Amazon's Next Move to Boost Its Advertising Business

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Amazon's (NASDAQ:AMZN) advertising business had a stellar 2018, more than doubling year over year to reach about $10 billion. Analysts don't expect much of a slowdown in 2019, with expectations of greater than 50% growth (i.e., the same amount on an absolute basis).

But some analysts have already raised concerns that the online retail giant is reaching the point where increasing the number of ad units it shows could negatively impact the shopper experience. Amazon's solution is to focus on delivering greater value to advertisers. Its latest product to do so is a mobile video ad unit within its app. The company is currently testing the product in its iOS app with plans to expand to Android this year, according to Bloomberg.

These mobile video ads could be pivotal to the continued growth of Amazon's advertising business.

Amazon's advertising challenge

Amazon was able to quickly grow its ad business to $10 billion in revenue thanks to the massive amount of traffic its website generates. Amazon garners nearly half of all internet product searches. It also has built-in base of advertisers, as it serves millions of third-party merchants and vendors all selling their products on its marketplace. Amazon easily filled its sudden surge in ad inventory.

But Amazon can't just keep adding more ads to every product search results page. The challenge is even bigger on mobile, where screen real estate is limited.
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