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Amazon has agreed to acquire Sizmek's ad server business, which will have significant implications for marketers and Google.
Although the terms of the deal have not been disclosed, a person whose company also relied on Sizmek's ad server believes the company was seeking about $ 30 million for its ad serving technology. Sizmek filed for bankruptcy on March 29, leaving its ad server, demand-side platform, and data management platform at hand. Sizmek was seeking to recover between $ 50 million and $ 60 million for all of its operations, but decided to transfer the DSP and the DMP to Zeta Capital for an estimated $ 36 million, announced the person involved in the application procedure. Of the three companies, the ad server is the only one to be profitable, generating between 75 and 80 million dollars last year, an increase of nearly 10% over the previous year, said this person.
In a statement, Amazon said that once the agreement reached, "Sizmek Ad Server and Sizmek COD [Sizmek Dynamic Creative Optimization] will work separately from Amazon Advertising for the moment. We look forward to working with the team and will share more updates as we create and create new opportunities to better serve our advertisers over time. "
In general, the Sizmek ad server is in direct competition with Google's (formerly DoubleClick) marketing platform, which helps marketers place digital ads and measure their effectiveness. In addition, there are not many advertising servers on the market, especially at the scale proposed by Sizmek.
Amazon's decision to acquire Sizmek's ad server will enable marketers to use its rich data – including both what people are buying and what they are looking for – to target consumers with advertising outside of the box. its walls. The combination of Amazon's robust data and the ability to target consumers outside of its walls could also potentially challenge the market leader, Google. In addition, Amazon could be compensated for bringing consumers to its website through ads purchased and placed by marketers outside its platform.
"Usually, you pay to get traffic to your site, but Amazon will be racking up money to drive traffic to its store – that's so much Amazon-y," says Jon Bond, chairman of the board. SITO Mobile, a data localization company. "Although Amazon's biggest competition is not Google, but the government, it looks a lot like vertical integration and, at one point, a monopoly."
According to eMarketer, Amazon captures nearly 50% of all online sales, or about $ 258 billion.
What does it mean for traders?
In the last 12 months, brands have begun to change their mentality dramatically. They are now starting to see Amazon not only as a retail partner, but also as a powerful advertising platform that rivals Google and Facebook, said Joshua Kreitzer, founder and CEO of Channel Bakers, an agency specializing in advertising through Amazon platform since 2014.
"Amazon knows our buying behavior, which makes their data extremely valuable to manufacturers. But just as important, Amazon over-indexes sales performance in the e-commerce sector, "says Kreitzer." In other words, brands make the most of both worlds by targeting target audiences and closing the sale. within the same ecosystem. "
Amazon has been very aggressive with video ads through its video search and OTT product; the combination of Sizmek's advertising server and Sizmek's dynamic creative optimization should now help them provide advertisers with more robust dynamic creative sites.
Amazon offers only one type of dynamic creative, called "Dynamic Ads for Ecommerce", which are hardly dynamic. The format contains only the image, the title, the price and the evaluation of the product.
However, the decision to acquire Sizmek's ad server will allow Amazon "to aggressively deal with video ads through its live and out-of-the-box video search product," says Kreitzer. "The Sizmek ad server will help them provide advertisers with creative placements."
Nevertheless, the potential of Amazon to challenge Google is not without problems.
"A big problem for portfolio companies is that Amazon needs to immediately put in place its reporting capabilities," said Kreitzer. "With their search console, it's difficult for portfolio companies and agencies to define traditional advertising measures, such as paid data versus organic ads, lifetime value, demographics, mobile data compared to desktop computers and geographic data. "
Hugo Loriot, general manager of the computer consulting company Fifty-Five, indicates another technological player who acted in the same way: in 2013, Facebook acquired Atlas, an advertising server that would be used in the same way as Amazon probably plans to use Sizmek. Despite the obvious synergies, the acquisition was a failure, Facebook having stopped its advertising server three years later.
"From a technical point of view, an advertising server like Sizmek will not be easy to integrate," says Loriot. "Facebook has not managed to integrate Atlas into Facebook's large ecosystem, and something similar could happen to Amazon."
"There is no guarantee that the Amazon movement will succeed," adds Loriot. "I'm really curious to know they're going to be more successful than Facebook, but I doubt they are, yes, the Sizmek ad server would bring creative optimization and reporting, that is, I mean, if they made it work properly, I'm just curious to know how they are going to integrate it and for me it will take at least two to three years before it is really ready to enter the market. "
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