Every marketplace will become an advertising business
Featuring Amazon's $47 billion advertising business, Alibaba, Uber, and Walmart
It seems like every marketplace around the world has added an advertising division to their business, and for some, it’s quickly becoming a significant source of revenue — see image below.
In this article, I’ll explore why advertising is such an attractive and lucrative revenue stream for marketplaces. I’ll also spotlight examples from Amazon, Uber, Walmart, Alibaba, and Mercado Libre, showcasing how they have successfully turned advertising into a cash cow.
Why advertising is perfect for marketplaces
Low cost, high margins
All things considered, the costs for a marketplace to launch an advertising business are relatively low, making it a profitable, high-margin revenue stream. Especially when compared to the investment required to say expand into a new country or adjacent market.
First-Party Data Advantage
Apple's App Tracking Transparency (ATT) and the phase-out of third-party tracking dealt a significant blow to the online advertising industry, in particular Meta which estimated a potential loss of around $10 billion in 2022 as a result of ATT.
This seismic shift has heightened the importance of first-party data — which marketplaces happen to have in troves. They know exactly what users want, when they want it, and how much they’re willing to spend. This rich data gives them a unique edge in the ad market, allowing for more effective advertising and closed loop attribution.
Right audience, right time
Most online ads work by interrupting a user’s attention — think Instagram, where an ad pops up every second or third post as you scroll through your feed.
Marketplace ads, however, have a unique advantage: they reach the right audience at the right time, particularly at the point of conversion.
Imagine you have a matcha company and you sell on Amazon. By running search ads targeting users who are typing in the keyword “matcha,” you're not only hitting your ideal audience but also at the ideal time — when they are looking to purchase.
Amazon
Amazon is the clear leader in marketplace advertising. The eCommerce giant launched its advertising division back in 2012 and has maintained its lead, with ad revenue projected to reach a $50 billion annual run rate by mid-2024. In Australia, Amazon's advertising revenue grew by 50% year-over-year, reaching $153 million.
Amazon ads come in a variety of options — see image below.
While Amazon’s advertising business has been a cash cow, customers have started voicing frustration over sponsored ads cluttering their user experience.
Returning to the matcha example, you’ll notice that the first four products displayed are all sponsored, with Matcha Maiden paying for a sponsored brand ad at the top of the page.
Uber
Although Uber only formally launched its advertising division in 2022, the ride-sharing giant reached $1 billion in ad revenue by 2024 — two quarters ahead of schedule. What stands out about Uber Advertising, aside from its explosive growth, is its ability to offer access to two distinct audiences through the Uber and Uber Eats apps.
With Uber Eats, there are:
Sponsored Listings - which allow restaurants to feature more prominently when a consumers is looking to order.
Post-Checkout Ads - which comes in 3 different types (display, video, interactive) and shows up in app as consumers are checking for an update on their order.
As for Uber, there are:
Journey Ads - which also features the same 3 types as above and appear in app.
JourneyTV - which is essentially in-car tablet advertising.
Because of Uber’s powerful first-party location data, advertisers can create hyper-targeted campaigns. For example, a travel company could target passengers en route to the airport, while a fast food chain could run breakfast ads during early morning rides.
Alibaba
Alibaba pioneered marketplace advertising with the launch of its platform, Alimama, in 2007. This platform enables companies to place ads across Alibaba's ecosystem, including Alibaba.com, Tmall, and Taobao. While Alibaba doesn't disclose exact figures for its advertising revenue, its CFO, Maggie Wu, once revealed that 60% of the company’s revenue was attributed to Alimama. In 2021, it was estimated that Alimama generated over 100 billion RMB ($14.11 billion USD).
Alimama not only has massive 20 different ad solutions — see image below. It has also fully embraced AI with virtual influencers and AI copywriters.
Mercado Libre
Over in Latin America, the e-commerce market is dominated by Mercado Libre, which operates in 18 countries across the region.
In 2023, the marketplace’s advertising services revenue reached $716 million, a substantial jump from $448 million it generated in 2022. If Mercado Libre can maintain it’s growth trajectory it will be on track to generate over $1 billion in advertising revenue for the first time in 2024.
Even more impressive is the company’s market share of more than 50% in Latin America, dwarfing the likes of Amazon and Walmart.
Walmart
Walmart Connect, the advertising arm of Walmart, achieved global revenue of $3.4 billion, marking a 28% increase from the previous year. This growth trend has remained consistent, with Walmart's advertising business reporting an impressive 30% year-over-year growth for fiscal Q2 2025.
The remarkable expansion is fueled by Walmart Connect’s diverse range of advertising solutions and its proprietary closed-loop measurement system.
Of the different advertising formats offered by Walmart Connect, the in-store ads are the ones that piqued my interest as they offer a unique advantage over online-only competitors like Amazon.
In-store ads include:
TV Wall ads
Self-checkout ads
Pickup & Delivery Sampling
In-store Demo
Live Events
In-store Audio ads
According to this analysis by Pacvue, Walmart is significantly outperforming Amazon in several key metrics, including cost per click, click-through rate, and return on ad spend.
While Amazon is currently the undisputed leader in the US (see chart below), I do believe that if Walmart can maintain it’s stellar performance metrics, it can slowly but surely steal significant market share from Amazon.
Final thoughts
With all of these marketplaces experiencing record breaking revenue growth, one might be wonder if an incumbent is losing market share as a result. It seem that loser would be Google, with the search giant acknowledging that digital ad budgets are increasingly moving towards Amazon.
As I’ve written in my previous article, Google is grappling with The Innovator's Dilemma when it comes to AI. To make things worse, it’s now also dealing with competitors on it’s home turf — digital advertising.
Things that caught my attention
Six Popular Growth Tactics … That Don’t Actually Work from
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Netflix’s hit show Chef’s Table is back, this time focusing on noodles - watch the trailer here.
LinkedIn growth experiment pt II: Company pages from
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Love the matcha example