Ad servers let advertisers store and manage creative and measure the performance of their ad campaigns across demand-side platforms and websites.
Much like Google has done with YouTube, Amazon 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,” said a former senior Amazon adtech staffer who worked on the ad server.
Amazon’s own marketing team had also shifted a lot of its ad serving requirements to Amazon Ad Server. Google would likely swoop in to pick up that business, industry experts said. Other beneficiaries could include the adtech companies Adform and Mediaocean’s Flashtalking, which both operate ad servers.
Amazon said only a small proportion of its marketing is run through the Amazon Ad Server. Amazon’s $20 billion-plus annual advertising budget also includes TV, outdoor, and other media channels that don’t require ad serving technology.
Industry experts said that Amazon Advertising leadership didn’t invest enough 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 they never had an interest in doing so,” said Michael Horst, a digital advertising consultant who briefly worked for Sizmek in 2016 and subsequently worked in close proximity 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,” said an Amazon spokesperson. “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.”
It is very difficult to compete in the ad serving business because of Google’s long held position as a market leader and the complexity of the technology, said Arnaud Creput, CEO of the adtech company Equativ. Switching ad servers can be a time consuming infrastructure challenge for advertisers and agencies, leaving some reluctant to adopt a rival technology.
In 2019, the UK’s Competition and Market Authority found that Google’s ad serving business had a 80-90% market share in the UK of the ads sold through the open display market. Experts said it likely had a similar share in the US.
Part of the appeal of Sizmek to Amazon was to quickly recruit adtech talent and onboard its global client base of brands that didn’t sell products with the online retailer, such as automakers and luxury brands, former Sizmek employees said.
But beyond that, the importance of the ad server today has changed, said 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 ad servers traditionally perform, like ad measurement and things like frequency capping — which ensures people aren’t blasted with the same ads too many times — are now baked into the other ad technologies companies often use, Caprio said.
“Ultimately it was probably the right strategic move to depreciate,” the Amazon Ad Server, said Caprio. “Their commitment to media and advertising is not going away. Where they focus should now is their investment in video and properties like ‘Thursday Night Football.'”
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