When Amazon announced the acquisition of Sizmek, it was seen as far from a footnote of a commerce behemoth picking up engineers from a bankrupt ad platform. I saw it as a move that would reshape the landscape of advertising as we know it.
On Friday, Ycor, parent company of leading European tech and data firm Weborama, announced a higher bid for Sizmek’s ad server and DCO engine. Yet an agreement for Amazon to acquire Sizmek’s ad server and DCO has already been signed and is going through court approvals. So, why did Amazon move to acquire, and why is Ycor throwing a wrench in the works?
Much has been said about Amazon becoming a formidable competitor to Google and Facebook. In 2018, the ecommerce giant topped $10 billion in revenue attributed to the advertising side of its business. But Amazon has its sights on a bigger prize: digital and TV.
Here’s why they are playing to win: Consumers want personalization. According to a survey by SmarterHQ, 72% of consumers say they now only engage with marketing messages that are personalized and tailored to their interests. Moreover, a study from Accenture found that 75% of consumers surveyed were more likely to purchase from retailers that knew their name and purchase history and used that data to provide recommendations based on their tastes. Based on these findings, it’s easy to see why Amazon’s ability to personalize results based on search and purchase history is already bearing fruit. In 2018, more product searches started with Amazon than Google for the first time.
What happens if Amazon can use advertising technology to put that consumer information to work for marketers? Then the game changes. Ad servers are the last mile, and dynamic creative optimization tools enable advertisers to create customized versions of each ad based on user preferences. They are the essential building blocks of advertising delivered over the internet, and Amazon understands that power. The Sizmek technology that Amazon wants will give advertisers stronger targeting, the ability to plan one campaign and target ads to different audiences and the ability to buy products from Amazon within those ads.
But wait—there is more.
Amazon wants the rich data they have about what consumers buy and search for to use it to create unique versions of ads that can be targeted to consumers outside of their walls.
In order for regulators to approve the Sprint and T-Mobile deal, they are stipulating that they need to have a fourth provider and therefore sell off part of the network. Who is in line to buy Boost Mobile, the most plausible divestiture of the combined entities? Amazon. What do carriers know? Where your phone is. If Amazon acquired Boost, they would know when you are physically closest to the point of sale.
Critical to the success of all of the players capturing a dominant share of advertising dollars is their ability to provide greater and greater scale. What is true for all media companies trying to achieve scale? They don’t solely rely on their owned and operated properties. They look to deliver paid ads to consumers in the broader ecosystem. Google has AdWords, Facebook has Instagram and Amazon wants the rich data they have about what consumers buy and search for to use it to create unique versions of ads that can be targeted to consumers outside of their walls.
Amazon would also be able to tell advertisers if a product was purchased after they saw an ad for it. This type of closed loop measurement is invaluable to marketers who are rapidly moving toward more personalized messaging to consumers to drive stronger business outcomes. This layer of proof will only accelerate the power of one-to-one messaging at scale.
Data-enabled TV spending will grow dramatically this year and next, according to a report by Advertiser Perceptions. But using data in linear TV is fraught with issues such as transparency, data matching, privacy and measurement. Connected TV is changing that. When video ads are delivered over IP, the power of digital marketing can be applied. For example, embedding technology in streaming devices can help enable top television marketers to bring more personalized messaging to consumers at scale. When an ad is served on any connected TV device, not only is individual targeting possible, making it deeper than the household targeting available in linear, but interactive elements can be applied to personalize the experience further.