Amazon ramps up ad spending amid rising competition

Jeff Bezos’ Amazon has reportedly boosted its ad spending in May, an unprecedented increase after slowing it down at the beginning of the coronavirus pandemic.

It looks like Amazon is ready to fully dominate the e-commerce industry again after it slashed its ad spending due to coronavirus-related demands. Regardless of whether it is because of the rising competition between other e-commerce giants, analysts say the company is “in a better position.”

Amazon spends more on ads

As per the newly issued data from ad-tracking firms such as AdAdage DataCenter and Kantar, the e-commerce giant has pumped more money on advertising two months after the coronavirus spread around the globe.

Kantar, for example, said the company spent an estimated US$144 million in May, a massive increase from April’s $101 million. It is still below pre-pandemic levels, however, with January’s ad spending reaching a total of $192 million. Kantar does not track social media ad spend, too.

The retail giant has focused its ad spending on its core retail businesses, according to the data, which includes Amazon Prime, Amazon.com, and Whole Foods. It also allotted money for its media services too.

Amazon ramps up ad spending amid rising competition

Instagram got the biggest boost, unlike other social media sites. Per the Pathmatics’ report, the company paid $9 million in May and $22 million in July for Instagram ads. It also paid an estimated $19 million for advertising its streaming services Amazon Music Prime and Prime Video.

The retail e-commerce giant is also last year’s top marketer in the U.S., spending an estimated $7 billion.

Levine: ‘It is in a better position’

Following reports of its competitions like Walmart and Shopify getting a firmer foothold in the industry, the e-commerce giant’s move appears to signal it is losing against other e-commerce giants.

In a piece posted by The Motley Fool, it is said that the company “must be losing significant market share,” citing its slower growth compared to its rivals.

On the one hand, an analyst at Pivotal Research named Michael Levine argued that Amazon’s sudden increase in ad spending means that the company is doing fine. He explained that the e-commerce giant’s move suggests that its supply chain has now steadied after the pandemic disrupted it in March.

“If they cooled off on spend and are turning the gas back up, it says to me that they’re in a better position from a fulfillment perspective,” Levine told the Business Insider.

Images courtesy of Worawee Meepian/Shutterstock, CottonBro/Pexels

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