What does Amazons Sizmek acquisition really mean?

AmazonAs you may have heard, Amazon has recently acquired the ad-serving technology and Dynamic Creative Optimisation (DCO) product from bankrupt ad tech company Sizmek. There’s been a lot of talk about how this is move will help Amazon to mount a significant challenge to Google and Facebook – but just how is the eCommerce giant going to turn the duopoly into a triopoly?

Amazon has been investing heavily in advertising and its clear the company now truly sees the potential it has to muscle in on Google and Facebook’s dominance. For a start, the Sizmek Ad Server competes with the Google Marketing Platform, previously known as DoubleClick.

“Amazons acquisition of Sizmek’s ad server essentially enables one of the worlds largest retailers to compete directly with the Google Marketing Platform in the quest to help marketers place digital ads and measure their effectiveness,” says Richard Wheaton, MD at Fifty-five. “Today there is a surprisingly small number of ad-serving solutions available to brands and agencies, so maintaining an additional option in the marketplace is not an unwelcome outcome.”

Of course, Google and Facebook have had their fair share of issues over the years but have still managed to continue their joint stranglehold of the digital advertising space. This is largely down to there not yet being any business capable of getting close to the reach that the pair have. Amazon, obviously, is a company large enough to truly cause a stir.

“The acquisition allows Amazon to close the loop and provide advertisers with access to metrics that none of its competitors can because of its huge captive audience and its innate ability to direct sales back to its own platform,” says Wes MacLaggan, SVP of marketing at Marin Software. “As the market continues to look for a counter point to Google and Facebook’s ad platforms, the potential to disrupt the duopoly’s hold on advertising dollars is huge and Amazon is taking advantage.”

Amazon’s decision to buy Sizmek’s ad server and DCO also raises questions over what Amazon plans to do with what it has acquired.

We know that, for the time being, the Sizmek Ad Server and Sizmek DCO will continue to operate separately from Amazon Advertising. Nonetheless, it’s only fair to speculate that Amazon will eventually fully integrate its acquisitions.

There’s also the question of if Amazon really intends to challenge the duopoly or is simply focused on doing its own thing and picking up what it can from the remainder of the digital advertising market.

“Amazon’s purchase of Sizmek comes by no surprise, as Amazon has been clearly investing more in advertising. The hardest question, though, is where Sizmek’s purchase sits strategically within the company,” says Xavi Beumala, Marfeel CEO.

“Would they want to create an ad serving platform that competes with Google? This would be a huge change in their current business model, which actually invites you to think that they are probably just incorporating an ad server so businesses that sell on Amazon depend less on third parties when advertising their products. This could be especially interesting for those businesses selling higher volumes of their products on Amazon. And for Amazon itself, it would allow them to have the entire data related to each purchase, starting from the ad.”

One thing we know for sure is that Amazon’s latest acquisition will pave the way for it to collect more ad dollars. How it uses this to offer a complete ad tech stack and make use of the data capabilities it has available remains to be seen.

The company will also be determined to not emulate Facebook’s 2013 acquisition of the Atlas ad server, which was shut down in 2016 after it “basically failed to integrate Atlas into the bigger Facebook ecosystem,” according to Fifty-five’s Wheaton.

What we also know is that the acquisition gives Amazon more data to play with, as well as expertise that the company didn’t previously have within the advertising space.

As such, Amazon’s walled garden looks like it has become just that bit more fortified and capable of making waves at the top of the digital advertising game.

“Today, they lack ad campaign data to help marketers optimise their campaigns (on and off Amazon) and since ad servers track every impression and assign credit from conversions, this will give Amazon ad clients better and more data to optimise from,” says Forrester analyst Collin Colburn. “Amazon has been slow to innovate their ad products. And by acquiring Sizmek, they automatically get capabilities and resources that are experts in the pipes of digital advertising, which will hopefully boost their innovation going forward.

“Google is the dominating force in ad serving today. This acquisition arms Amazon with a viable alternative, which has got to make Google take notice and make them more concerned about Amazon’s encroachment into the digital ad space.”