Amazon has agreed to acquire Sizmek's ad server business, a move that will have significant implications for both marketers and Google.
Although the terms of the agreement were not disclosed, a person whose company was also bidding on the Sizmek ad server believes that the company was seeking around $ 30 million for its ad serving technology. Sizmek filed for bankruptcy on March 29, leaving its ad server, its demand platform and its data management platform in play. Sizmek sought to capture between $ 50 million and $ 60 million for all its parts, but decided to download the DSP and DMP to Zeta Capital for an estimated $ 36 million, said the person involved in the tender. Of these three companies, the ad server was the only one that was profitable, since it generated between $ 75 million and $ 80 million last year, almost 10 percent year after year, said this person.
In a statement, Amazon said that once the deal is closed, "Sizmek Ad Server and Sizmek DCO [Sizmek Dynamic Creative Optimization] It will operate separately from Amazon Advertising at the moment. We look forward to working with the team and will share more updates as we invent and create new opportunities to better serve our advertisers over time. "
In general, the Sizmek ad server competes directly with the Google Marketing Platform (formerly DoubleClick), which helps advertisers place digital ads and measure their effectiveness. There are not many ad servers on the market either, especially not on the scale offered by Sizmek.
Amazon's decision to acquire the Sizmek ad server will allow marketing professionals to use their rich data, which includes both what people actually buy and what they are looking for, to target consumers with ads outside their own walls. The combination of Amazon's strong data and the ability to target consumers outside its walls could also challenge Google, the market leader. What's more, Amazon could receive payments to attract consumers to its website through ads that marketers buy and place outside of their platform.
"Usually, you pay to attract traffic to your site, but Amazon will make money to attract traffic to your store, it's so Amazon-y," says Jon Bond, president of SITO Mobile, a data localization company. "Although Amazon's biggest competition might not be Google, but the government, because it looks a lot like vertical integration and, at some point, a monopoly."
Amazon captures almost 50 percent of all e-commerce sales, or approximately $ 258 billion, according to eMarketer.
What it means for sellers
In the last 12 months, there has been a mbadive change in mindset with brands that are now starting to see Amazon not only as a retail partner, but as a powerful advertising platform that competes with Google and Facebook, says Joshua Kreitzer, founder and CEO of Channel Bakers, an agency specialized in advertising through the Amazon platform since 2014.
"Amazon knows our buying behaviors, which makes their data extremely valuable to manufacturers. But just as important, Amazon over-indexes the performance of sales within the e-commerce industry, "says Kreitzer." In other words, brands get the best of both worlds by targeting audiences of relevant buyers and closing the sale within the same ecosystem. "
Amazon has been making very aggressive moves with video ads through its video on the search product and OTT; The combination of the Sizmek ad server and Sizmek's dynamic creative optimization should now help them provide advertisers with more dynamic dynamic creative locations.
Amazon only has one type of dynamic creative, called "dynamic e-commerce ads," which is hardly dynamic. The format only presents the image, the title, the price and the revision rating of the product.
However, the move to acquire the Sizmek ad server will allow Amazon to "make very aggressive moves with video ads through its video search product and over-the-top," says Kreitzer. "The Sizmek ad server will help them provide advertisers with a more robust dynamic creative placements."
However, Amazon's potential to challenge Google is not without its problems.
"A big problem for portfolio companies is that Amazon needs to immediately address its reporting capabilities," says Kreitzer. "With its search console, it is difficult for companies and control agencies to shape traditional advertising metrics like paid vs. organic, lifetime value, demographic information, mobile vs. desktop, and geographic data."
Hugo Loriot, managing director of data consultancy Fifty-Five, points to another technology power that made a similar move: in 2013, Facebook acquired Atlas, an ad server that would be used similarly to how Amazon would most likely seek to use Sizmek. Despite the obvious synergies, the acquisition was a failure, as Facebook closed its ad server only three years later.
"From a technical point of view, an ad server like Sizmek will not be easy to integrate," says Loriot. "Facebook basically failed to integrate Atlas into the larger Facebook ecosystem, and something similar could happen to Amazon."
"It is not guaranteed that the Amazon movement will succeed," adds Loriot. "I'm very curious to know if they will be more successful than Facebook, but I doubt they will be." Yes, the Sizmek ad server would provide creative optimization and reports, that is, if they really make it work. "I'm curious to know how they will integrate it. and for me, that will take at least two or three years before I'm really ready to go to market. "