Their targeted ads aren't the best
I set up a new account, bought a copy of the Divine Comedy. Came back a few weeks later and there was one item in my 'Suggested Items' list... a mop.
How they came to that conclusion I have no idea.
Amazon made more than $600m from advertising last year and is on track to make $835m in 2013, thanks to knowing what we buy and not having to share the wealth. The numbers come from eMarketer and are only educated guesses as Amazon doesn't publicly share its figures. The logic is sound, though, and if the trend continues then …
First of all, you are mistaking suggested items for adverts. Amazon supplies ads to 3rd parties like the daily mash.
Their ads are spot on and based on your amazon browsing history as much as shopping history and wish-lists. Definitely way better than Google. I have clicked on an amazon ad more than once in the last year.
As a comparison - last time I have clicked on a google ads was many years ago. It was before the ad scum took over and the old statistic science "dumb ass" engine was replaced by the semi-realtime "smart ass". That was the day when their ads stopped being relevant for anyone but the most "obvious" target demographics.
Amazon ads are where Google used to be. You may get weird results when the dataset is small. Once the dataset grows above a certain size their precision becomes uncanny. As expected - think of Google of old, just working of a much better dataset.
Amazon don't really have to do anything.
They are making money in loads of places they don't need to bother putting advertising on mobile.
If they are making 600 Million and they expect to be making quite a lot more anyway next year they don't have to change anything.
Amazon seems to understand that not massively irritating your customers is a good strategy.
Except if the PC presence shrinks, so does the ad visibility. The ads show up on PCs, NOT mobiles. To avoid losing their ad visibility, they need to start migrating the ads. I suspect they'll take this a step at a time, perhaps starting with tablets where there's more real estate to spare and then move on to phones as their resolutions increase.