5 things we learned about Amazon’s ad ambitions this year
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Amazon had a busy year, seemingly extending its tentacles into every industry, from retail and advertising to entertainment and health care. Here’s the best of Digiday’s coverage of Amazon’s expansion and far-reaching influence from 2017.
Advertisers warm to Amazon’s increasing ad pitch
Amazon developed its advertising business throughout the year. Some of the world’s biggest brands began considering Amazon for their ad budgets, making it more plausible that the e-commerce giant could challenge the Google-Facebook duopoly.
Amazon courted high-level marketers at companies like Unilever, pledging in pitches to become an “ad platform leader” for advertisers that’s capable of “best-in-class service” and “strategic consultation.” Its trump card is data: Facebook knows who people are and their interests, and Google knows what people are actively looking for. But only Amazon has data on what people buy.
How Amazon is readying its blitz on the ad industry
Also on the ad business front, Amazon’s plans to open a new office in New York City — which it expects to create 2,000 jobs, mostly in advertising — emerged in October. Media agency executives in New York said Amazon reps are more persistently trying to sell them and their clients on Amazon advertising.
Saurabh Sharma, director of programmatic at Amazon, said Amazon’s big competitive advantage as a platform is that it is about the intersection of e-commerce and advertising: “It’s not only about being able to place ads in the right place and right time; it’s also the right relevance.”
Amazon is dominating server-to-server bidding
Amazon established itself as a leader in server-side bidding, header bidding’s presumed successor. A ServerBid study released on Oct. 4 found that the tech giant’s Transparent Ad Marketplace is the most popular server-to-server wrapper in the ad industry.
Publishers implement Amazon’s wrapper because it brings in unique demand, is easy to integrate, matches users across different platforms and provides competition to Google, which wields a lot of control over publishers and their tech stacks. Plus, Amazon offers proprietary commerce and behavioral data.
As Purch CTO John Potter put it: “Nobody wants Google to have more power in advertising.”
Amazon is coming for video publishers
Amazon now offers publishers a place to distribute videos and the chance to make money from the start. Last year, Amazon opened its Prime streaming platform, Amazon Video Direct, to video publishers and creators, letting them distribute individual videos, themed video collections, seasons of shows and subscription channels.
Companies with subscription streaming services, including premium cable channels like HBO, can sell them to Prime customers through the Amazon Channels program. Digital publishers can also sell shows to Amazon’s original video business, Amazon Studios.
One publisher in the Amazon Video Direct program said it earned mid-five figures on Amazon during its first month on the program last year — nearly four times what it made from YouTube ad sales during the same month.
“Most of the time, when you launch on a new platform, you have a very long ramp toward success,” said Erick Opeka, evp of digital networks for Cinedigm, which distributes three streaming channels through Amazon. “With Amazon, we saw success out of the gate immediately.”
The Amazon effect echoes across the industry
Amazon was discussed in more than 100 companies’ second-quarter earnings calls this year. Here are areas we haven’t mentioned already in this post that felt the e-commerce giant’s impact:
- Brick-and-mortar retail: Amazon’s ascent has led to an increase in online shopping and closures of brick-and-mortar stores.
- Delivery: Customers have grown accustomed to Amazon’s speed of delivery, pressuring other companies like Rent the Runway to test options like same-day delivery.
- Health care: Amazon created a team of health technology experts and tested its Echo device in hospitals. Companies like Walgreens and Express Scripts said they’d be open to having the e-commerce giant as a client.
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