Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

Hard Criticism for Amazon’s Advertising

July 17, 2019 By Jeremy Jones, CFA

By Avigator Fortuner @ Shutterstock.com

Shira Ovide, writing at Bloomberg, unloads some harsh criticisms of Amazon’s advertising business. Ovide explains that the option has become a toll that producers must pay in order to get their products in front of customers. She concludes:

To be fair, Amazon is doing a lot of work for its cut of sales. It provides a vast customer base for merchants, often stores inventory for them and handles shipments, and takes responsibility for customer service and payments. That’s arguably far more work than Apple does for its 30% commission on a purchase of an iPhone game. 3

And all advertising is, in a way, a toll levied by a powerful distributor. Businesses buy ads on Facebook and Google to ensure their products and services don’t get drowned out by a sea of other information. Frito-Lay pays a supermarket extra to ensure its chips are on visible spots on shelves. Alibaba and eBay sell ads similar to those that Amazon offers to merchants. There’s nothing particularly unusual about what Amazon is doing in carving out room for merchants to market themselves, for a fee.

But there is also something perverse about paying Amazon a kind of  tax to make sure your product is seen on Amazon, so people will buy the item on Amazon. Even Google’s ad empire isn’t this kind of a closed loop. And if one Amazon merchant doesn’t purchase an ad, one of its competitors’ dog beds — or Amazon’s own brand — might instead nab an eye-catching display and wrest a sale instead. Amazon is just different, in a way that makes typical business tactics a little icky.

Amazon’s growing cut from its merchants is one reason why the company’s revenue is increasing more quickly than its merchandise sales. Amazon is extracting a bigger share for itself. Like other powerful tech companies, Amazon is able to charge more to the partners that rely on it, because they don’t really have a choice.

Read more here.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Amazon Keeps Expanding
  • Kroger Gunning for Amazon
  • Amazon Establishes Foothold in Big Box Retail with Best Buy Partnership
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #5 in CNBC's 2021 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • Avoid This Serious Tax Mistake in Retirement - July 6, 2022
  • Could Car Dealers Get Flooded with Cars Mid-Recession? - July 5, 2022
  • Despite Inflation, Best Year Ever for Vacation Demand - July 1, 2022

Search Young Research

Most Popular

  • Here’s Why You Need a 15-Year Retirement Investment Plan
  • Why Work When Taxes Take It All?
  • Even Without Food and Gas, Inflation is Soaring
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • Are Google, Amazon, and Microsoft About to Crash This Specialized Real Estate Market?
  • Avoid This Serious Tax Mistake in Retirement
  • The Power of a Compound Interest Table
  • What Happens to Your Passwords When You Die?
  • Time to Save, Troubles Dining Out, and Intelligence on Yellowstone
  • Red States Churning Out Jobs While Blue States Lag Behind

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • BIDEN OUT OF TOUCH: Will America See Recession, or Worse?
  • Your Average Joe – a Man Out of Touch
  • “Talk to Me, Goose!” Time Flies in Top Gun: Maverick
  • The Dangers of Politicizing the Federal Reserve
  • FOOD SHORTAGE: Four Reasons Farms Are Suffering
  • Rich Grandchild, Poor Grandchild
  • Facebook Braces for “Worst Downturn in Recent History”
  • Happy Independence Day
  • For Investors Who Want to Stop Worrying About a Market Crash
  • Breaking News: House Election Update

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2022 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.