Amazon’s Demand Side Platform (DSP) has fast become an integral part of many a marketer’s digital advertising strategies. The advanced programmatic solution has allowed for businesses to automatically bid on ads through the platform in a real time environment, optimising targeting and ensuring placement of relevant ads to the right people, at the right time.
While there are many different demand side platforms that marketers can choose from, Amazon’s DSP has been growing at a remarkable rate, with marketers increasing their platform spending by 44% between Q3 and Q4 2019.
So what exactly is driving this growth? Many different factors could be considered as major contributors to Amazon’s growing market share. However, there are two driving forces that are worth exploring further. The first is Amazon’s natural advantage in targeting due to the huge amount of data it holds over consumer behaviours and buying trends thanks to its integrated ecommerce platform. The second – and the most interesting at this particular time especially – is Amazon’s recent significant expansion.
Previously, Amazon’s DSP primarily dealt in display ads, featured not only on Amazon’s own marketplace but also on associated properties such as Audible and IMDb. However, Amazon has been relying on its established DSP to enter into the mixed media landscape, expanding into alternative ad formats such as video and streaming.
While Amazon quickly diversified from display ads to display ads and video ads, it was just last year that it started using its DSP – and the valuable customer data attached to its DSP – to take OTT advertising more seriously. OTT, or ‘over the top’ advertising, has seen Amazon strengthen the value of its video ad offering through the connected TV market.
OTT advertising is that which is delivered through OTT devices or services. These devices or services are used to stream digital content to viewers. The term ‘OTT’ is an umbrella term, currently covering everything from external streaming boxes and HDMI sticks to games consoles and integrated systems such as smart TVs and web-enabled players.
The move has seen Amazon expand its video ad capabilities from the web to the platform’s own Fire TV network using its DSP. The expansion to CTV – connected TV – has enabled Amazon Ads users to programmatically purchase TV video placements. These CTV video ads have allowed marketers to bridge the gap between linear television advertising and contemporary digital media, and the shift appears to be working.
The reason? Amazon’s Fire TV currently features more than 50 third party apps, all of which are financially supported by ads. While app developers may have access to multiple demand side platforms, under Amazon’s Fire TV inventory optimisation policy, “ad enabled apps reserve 30% of their total advertising impressions for Amazon”, says Ryan Mayward, Amazon Advertising’s Director of Ad Sales.
Over the past year, the number of ad-supported apps available through Fire TV has risen by more than 300%, which has helped Amazon to narrow the gap between itself and its largest rival. In 2016, Roku’s market share stood at almost 50%, dropping down to 39% in early 2020, while Amazon’s CTV market share has risen to the same figure, up from just 16% 4 years ago.
However, Amazon doesn’t appear to be stopping at using its DSP to expand into video ad placements through its own CTV network. It’s still looking to expand further, into new ad formats.
Earlier this year, it was announced that Amazon was beginning to look into expanding into other ad formats beyond using its DSP to power video ads through its own CTV. More specifically, it has been rumoured that Amazon is looking to increase the use of streaming ads outside of the Fire TV ecosystem, bringing in alternative CTV and gaming platforms to provide today’s marketers with a way to reach even more audience pools.
To date, Apple TV, Xbox, PlayStation, and Android TV have been highlighted as potential targets for expanding Amazon’s streaming ads through its DSP. The proposed partnerships would enable both new and existing Amazon Ads users to purchase streaming placements programmatically outside of Amazon’s media estate for the first time ever. This would enable businesses to diversify their marketing efforts and build an off-Amazon brand while still being provided with access to the valuable data held by the Amazon DSP. And this is key.
The demand side platform market is expected to grow at a rapid rate, and it’s not surprising that Amazon is noted as one of the key players facilitating this growth. As already touched upon, Amazon’s ecommerce platform gives it a unique advantage over other DSPs such as Criteo or Sizmek, for example.
Retailers are fast forming a strong reliance on Amazon’s vital consumer data, yet they don’t want to be restricted only to Amazon’s audience. Through expanding into other ad formats – and indeed other ad environments – marketers can retain access to Amazon data while reaching new demographics.
The expansion of ad formats from display to video to streaming stands to benefit marketers by providing access to a larger pool of relevant consumers, helping them to boost their revenue and optimise their marketing strategy through improved targeting. Consider Apple TV, for example. Apple has achieved remarkable success through what some are calling ‘obsessive’ brand loyalty.
Customers are keen to use the same brand to meet all their needs, which means that Apple users are more likely to consider Apple TV over Amazon Fire. Through expanding ad formats and ad environments, marketers can continue to benefit from the Amazon DSP while gaining access to previously hard-to-reach demographics.
Streaming is a hot area of interest, which is understood to be a driving force behind Amazon’s diversification in the use of its DSP. “In 2020, the industry will see the impact of the ‘streaming wars’ with new streaming services continuing to enter the market.
However, this fragmentation or the market and customer base should not be viewed as a challenge, but rather a prime opportunity for advertisers to extend the reach of their campaigns. Ad-support streaming platforms will increasingly be used by advertisers to complement linear, acting as “reach extenders” that allow brands to engage with audiences that they wouldn’t reach with linear alone” says Mark Hudson, Head of Business Intelligence at insights firm TVSquared.
Prior to the global pandemic, the OTT, CTV, and video format advertising market was expected to reach $5 billion this year. Of course, 2020 has seen practically every business having to adapt to a ‘new normal’ and operate under a new and unexpected business landscape. But even under the current conditions, Amazon’s expansion of its use of its DSP could be exactly what marketers need to succeed.
Worldwide marketing is struggling. The Interactive Advertising Bureau (IAB) reports that, on the whole, digital ad spending is down by one third for Q2. Naturally, given business closures, pay cuts, and job losses, consumer spending is down, too. However, this doesn’t mean that marketers should pause all campaigns. Instead, it means that advertisers need to shift their focus from sales to prioritising online brand awareness.
As a result of Government-mandated ‘stay at home’ orders, an increasing number of people are spending more time at home. Apple, a company cited to be a potential partner for streaming CTV advertising through the Amazon DSP in the future, experienced a notable reduction in device sales following the COVID-19 outbreak.
However, overall sales for Apple increased from $58 billion in 2019 to $58.3 billion in 2020, and far exceeded expectations of $54.6 billion. The reason? Apple saw “a record for streaming” according to CEO Tim Cook, as a direct result of more people being home.
Even before the Coronavirus crisis, it had been reported that 60% of adults used streaming services to watch TV. At a time when retail sales are down, yet media consumption is up, Amazon’s DSP – and more importantly, the use of its DSP to expand into other formats such as video and streaming – can be one of the most effective ways to maintain and build brand awareness, creating a strong, loyal, and engaged audience base ready for when consumer behaviour begins to edge back to 2019 levels… and then grows further.
The increase in ad format offerings from Amazon’s DSP could not be better timed. Itself a natural progression, similar to how media has been consumed online (text-and-image based, in-line video, streaming video), the recent addition of streaming media outlets as an advertising destination is the next logical step.
The rise of stay-at home orders to combat the spread of Coronavirus is shrinking the retail sector due to consumers being unable to shop in physical outlets, while expanding the online video streaming market as people seek to entertain themselves and their families at home.
These same orders are prompting advertisers to pivot their advertising campaigns away from sales pitches and into brand awareness, and Amazon’s DSP expansion places it perfectly to allow advertisers to reach audiences where they are now.