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Amazon made $47B from ads in 2023 – not products – and Kevel gives any e-commerce operator the same infrastructure to monetize its own platform.
ENTRY ANGLES
Build ad platforms enabling e-commerce players to monetize audiences through retail advertising · Provide full-featured advertising infrastructure as alternative to building in-house (like Amazon) · Target e-commerce players lacking resources to build proprietary ad platforms
VERTICALS
CAPABILITIES
Ad platform technology and infrastructure, E-commerce integration expertise
The fastest-growing advertising category most e-commerce companies haven't touched yet is Retail Media – and Kevel exists to change that.
Anyone can technically build an ad network on Kevel. But the company focuses specifically on what's called Retail Media – and its flagship product is the Retail Media Cloud.
Retail Media is when online retailers, marketplaces, and other e-commerce players decide to earn incremental revenue from advertising: charging the brands and sellers on their platforms for paid promotion, product placement, and sponsored content.
The Kevel platform has two core modules.
The first is the ad server itself. It supports multiple pricing models including fixed rates and auctions, a self-serve interface for advertisers, a reporting module, and the ability to integrate an advertiser's product catalog directly – so they can quickly select which products to promote.
The second module handles ad targeting. It automatically segments audiences and optimizes delivery to maximize the advertiser's chosen metric – cost per impression, cost per click, or number of conversions – depending on campaign goals.
The platform supports not just standard display banners but also e-commerce-specific formats: sponsored product listings, product video ads, and promotional content blocks.
Kevel doesn't take a cut of client ad revenue. Clients pay only for the technology – essentially for the volume of ad units and total impressions. Publishers can embed ads anywhere on their platform in any configuration they need, using Kevel's API.
Kevel already has a meaningful client roster spanning small, mid-size, and large companies including Delivery Hero.
A mid-size automotive marketplace, for example, added sponsored listings for its dealers and saw a 30% revenue uplift – using Kevel's integration instead of building its own ad infrastructure from scratch, which would have taken nine times as long.
Kevel has raised $23M, bringing total funding to $45.2M.
Why would online stores and marketplaces bother with advertising when they already earn from selling products?
Because the margins on advertising are dramatically higher. Ad revenue requires subtracting only the cost of running the ad server or paying for a platform like Kevel – there's no inventory, no logistics, no cost of goods sold.
Amazon earned nearly $47B from advertising on its marketplace in 2023 – and the number keeps climbing. Instacart, considerably smaller than Amazon, generated $871M in ad revenue in the final quarter of 2023 alone – an 18% increase over the prior quarter. That advertising revenue represents nearly 30% of Instacart's total revenue. Their ad income is growing; their delivery volume is not.
Numbers at this scale support a provocative claim: online retailers and marketplaces are gradually becoming media businesses – organizations that earn their profits not from selling products but from selling access to audiences.
Retail media is also growing faster than any other advertising category. Search advertising took 14 years to grow from $1B to $30B. Social media advertising took 11 years. Retail media took five – with that growth happening between 2016 and 2021. This is a recent, structural shift in how advertising dollars flow.
Looking across the advertising market as a whole, retail media now captures roughly the same share of advertiser spending as social media advertising. Search advertising receives about three times less. Morgan Stanley recently projected that retail media will grow to a $130B market.
Amazon currently holds 47% of the retail media market. Criteo is projected by Morgan Stanley to reach 15%, and Trade Desk 5%. The remaining share will be split among others – including Kevel. The company is clearly aiming to compete with Criteo and Trade Desk. But even fourth place in this market would be a very profitable position.
In 2020, Andreessen Horowitz published a piece sketching the evolution of software business models: from on-premise licensing to SaaS subscriptions, then to usage-based pricing and freemium. The essay's key prediction for the 2020s was a fintech revolution – cloud software companies in every vertical would start embedding financial services to create new revenue streams. Software businesses would become fintech businesses.
That prediction has held. Shopify's revenue from payment processing fees already exceeded its platform subscription revenue in 2020 by a factor of two. Financial services – including merchant loans and other add-ons – now account for 76% of Shopify's total revenue.
Something analogous now appears to be happening in e-commerce more broadly. Marketplace and retail players have been adding revenue from financial services – consumer financing, installment plans, factoring for sellers. Now the most sophisticated players are opening a new incremental revenue channel: retail advertising. To do that, they need reliable, full-featured ad platforms. Amazon built its own. Most e-commerce players don't have the resources or appetite for that – which is exactly where platforms like Kevel come in.
The direction: build platforms that enable e-commerce players to monetize their audiences through retail advertising.
The market is still growing, many potential customers haven't yet adopted any platform, and the category is large enough to support multiple competing players. There's still real room to enter and scale.
Zooming out, the broader pattern is worth naming: as any market matures, its players start extracting value from adjacent activities. Cloud software companies monetize financial services. Online retailers monetize advertising.
This happens for a structural reason: competition on a mature market drives margins toward zero. As the core business becomes less profitable, operators search for new higher-margin revenue streams to compensate.
That logic generates an interesting question for any other market: which sector has become competitive enough that its players are now ready to look for new revenue sources? Online education is one candidate. Most students buy courses on installment plans or credit – and currently it's banks that pocket the interest. An education platform that becomes the lender captures that margin without building a single new product. The vertical that's next to tip into this pattern is the one worth building toward.