In a joint theoretical and experimental work the optical properties of azobenzene-functionalized self-assembled monolayers (SAMs) are studied at different molecular packing densities. Our results, based on densityfunctional and many-body perturbation theory, as well as on differential reflectance (DR) spectroscopy, shed light on the microscopic mechanisms ruling photo-absorption in these systems. While the optical excitations are intrinsically excitonic in nature, regardless of the molecular concentration, in densely-packed SAMs intermolecular coupling and local-field effects are responsible for a sizable weakening of the exciton binding strength. Through a detailed analysis of the character of the electron-hole pairs, we show that distinct excitations involved in the photo-isomerization at low molecular concentrations are dramatically broadened by intermolecular interactions. Spectral shifts in the calculated DR spectra are in good agreement with the experimental results. Our findings represent an important step forward to rationalize the excited-state properties of these complex materials.