Why Ecommerce Websites Should Have Display Ad On Their Site

Ecommerce websites should incorporate display advertisements for several key reasons that contribute to both direct and indirect business growth.

Supplemental Revenue Stream

Display advertisements provide ecommerce platforms with an additional source of income. As websites generate traffic, they can capitalize on their visitors by serving targeted ads. Many ecommerce platforms may not convert every visitor into a paying customer immediately, but they can still earn revenue through these ads. By leveraging partnerships with ad networks or directly selling ad space, ecommerce businesses can monetize non-converting traffic. This additional revenue helps offset operational costs, such as website maintenance, logistics, or customer support, without solely depending on product sales. In some cases, this can significantly improve overall profitability.

Understand Customers Better

Ecommerce websites can use display advertisements to strategically promote their own products or services. By highlighting new arrivals, best-selling items, or seasonal promotions, businesses can direct users to specific pages within their own site, effectively boosting internal traffic and increasing the likelihood of conversions. This approach not only enhances the visibility of their products but also provides control over the customer journey, ensuring that the most profitable or relevant products are prioritized. Furthermore, these internal ads can be customized and personalized based on a user’s browsing history or preferences, further increasing engagement and conversion rates.

Incorporating display ads can improve site analytics and customer insights. By tracking how users interact with ads, businesses can gather valuable data on customer preferences, behaviors, and trends. These insights allow ecommerce sites to refine their marketing strategies, product offerings, and website design to better meet customer demands. For instance, if an ecommerce platform notices that certain product categories receive high engagement through ads, it can prioritize those products for future promotions or adjust inventory to meet demand more effectively.

Display advertisements also play a pivotal role in customer targeting and personalization. Modern ad platforms allow businesses to serve personalized ads based on customer behavior, preferences, and purchase history. By analyzing user data, ecommerce websites can create highly relevant ad campaigns that not only cater to customers’ needs but also improve overall customer satisfaction. Tailored ads can remind users of items left in their shopping carts, promote related products, or offer special discounts, encouraging repeat purchases and fostering brand loyalty.

Proven Success with Major Players

Two of the most successful ecommerce giants, eBay and Amazon, have leveraged display ads to tremendous effect, demonstrating the potential of this strategy. Both companies use on-site display advertising as a way to drive significant supplemental revenue while maintaining their core focus on ecommerce.

Amazon’s Strategy

Amazon’s use of display advertisements has evolved into a highly sophisticated and lucrative strategy that significantly enhances both its revenue model and its ecommerce ecosystem. Amazon has developed a multi-layered approach to advertising, leveraging both internal and external ads to drive value. Here’s a detailed breakdown of how Amazon has effectively integrated display ads into its platform:

1. Advertising Ecosystem as a Core Business Arm

Amazon’s advertising business, primarily powered by Amazon Advertising, has become a central part of its overall strategy, generating tens of billions in revenue annually. As of recent years, Amazon Advertising has become the third-largest digital advertising platform in the U.S., behind only Google and Facebook. What started as a supplementary revenue stream is now a major contributor to Amazon’s profitability.

The foundation of Amazon’s advertising success is rooted in its massive user base and rich data ecosystem. Amazon can leverage the vast amount of data it collects on user behavior, purchases, browsing history, and preferences to create highly targeted and personalized ads. By analyzing user data, Amazon can ensure that ads shown are relevant to each visitor, increasing the likelihood of engagement and conversion. This capability is especially appealing to both external advertisers and sellers who want to reach highly specific audiences.

2. Supplemental Revenue via External Ads

Amazon allows external companies, brands, and advertisers to purchase display ad space on its platform. These ads appear throughout Amazon’s site in various forms, such as banner ads, product placements, and sponsored product listings. External advertisers, ranging from consumer goods companies to tech brands, bid for ad space to target Amazon’s highly engaged customer base.

For Amazon, this represents a significant revenue stream outside its traditional ecommerce sales. These external ads, powered by Amazon’s demand-side platform (DSP), allow brands to target consumers not just on Amazon but also across a wide range of websites and apps. The DSP enables advertisers to leverage Amazon’s first-party data to create powerful display ad campaigns, which extend Amazon’s ad dominance beyond its own site into the wider internet.

3. Internal Ads to Promote Third-Party Sellers and Own Products

Amazon uses a strategic mix of internal display advertisements to promote both its own products (such as Amazon Basics, Kindle, Alexa devices, etc.) and third-party sellers within the platform.

Sponsored Products and Sponsored Brands – These ads are often the most visible form of internal advertising on Amazon. When a customer searches for a product, the first several listings are usually “Sponsored” products, which are paid placements by third-party sellers or Amazon itself. This ad format allows sellers to improve the visibility of their products, increase sales, and capture valuable customer attention during critical shopping moments. Sponsored Brands allows brands to advertise collections of products with more prominent visibility in search results.

Display Ads for Related Products – Amazon uses display ads strategically throughout the customer journey to highlight related or recommended products. These ads might show up on product detail pages, in search results, or during checkout processes. For example, if a customer is looking at a camera, Amazon may show ads for complementary products like lenses, tripods, or camera bags. This kind of cross-promotion boosts the average order value and helps move inventory more efficiently.

4. Sponsored Display Ads (Retargeting)

Amazon also offers Sponsored Display Ads, a form of retargeting that allows brands and sellers to display ads to users both on and off Amazon. If a customer views a product on Amazon but does not make a purchase, Amazon can serve them targeted display ads for that product on external websites and social media platforms. This retargeting increases the chance of a customer returning to complete the purchase.

Amazon’s Sponsored Display Ads are particularly powerful because they target users who have already shown intent by engaging with specific products. The conversion rate for retargeted ads is typically higher than for standard display ads, making this an effective strategy for both Amazon and its sellers to boost sales.

5. Enhancing Seller Ecosystem through Advertising

For third-party sellers on Amazon, advertising is essential to gaining visibility and competing in the marketplace. The sheer volume of sellers and products on Amazon means that organic reach is often insufficient to drive significant sales, especially in competitive categories. By allowing sellers to purchase ads, Amazon empowers them to improve their rankings, gain visibility, and compete for customer attention.

Advertising also helps level the playing field for smaller sellers. Even if a business is relatively unknown or new to Amazon, it can use targeted advertising to reach specific demographics or customers who are highly likely to purchase its products. This creates a win-win situation – sellers boost their sales, and Amazon earns ad revenue while retaining a vibrant and diverse marketplace.

6. First-Party Data Advantage

One of the most significant factors driving Amazon’s success with display advertising is its access to unparalleled first-party data. Amazon knows not only what customers are buying but also what they are searching for, how they engage with product pages, and how often they visit the site. This gives Amazon a competitive edge over traditional display advertising networks.

This data is invaluable to advertisers, as it allows them to target potential customers with far greater precision. For example, if a customer frequently purchases pet products, advertisers can display ads for pet food, accessories, or even complementary services like pet grooming. The rich targeting capabilities ensure that ads are relevant, increasing the likelihood of clicks and conversions, which benefits both the advertiser and Amazon’s ad business.

7. Internal Product Promotion

Amazon strategically uses display ads to promote its own products and services across the platform. Products like Amazon Echo, Kindle, Prime Video, and Amazon Basics are prominently featured through display ads, especially during major shopping events like Prime Day or Black Friday. These ads help Amazon drive significant sales of its private-label brands, contributing to the growth of its product ecosystem.

Their ability to push its own products through internal ads allows it to create a self-sustaining loop, where the company generates revenue not only from product sales but also by boosting its own brands’ visibility via its own advertising network.

8. Global Reach and Scalability

Their advertising platform is not limited to a single country or region; it has global scalability. Sellers and advertisers can use Amazon’s advertising tools to reach customers across different markets, helping international brands enter new regions with targeted ads. This global reach amplifies Amazon’s value proposition to advertisers and sellers alike, as they can leverage a single platform to target audiences around the world with precision.

Learn From eBay

eBay has successfully integrated display advertising as a core part of its business model, leveraging both internal and external advertisements to enhance its marketplace ecosystem. Much like Amazon, eBay’s strategy focuses on generating supplemental revenue, boosting visibility for its sellers, and enhancing customer experience through relevant and targeted ads. Here’s a detailed look at how eBay uses display advertising effectively:

1. Diversifying Revenue Streams through Display Advertising

eBay, traditionally an ecommerce platform that earns revenue primarily from seller fees, has diversified its income streams by embracing display advertising. This helps offset the reliance on transaction-based fees and offers the company a more sustainable and flexible business model. With millions of daily visitors, eBay is able to monetize its traffic through advertisements, ensuring that even if a customer does not purchase an item, the platform can still generate income from their presence.

External Advertisers – eBay partners with third-party advertisers, allowing external brands to display ads to eBay’s audience. These ads may include banners, native content, and product listings that appear throughout the platform, whether users are browsing product categories or individual listings. External advertisers, from retail brands to tech companies, bid for this ad space, providing eBay with a consistent revenue stream independent of direct ecommerce transactions.

Ad Formats – eBay offers several ad formats for external advertisers, including display banners, sponsored listings, and native ads that blend seamlessly with the user experience. These ads are typically placed in high-visibility areas such as category pages, search results, and within item listings.

2. Promoting Sellers with Promoted Listings

One of the key features of eBay’s advertising ecosystem is Promoted Listings, which allows sellers to pay for increased visibility within search results and product categories. This is particularly useful for small and medium-sized sellers who might struggle to gain organic visibility due to the sheer volume of products and competition on the platform.

Boosted Visibility – Sellers bid for ad placements based on a cost-per-sale (CPS) model. In this model, sellers only pay when a sale is made through their ad. This is a win-win for both eBay and sellers—sellers get higher visibility without upfront costs, and eBay earns a commission on each successful sale made via promoted listings.

Placement in Search Results – Promoted listings appear at the top of search results, giving them prime real estate and increasing the likelihood of clicks and purchases. They are labeled as “Sponsored,” but are otherwise indistinguishable from organic results, allowing them to blend seamlessly with the user experience.

Enhanced Seller Experience – By using promoted listings, sellers can compete in highly competitive categories. For instance, a small electronics seller can boost their product’s ranking, placing it alongside large retailers and increasing the chances of making a sale.

This approach has proven highly effective for both eBay and its sellers, generating increased sales and better returns on investment (ROI) for sellers, while providing eBay with additional revenue streams.

3. Targeted Display Ads Based on User Behavior

eBay leverages its vast amount of user data to provide highly targeted ads to its audience. The platform tracks user behavior such as browsing history, past purchases, search queries, and interactions with product listings. This data is then used to display relevant ads, ensuring that users see promotions for items they are more likely to purchase or engage with.

For instance:

If a user has been browsing for smartphones, they may see display ads for phone cases, chargers, or other related accessories. This helps eBay increase average order values (AOV) while enhancing the user experience by showing products that align with their interests.

Retargeting – eBay uses retargeting ads to bring back potential buyers who may have visited a product page but didn’t make a purchase. These users will see ads for the product they viewed across eBay’s site or even on external websites and apps, encouraging them to return and complete the purchase. Retargeting has a higher conversion rate because it targets users who have already shown intent to buy.

4. eBay’s Focus on Seller Success through Advertising

A critical part of eBay’s display advertising strategy is its focus on empowering sellers to succeed. eBay has created a system where advertising benefits sellers by giving them the tools to increase their product visibility and compete more effectively in the marketplace.

Promoted Listings Advanced – eBay introduced Promoted Listings Advanced, a more granular version of its standard promoted listings, allowing sellers to bid on specific keywords and control their daily ad budget. This advanced advertising model is based on a cost-per-click (CPC) structure, similar to Google’s paid search ads. Sellers can set keyword targeting, ensuring that their ads appear for relevant searches, thereby increasing the precision of their ad spend.

Performance Data and Insights – eBay provides sellers with detailed analytics and performance insights for their promoted listings, allowing them to monitor the success of their campaigns and adjust their bidding strategies as needed. Sellers can track key metrics such as impressions, clicks, and sales directly attributed to their promoted listings. This level of transparency ensures that sellers can optimize their ad spend for maximum effectiveness, making eBay a more attractive platform for businesses of all sizes.

5. Personalization and User Experience

While eBay generates substantial revenue from its display ads, the platform carefully balances the volume of ads with the user experience. The goal is to ensure that advertising complements, rather than detracts from, the overall shopping experience. Personalization is key to achieving this balance.

Relevant Ads – By leveraging user data, eBay ensures that ads are relevant and engaging for shoppers. Instead of bombarding users with irrelevant ads, eBay uses machine learning and data analytics to show personalized ads that align with the user’s interests, purchase history, or current browsing behavior.

Native Ad Integration – eBay has implemented a native advertising strategy that seamlessly integrates ads into the user interface. These native ads look and feel like organic product listings, ensuring that they do not disrupt the browsing experience. This approach enhances the likelihood of users engaging with ads without feeling like they are being overly marketed to.

6. Global Reach and Market-Specific Advertising

eBay is a global platform with a presence in multiple countries, and its advertising strategy reflects this reach. The platform offers market-specific advertising options for both global and local sellers and advertisers. This flexibility allows sellers and external advertisers to target specific geographic regions or demographics based on their marketing objectives.

For example:

• A seller based in the U.S. can target their ads to users within the U.S., while a multinational company may run a global ad campaign across eBay’s international markets.
• Advertisers can also choose to target specific categories or user segments based on the products they sell, ensuring that their ads reach the most relevant audience.
• This global advertising approach has made eBay an attractive platform for large brands seeking to tap into international markets, while also giving local sellers the tools to boost visibility within their own region.

7. eBay Partnering with External Ad Networks

eBay works with external ad networks, including Google Ads and other programmatic advertising platforms, to display ads both on eBay and across the web. This partnership helps eBay extend the reach of its display ads and enhances its ability to target users based on data collected on and off the platform.

eBay’s collaboration with external ad networks also allows for offsite retargeting, where users who have interacted with eBay’s platform are served ads on other websites, encouraging them to return and complete their purchases. This expands the reach of eBay’s advertising strategy beyond its own site, increasing the likelihood of conversions.

8. Seasonal and Event-Based Advertising Campaigns

eBay capitalizes on peak shopping periods, such as Black Friday, Cyber Monday, and holiday sales, by offering enhanced advertising packages to sellers and external advertisers. During these periods, the volume of shoppers increases significantly, making it a prime opportunity for both sellers and external brands to reach a larger audience.

eBay often promotes its own sales events through display ads, ensuring that users are aware of discounts and promotions happening across the site. Sellers can also take advantage of these high-traffic periods by running promotional campaigns, ensuring their products are featured prominently when shopper intent is highest.

These examples highlight how display advertising can provide ecommerce businesses with financial flexibility and growth opportunities. The success of these industry leaders shows how advertising not only enhances revenue but also strengthens the marketplace ecosystem.