How Retailers Became Ad Platforms

by Sebastian Gabel, Duncan Simester and Artem Timoshenko

June 17, 2024

HBR Staff/Artur Debat/fotograzia/Getty Images

Summary.

A rapidly growing number of major retailers are today creating and operating their own advertising platforms — a phenomenon widely referred to as retail media. Nobody has had more success in the space than Amazon, which in 2023 earned $46.9 billion from advertising, comprised primarily of sponsored ads on its site. This figure exceeds the annual global revenue of Coca-Cola and makes Amazon the third-largest advertising platform in the United States, behind only Google and Facebook.

Sebastian Gabel is an assistant professor of marketing at Erasmus University. His research focuses on developing deep learning for targeting applications in retailing. Prior to his academic career, Sebastian co-founded a retail-media services company that was sold to the Schwarz global retail group.

Duncan Simester is the NTU Professor of Marketing at the MIT Sloan School of Management. His research focuses on marketing strategy, go-to-market strategies, and the use of artificial intelligence and experiments to improve business decisions. He regularly consults with companies on these topics.

Artem Timoshenko is an assistant professor of marketing at the Kellogg School of Management, at Northwestern University. His research focuses on applications of AI to marketing analytics and customer insights.

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How Retailers Became Ad Platforms

Summary.

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