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Will Amazon Own the Programmatic Advertising Market?

Will Amazon Own the Programmatic Advertising Market?

Amazon has dominated eCommerce and fulfillment for years — and now it’s major contender in the streaming wars.

How will the tech-turned-everything company approach programmatic advertising? Back in 2013, Digiday called Amazon the ‘sleeping giant’ of media. Now, it seems, the giant has awakened.

In this post, we’re talking about Amazon the media company, not necessarily Amazon the eCommerce platform. Amazon has slowly transformed itself into a media company, replete with the Fire Stick, Kindle Fire, Amazon Prime and owned and operated sites like IMDb.com.

What has Amazon done with this owned content, and where is it going?

Amazon, the Third Largest Ad Platform in the US

Now firmly established as a media company, Amazon has quickly brought its advertising game up to speed.

“For more than a year now there’s been a steady murmur about Amazon’s encroachment on the territory of the Facebook-Google duopoly,” writes Nicole Perrin in a report for eMarketer from late last year. “This year, 57.7% of US digital ad spending will go to one of those two platforms.”

But Amazon is slowly taking a piece of that total digital ad spend, percentage point by percentage point. In 2018, Amazon accounted for 4.1 percent of all digital ad spending in the United States. It doesn’t sound like much, but it makes Amazon the third largest programmatic ad platform. By 2020, eMarketer predicts this will be up to 7 percent.

Of course, it’s worth putting what ‘third largest ad platform’ means in context. According to the eMarketer report, the programmatic advertising duopoly between Facebook and Google will continue to stand for the foreseeable future:

“Amazon may be in third place, but 4.1% is far behind Facebook’s 20.6% or Google’s 37.1% of market share. In 2020, Amazon’s 7.0% share will compare with Facebook’s 20.8% and Google’s 35.1% of US digital ad spending. So while the gap may be narrowing, the duopoly pillar still stands.”

Source: eMarketer

Amazon isn’t exactly new to the programmatic advertising environment. Kindles have been around for a decade and Amazon has offered sponsored spots at the top of their eCommerce results pages for at least as long. But the company has made some critical changes to the way they approach programmatic advertising that may contribute to making them a bigger player.

Where Amazon is Going With Programmatic Advertising

The ‘first steps’ in doubling down on programmatic advertising came in September 2018, when Amazon consolidated its advertising offerings. Before, advertisers had to navigate Amazon Marketing Services (the full suit of CPC ad formats), Amazon Media Group (the unit that sold display ads on Amazon devices and properties) and the programmatic advertising platform itself. Now, these are all operated under one roof as Amazon Advertising.

“We’ve unified our product offerings under the name ‘Amazon Advertising,’” said Paul Kotas, SVP Amazon Advertising, in the September announcement. “This is another step towards our goal of providing advertising solutions that are simple and intuitive for the hundreds of thousands of advertisers who use our products to help grow their business.”

Source: CPC Strategy

With simplification and accessibility as the goal, Amazon will offer essentially five features in one console:

  • Sponsored Products, specifically for the eCommerce platform.
  • Display ads, for both Amazon and third party sites.
  • Video ads, for Amazon devices and properties like IMDb.
  • Amazon Stores, to create branded stores.
  • Amazon DSP, for CPC bids and monitoring.

This is what Amazon Advertising will have to offer. But what will it mean for their expansion into the programmatic advertising market?

Garett Sloane at AdAge writes that while there won’t be a major difference to the status of Google and Facebook as a duopoly, there will be a differential in what Amazon has on offer. “No other major platform is so plugged into what consumers buy,” Sloane writes. “Amazon doesn’t need to close the loop from ad to sale by reading uncertain data about when a person saw an online ad and when that led to an actual purchase. Amazon is the loop.”

That difference means Amazon should slowly but surely strengthen its impact on the programmatic advertising market over the next few years. And it will certainly change what, why and how advertisers buy on a programmatic platform.

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