Benzinga | Jun 9, 2021 12:17PM EDT

Pandemic Driven Online Shift Stimulates Amazon's Ad Rate Surge: Bloomberg

* Amazon.com Inc's (NASDAQ:AMZN) May advertising rates surged 55% year-on-year to $1.16 per click, insinuating the sustainability of the e-commerce retailer's rising profitability during the upcoming summer sale Prime Day holiday shopping season, Bloomberg reported.

* Amazon's advertising cost rose to over 30% of the product price, up from around 20% a year ago.

* However, the ballooning ad rates could drive the regulatory initiative to charge higher taxes from Amazon and higher prices by the e-commerce platform merchants when they were already struggling with higher shipping costs and other inflationary pressures.

* The pandemic-induced online shopping growth triggered greater advertising competition on Amazon.

* EMarketer Inc estimated global shoppers to spend around $578 billion in 2021.

* Procter & Gamble Co (NYSE:PG) and Clorox Co (NYSE:CLX) bring billion-dollar advertising budgets to Amazon to maintain their dominance on the online sales shift.

* EMarketer estimates Amazon's U.S. advertising revenue to beat $20 billion in 2021 as it continues to win market share from digital advertising leader Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) Google.

* Companies like Thrasio, Perch, and Branded have announced debt and investor funding of over $2 billion to buy and expand Amazon brands, with advertising a key tool for growth.

* Amazon aggregator Elevate Brands CEO Ryan Gnesin endorses the retailer despite its high ad rates compared to Facebook Inc (NASDAQ:FB) and Google to capitalize on Amazon shoppers' readiness to buy.

* Price action: AMZN shares traded higher by 0.75% at $3,289.50 in the market session on the last check Wednesday.