Amazon, Advertising's Sleeping Giant, to Awaken in 2013

E-commerce behemoth preps self-serve RTB platform

Ads served on Amazon’s owned-and-operated sites have been sold on a cost-per-thousand-impressions basis, but agencies are said to be wary of Amazon switching them to a cost-per-acquisition model since the e-commerce company would then have more insight into which clicks resulted in purchases (potent data that often isn't shared with most publishers). Nonetheless, the idea of such closed-loop advertising has many media buyers excited.

“What’s so powerful is having revenue data and action data on purchases,” said Scott Symonds, managing director of AKQA Media. “Google has [some ability to track conversions] through Google Analytics, but everyone is desperate to see [a closed-loop system].”

Said IgnitionOne CEO Will Margiloff: “I’ve always believed that the best data is conversion data. Who has more conversion data in e-commerce than Amazon?”

“The truth is that they have a singular amount of data that nobody else can touch,” said Jonathan Adams, iCrossing’s U.S. media lead. “Search behavior is not the same as conversion data. These guys have been watching you buy things for … years.”

Amazon is pulling at the low-hanging fruit of online advertising: retargeting, a market crowded with other retailers including Walmart, Best Buy and Target as well as pure-play retargeters like Criteo. The company had even been in deep acquisition talks with Criteo before Amazon began building out its bidder over the last year, sources said. Those talks dissolved after Criteo pegged its price higher than Amazon was willing to pay; one source estimated Criteo’s current valuation to be around $1 billion. The Amazon spokesperson did not respond to a question on the acquisition talks with Criteo.

But Amazon also has an opportunity to shift up the funnel, to go after demand-generation ad budgets (i.e. branding dollars) by using its audience data to package targeting segments. It's easy to imagine these segments as hybrids of Google’s intent-based audience pools and Facebook’s interest-based ones.

Many media buyers agreed that Amazon has the potential to seismically shift the online advertising market, with Google, Amazon and Facebook replacing Yahoo, AOL and MSN as online advertising’s holy trinity. That's if they even want in.

Several sources, including buyers and ad tech executives, questioned how invested Amazon is in advertising. One trading desk executive who met with Amazon executives said the company's execs seemed most interested in how to beat Walmart, not Google. Another ad tech exec noted that Google has tens of thousands of employees focused on advertising. Sources ballparked the size of Amazon Media Group, which runs its ads business, in the range of 600 employees. The Amazon spokesperson declined to confirm the number of Amazon Media’s Group employees. Amazon has staffed a respected team within the Amazon Media Group, with sources pointing to former MediaMath vp Mark Mannino and former NBCUniversal sales exec Ryan Mayward as key hires.

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