Why Amazon’s Kindle Fire Inches it Further into Advertising

Amazon publicly hinted at its untapped potential to become a major player in the behavioral targeting and search space for years and yesterday the company showed its hand with its tablet offerings, notably the Kindle Fire.

Amazon’s golden ticket isn’t its indivisible connections to major brands or its tactical launches of ever-discounted tablet devices; it’s consumer data. Most of the industry knows this, but until recently, Amazon’s ability to get its act together and start exploiting its considerable data hoard of both browser-histories and purchasing histories beyond its site wasn’t apparent. With a new slate of tablets, Amazon would appear poised to follow Apple’s path and move fully into the ad sales business, but backed up with tons of data.
Chia Chen, VivaKi’s svp of mobile practice, believes the chances are that Amazon will eventually attempt to push farther into advertising.
“Amazon is unique in its scale, technology, distribution and the breadth of content offering,” said Chen.” Apple is the only competitor who can match up to Amazon in all four of those categories. And, I would argue, Amazon wasn’t sleeping. It just wanted to make sure it had all of the pieces in place and the user experience worked out so that it can really put together a competitive offering.”
Amazon has quietly made moves in this direction. Last June, Amazon partnered with demand-side-platform Triggit to resell ad inventory space across nine ad exchanges, using behavioral targeting based on user demographics derived from browser histories and its own sizable stockpile of consumer data. Even though Amazon’s privacy policy for certain devices has in some versions promised to discard identifying-information after 30 days, that promise has nothing to do with the fact that device A has already been identified with browser history A . That means that Amazon’s data can be as rich as any blue-chip audience-buying platform.
And Amazon’s potential wealth of insights from its data stores on its considerable customer base and transactions, which rival those of Walmart, pales in comparison to the industry disruptive potential of its lightening-speed Web proxy capabilities. Amazon’s Web proxy service, which makes web service on its tablets faster than on a laptop, desktop or other mobile device, may also be able to pre-fetch search results based on browser’s behavioral history.That practice has brought great controversy to companies like Phorm, which was used by British Telecom for its WebWise system to pre-sort search results, without informing consumers that their search results weren’t organic. On the Kindle Fire and Silk, users explicitly opt-in for fast web service and content in exchange for the use of their private data in an agreement which is anything but clear.
If Amazon can successfully hit Google on two fronts – an Amazon-style “you might also like this” personalized search and data-rich targeted advertising using both browser behaviors and purchase history – its lob at Apple with its cut-rate tablet might not matter that much. Amazon’s potential to create a highly personalized search layer with data-infused targeted ads is a credible threat to the powers that be, and there’s not much that they can do to stop it. Unlike Google and Apple, Amazon can easily exploit its ecommerce data, pre-sort search results in brand-favorable ways and even possibly provide a formidable content challenger, if rumors of a possible Netflix-Amazon deal are true. Amazon can get away with this because, if users commit to its privacy policy, they’ve opted-in for it, although consumers are also allowed to opt-out on privacy grounds and receive less comprehensive services.
One lingering question is why is Amazon launching now? Google is embroiled in a potentially damaging antitrust investigation and the ad tech industry is in full-tilt consolidation mode. It seems counter-intuitive for Amazon to show its hand as the industry is embroiled in so much uncertainty. Amazon’s timing isn’t so much a shot in the dark, according to some, but rather a move designed to optimize its impact in a tumultuous landscape in mobile, ad tech and search.
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