Investors are pouring millions of dollars into new digital firms that help marketers tap Amazon and Walmart's growing ad businesses

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Amazon CEO Jeff Bezos.

• Two Amazon-focused firms - Teikametrics and etailz - recently announced big funding rounds, showing investors want to fund companies that focus on e-commerce advertising even as funding for adtech and media companies dries up.
• Companies like these are looking to crack into Walmart's e-commerce platform and building tools to help sellers with pricing and inventory challenges.
• They see a chance to help sellers who are finding it harder to work directly with Amazon as it gets bigger.
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Funding for adtech and digital media companies is getting harder to come by - except for tech firms looking to capitalize on the rise of Amazon.

Last week, Teikametrics and etailz - two firms whose software helps retailers sell products and run ad campaigns on platforms like Amazon - announced new funding rounds. Boston-based Teikametrics raised $15 million in a venture round led by Jump Capital, and Spokane Valley, Wash.-based etailz raised $25 million in debt financing from Encina Business Credit. And in September, Business Insider reported that Amazon-focused Sellics raised $10 million in Series A funding from venture-capital firm Frog Capital.

The opportunity for tech firms to help marketers sell and promote their products through e-commerce sites is growing. According to research firm eMarketer, retail media is a $15 billion to $25 billion business globally.

As Amazon's ad business grows, Walmart, eBay, and Google are building out offerings that rival Amazon. That's led to a cottage industry of firms that help marketers measure sales, set prices, and run ad campaigns.

Unlike adtech companies that make money based on how much advertisers spend on individual campaigns, the Amazon-focused firms make money from software backed by recurring revenue models, which appeals to investors who are increasingly cooling on adtech and digital media companies.

"This is an enormous market - Amazon is the largest retail e-commerce platform and the third-largest ad platform," said Eric Franchi, operating partner of MathCapital, a venture capital fund that invests in advertising and marketing companies. "Marketers that want to enter this have to think about not just digital ads but product catalogs, dynamic market pricing, and what are the areas outside of Amazon."

MathCapital is not an investor in Teikametrics, etailz or Sellics.

Amazon-focused firms are trying to break outside of Amazon

Eight-year-old Teikametrics sells software that helps companies like Clarks and Razer sell their products on Amazon and Walmart. The firm is one of a handful of companies plugged into Walmart's self-serve advertising platform that formally launched last month.

John O'Shea, chief growth officer at Teikametrics, said the firm would use the funding to build new products that go beyond running ads, like features that use artificial intelligence to help sellers decide how much inventory to stock and how to price items to improve their retail margins.

"Sellers and brands are generally unwilling to share that information directly with platforms, but they share it with us," O'Shea said. "[Brands] don't want Amazon to know that because Amazon is building its own products to compete and they may try to squeeze you for the margin points."

He said the firm also plans to use its funding to nearly double the 120-person company's headcount, particularly in product, engineering and analyst roles.

Beyond Amazon and Walmart, Teikametrics is also looking at Google Shopping and Instagram as the next big e-commerce platforms for brands.

More money is moving into e-commerce

Kunal Chopra, CEO of etailz, said that it would use its new funding to build new software products for e-commerce brands. The company will also beef up its business that buys products from manufacturers and sells them at higher prices on marketplaces like Amazon. Etailz also runs advertising campaigns to promote the products.

As more brands look to Amazon to sell goods, Chopra said it's getting harder for brands to work directly with Amazon.

"The bar to becoming a first-party seller on Amazon is only becoming higher, and Amazon is only going to be working with the top brands when it comes to its retail business," he said. "With third-party sellers, you're seeing this big market to help those sellers find places to go."

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