It's Amazon's Turn To Lead The Next $100 Billion Market

Based on the opinion of Morgan Stanley, after an increase in advertising spending in retail media for the next few years, Amazon.com will be able to benefit from a significant increase in profits over the next few years as a result of greater revenues from their business.

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Analyst Matthew Cost estimates that retail media advertising will generate $130 billion by 2025 based on data provided by Nielsen. Advertisers can leverage the retailer's customer data to generate better conversions in addition to increasing ad revenue for the retailer by leveraging the data of their customers. Cost's analysis estimates that the value of retail advertising in 2022 will be around $80 billion around the world, excluding China, according to Cost's research.

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In the first trading session of the week, Amazon's stock price (ticker: AMZN) rose by 0.6% to $102.99, which is a 1.6% gain over Monday's trading session. The stock price also increased by 0.6% over last week's trading session.

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From 2022 to 2025, according to Cost's forecasts, retail media advertising is expected to experience rapid growth at an annual rate of about 17.7%, which is a significant amount of growth over the past few years. There is a possibility that retail media advertising will eventually represent approximately 45% of the total budget for online advertising in the near future. It is considered a major tailwind for the company to hold its position in the marketplace by maintaining its 47% market share last year since it has been the early leader in the field of e-commerce since the company was founded in 1994.

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He contends that large retailers, such as Amazon (AMZN) and Walmart (WMT), are in the best position of all to grow in the retail media market over the next five years because they have the largest customer bases and the most comprehensive data sets, respectively, in the industry. The strong growth in Amazon's advertising business and the company's continued expansion over the next few years should allow [Amazon] to maintain its leadership position in the next few years.

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In the retail advertising industry, according to Cost, there are very few companies that have a lower operating profit margin than ones in the e-commerce world and physical retail. Retail advertising, on the other hand, has a lower operating profit margin than most kinds of advertising, according to Cost. A retail advertising campaign is more profitable than the traditional retail channel itself, with margins of profit that can be as high as 60% higher than those normally associated with traditional retail.

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During early November, Cost's Morgan Stanley colleague Brian Nowak was advising on Amazon stock for a company called Morgan Stanley. According to his recommendation, the stock should be rated Overweight and the price target for this stock should be $150.

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