a profit contributor by 2021.
"Amazon, more than any other digital company, may have a direct line of sight on the multi-billion dollar 'trade promotion/merchandising' budgets of many marketers," Olson wrote.