- Amazon this week said it will shut down its ad serving business by the end of 2024.
- Industry insiders said Amazon didn’t invest enough in its ad server for it to compete with Google.
- Now Google stands to win Amazon’s former ad server clients — including Amazon itself.
When Amazon announced this week that it would close its ad serving business by the end of 2024, some industry insiders saw it as a missed opportunity to strengthen Google’s already dominant position atop the digital advertising industry.
When Amazon entered the ad serving business in 2019 by purchasing the bankrupt adtech company Sizmek, the ad industry interpreted this as a way for Amazon to compete with Google’s DoubleClick Campaign Manager ad server.
Advertisers can use ad servers to store and manage creative, as well as track the performance of their ad campaigns across demand-side platforms and websites.
Amazon, like Google, could have used the ad server to control exclusive access to its prize inventory, such as ads on Amazon Prime Video.
“Amazon had the power to do it, but they bottled it,” a former senior Amazon adtech employee who worked on the ad server explained.
Amazon’s marketing team had also moved many of its ad serving needs to Amazon Ad Server. According to industry experts, Google would likely swoop in and take over that business. Adtech companies Adform and Mediaocean’s Flashtalking, both of which operate ad servers, could also benefit.
Amazon claims that the Amazon Ad Server is only used for a small portion of its marketing. Amazon’s annual advertising budget of $20 billion or more includes TV, outdoor, and other media channels that do not require ad serving technology.
According to industry experts, Amazon Advertising leadership did not invest sufficiently in the Sizmek assets for it to become a credible alternative to Google’s ad server.
“They should have been able to push it to the leading technology in that area, but what I recognized is that they never had an interest in doing so,” said Michael Horst, a digital advertising consultant who briefly worked for Sizmek in 2016 and later worked closely with Sizmek engineers after the company was acquired by Amazon.
“At Amazon, we’re always evaluating the potential of our products and services to deliver customer value, and we regularly make adjustments based on those assessments,” according to a spokesperson for Amazon. “We have shared this decision now to provide ample transition time for our customers and to support employees who may be impacted by this decision.”
Because of Google’s long-held position as a market leader and the complexity of the technology, it is extremely difficult to compete in the ad serving business, according to Arnaud Creput, CEO of the adtech company Equativ. Ad server switching can be a time-consuming infrastructure challenge for advertisers and agencies, making some hesitant to adopt a competing technology.
The UK’s Competition and Markets Authority discovered in 2019 that Google’s ad serving business had an 80-90% market share of ads sold through the open display market in the UK. Experts believe it has a similar share in the United States.
Former Sizmek employees said that part of the appeal of Sizmek to Amazon was its ability to quickly recruit adtech talent and onboard its global client base of brands that did not sell products with the online retailer, such as automakers and luxury brands.
Beyond that, the ad server’s importance has shifted, according to Mike Caprio, former Sizmek chief growth officer and general manager of the Americas until 2019, prior to the Amazon acquisition.
Many of the important functions that ad servers have traditionally performed, such as ad measurement and frequency capping — which ensures people aren’t bombarded with the same ads too frequently — are now baked into the other ad technologies that companies commonly use, according to Caprio.
“Ultimately, it was probably the right strategic move to depreciate,” Caprio said of the Amazon Ad Server. “Their commitment to media and advertising will not fade.” Where they should put their money now is in video and properties like ‘Thursday Night Football.'”