News broke recently that Amazon has bought Sizmek Ad Server after the latter had filed for bankruptcy earlier this year and had been looking for about $30 million for the ad serving technology. Amazon has bought both the ad server and their dynamic creative optimisation suite (DCO) which is a tool that helps personalise ads using data. The plan for Amazon is to run both products separately for the time being, although this is likely to change in the long term.
E-commerce giant Amazon is the world’s 3rd largest ad platform, by spend. Approximately $4.6 billion was spent on ads last year, with that number still increasing this year. Digital spend in general is growing fast: year-on-year (YoY) global ad spend has increased by 4.2%.
This, therefore, is an interesting proposition for Amazon. Sizmek is an ad management platform for advertisers and agencies focused on executing digital advertising campaigns across mobile, display, rich media, video and social, all powered by a data engine. It is a DSP (demand-side platform) that agencies would be able to use to access relevant inventory to serve ads across the web and app programmatically. This will therefore allow Amazon to gain a greater reach outside of their eco-system. Amazon and Sizmek also already have mutual customers, so the investment already creates the platform for potential long-term success.
All Response Media viewpoint
Sizmek ad server is a direct competitor to the Google Marketing Platform. There are many ad serving providers that exist in the market but not at the scale of Sizmek, therefore the acquisition could push Amazon in a good direction to become a bigger competitor to the likes of Google and Facebook, which both also have a history of buying tech companies: Google for example bought Urchin Analytics (now Google Analytics) and DoubleClick (now Google Marketing Platform).
An article last year showed that 87% of shoppers begin their product searches on Amazon. Therefore, if Amazon ends up sharing their data directly through Sizmek, this could be a huge opportunity for e-commerce advertisers as they’ll be able to tap into high purchase intent audiences.
This could mean that Amazon ads start showing up on the display network, which would be a game changer for existing Amazon advertisers as there’s an opportunity to prospect outside of the Amazon platform but also for the other tech giants as Amazon push forward for more market share.
As most advertisers have more of an appetite to diversify media and shift the lion share of investment away from Google and Facebook, this can certainly be a positive.
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