Amazon’s continued push into the world of programmatic advertising offers a vast pool of quality advertisers that publishers can access. Maor Davidovich of Adnimation explains more…
In 2022, Google and Meta’s share of digital advertising revenue in the US fell below 50% for the first time in years. This decline was largely due to the rise of Amazon, which captured over 11% of all digital ad purchases.
For years, Amazon’s strategy has been to enable advertisers to promote their products on Amazon. But over the past couple of years, relatively under the radar, it has begun expanding its advertising business by serving ads on external sites.
In fact, no one quite realized how big Amazon’s advertising business was until 2022, when it revealed that it generated $31.2 billion in revenue in 2021. In Q4 of 2022, Amazon’s ad revenue grew 19% year-over-year.
It is now quite evident that Amazon has set its sights on the programmatic advertising world. This presents opportunities not only for advertisers, but for online publishers as well.
Unique SSP for Publishers
Amazon’s supply-side platform (SSP), Amazon Publisher Services, is a unique demand source in many ways.
First, it brings new quality advertisers to the table.
Many SSPs bring in existing advertisers and route them through different ad networks to compete against each other. But Amazon’s advertisers are distinctive, as they are primarily found on Amazon’s own demand-side platform (DSP) and offer e-commerce products. This creates a new category of advertisers that Amazon introduces to the market that are only available through its SSP.
Second, Amazon possesses a tremendous amount of first-party data.
In an age where third-party cookies are headed for extinction, access to quality first-party data is critical. If you’ve made a purchase on Amazon, you voluntarily told them where you live, what you like to buy, and what things interest you.
This first-party data enables publishers to serve more relevant ads to its users. More relevant ads lead to higher conversion for advertisers, which enable publishers to charge them more to serve their ads.
Third, there are no third-party fees.
Advertisers often go through third-party networks that charge a relatively large fee in return for their services. When this happens, publishers receive less overall ad revenue.
Advertisers on Amazon cut out the middleman by going directly through Amazon. That means they are paying less fees, and more of their ad spend is reaching the publisher, if managed correctly.
Opportunity for Publishers
Amazon’s continued push into the world of programmatic advertising presents a great opportunity for publishers in their effort to monetize their websites and increase ad revenue.
First and foremost, Amazon offers a vast pool of quality advertisers that publishers can access. This in and of itself can increase fill rates and drive revenue when a substantial part of a website’s ad space can be sold to Amazon advertisers.
But more importantly, Amazon’s efforts fuel competition with Google and other advertisers, resulting in a higher demand for the publisher’s inventory. This increased demand enables publishers to leverage competition to charge higher CPMs to both Amazon and Google.
As Amazon continues to grow, publishers will have greater leverage to use the competition between the two giants to negotiate higher prices.
Challenges for Publishers
For publishers to take advantage of multiple demand sources, they need to implement header bidding. This is where Amazon falls short.
Amazon offers a one-code wrapper for header bidding; however, it creates a dual layer process that first goes to Amazon, then to other demand partners. This slows down the website and limits revenue potential.
To fully leverage Amazon’s advertising potential and harness competition effectively, publishers need to implement a custom solution that integrates Amazon’s demand on par with Google and other demand partners. This allows for simultaneous bidding and boosts CPMs.
To maintain this advantage, ongoing monitoring is essential. Doing so prevents slowdowns in ad requests and secures the highest possible pricing through competition.
Another challenge for publishers is simply getting accepted into Amazon’s Publisher Services program.
Not all publishers meet the eligibility criteria and those that do often receive unfavorable terms, such as late payments. Amazon’s payments come in more than a month after Google’s, which can lead to cash flow difficulties.
Amazon’s growing presence in the programmatic advertising industry presents a great opportunity for publishers, but it requires careful execution.
Capitalizing on Amazon’s SSP and generating higher ad revenue requires advanced ad technology, ongoing management, and the ability to secure the best possible terms.
While this is no simple feat for many publishers, ensuring proper implementation and management is crucial. Publishers struggling with this should seek assistance from a third party that can oversee the process.
When implemented correctly, publishers will be able to sit back and reap the benefits of Amazon’s continued expansion into the world of programmatic advertising.
CEO and Co-Founder of Adnimation
Adnimation is a technology-driven monetization company that helps online publishers maximize their ad revenue. Founded in 2013, Adnimation provides monetization services to websites, CTV apps, and mobile apps using a blend of innovative technology and hands-on professionalism. The company’s headquarters are located in Israel.