According to the latest DSP report by business intelligence firm Advertiser Perceptions, Amazon is the preferred demand side platform for advertisers today. Amazon’s dominance had already long been on the cards, with the ad giant’s 2019 reports showing a 44% increase in DSP spending between quarter 3 and quarter 4.
However, the new research – which surveyed 326 agency buyers and brand marketers spending upwards of $1 million on digital advertising per year – goes one step further to officially confirm that Amazon is sitting comfortably at the top of the DSP leaderboard for 2021.
What’s particularly interesting about this is that Amazon has risen to the top and left a safe gap between its competitors at a time when the competition is fiercer than ever before.
Reports show that the global DSP marketplace is expected to become increasingly stronger over the next five years with a CAGR of 30% to 2025, and taking the worldwide demand side platform market value from $10,410 in 2019 to $29,680. Advertisers have a huge amount of choice as the market continues to develop, so exactly why are they opting for Amazon in such large numbers?
Amazon’s Rise to the Top
The report states that 46% of those surveyed had used Amazon’s demand side platform over the previous 12 months; up by 5% from the 2018 study.
And while Google’s DSP and The Trade Desk have also seen user statistics increase during this time – Google by 8% and The Trade Desk by 11% – the majority of respondents today cite Amazon as their preferred demand side platform, taking a grand total of 27% of the overall vote.
However, it hasn’t always been this way. This is the second time that Amazon has been crowned the DSP leader, having lost its title in Q1 2020 and slipping down to third position behind its two closest competitors.
In fact, even now, Google remains the preferred option for advertisers choosing to go down the self-service DSP route.
Now, Amazon has once again reclaimed its prime position. As it turns out, Google’s self-service wins weren’t enough to help it maintain the Number One spot on the leader board, especially as a previous Programmatic Intelligence report by Advertiser Perceptions notes that only 27% of advertisers opt for self-service, compared to a much larger 42% who use a managed service. The remaining advertisers utilise both options.
Following Amazon’s temporary blip, Advertiser Perceptions CSO Kevin Mannion predicted that it was going to be hard to knock Google from the top spot, stating that “Google’s DSP is poised to continue making gains over the next year or more”. But, of course, nobody could have predicted what would happen throughout 2020.
Why Advertisers Prefer Amazon
Overall, the Advertiser Perceptions report suggests that 42% of advertisers are seriously thinking about adding the Amazon demand side platform into their 2021 strategy in an effort to delve deeper into connected TV and over-the-top advertising techniques.
But with so many options out there, why is Amazon the DSP of choice?
Here are the top 4 reasons why advertisers are gravitating towards Amazon’s DSP:
1. Amazon’s Gravitational Pull
Amazon as a sales platform is huge. In fact, Amazon is the world’s largest online retailer. And the size of the platform naturally generates interest. For example, the number of brands selling through Amazon is growing all the time (and is growing at an ever more rapid rate as non-essential retailers have been forced to close their physical locations during the pandemic). According to the Advertiser Perceptions report, advertisers are more likely to use the DSP that’s owned by the retail platform. When Amazon sellers are removed from the equation, Google and The Trade Desk are significantly more popular.
Amazon’s size also makes it incredibly familiar and visible amongst advertisers, making it a go-to-choice for those just starting to dip their toes into programmatic advertising. Advertisers know Amazon. They’ve purchased through its marketplace. They may even already be using Amazon advertising features such as Sponsored Brands. Familiarity is a big turn on. And this may explain why some of the less well known demand side platforms, such as Tubemogul, Oath, and Dataxu, aren’t performing quite as well.
There’s also the strong ‘network effect’ to take into consideration here; the simple fact that more advertisers choose the Amazon DSP because more advertisers choose the Amazon DSP. And so at this point, growth becomes a sort of self-fulfilling prophecy. Procter & Gamble’s Global Media Manager, Danilo Tauro, expands on this network effect idea in an AdExhanger post, noting that “as more advertisers and agencies leverage a DSP, fellow advertisers and agencies are incentivised to follow suit”.
2. The Powerful Reach of the Fire Network
The global health crisis that swept the world in 2020 had some pretty unexpected impacts on the digital marketing landscape. Lower ad demand was witnessed across most sectors, with Google noting that it ‘experienced a significant and sudden slowdown in ad revenues’ in March, and almost three quarters of advertisers stating that the COVID-19 pandemic was affecting upfront ad spending not only throughout 2020, but also into 2021. It is clear that today’s advertisers need to do more with less.
And so, what we’re seeing right now is a growing trend for advertisers to reduce the number of demand side platforms they incorporate into their strategy. This could have gone either way for Amazon. For example, Amazon allows advertisers to programmatically purchase ads for display only across its Fire TV ecosystem, which until recently has been somewhat restrictive. It’s meant that advertisers have needed to utilise at least one other DSP to create a more balanced, well-rounded strategy. But no longer. Today, Fire TV is hotter than ever, and it’s got the global pandemic to thank.
Fire TV has quickly become the ecosystem of choice for advertisers. Amazon excellently marketed its Fire TV devices as ways to ‘stay informed, connected, and entertained’ during the height of the crisis, resulting in a spike in viewers, particularly for content within the family and fitness categories as schools and gyms closed and families spent more leisure time at home. In a DigiDay post, it’s noted that ‘CTV buying is not specific to certain platforms’, with the author noting that they “see very few clients who are saying they want to buy connected TV but only on Roku”. Except now they are. And they’re demanding Fire TV. And they’ll continue to demand Fire TV throughout the crisis.
3. New Advertiser-Centric Features
Even during a challenging time, Amazon has been continually adding new features to its demand side platform. And perhaps most importantly, the type of updates it’s been introducing have been specifically designed to give advertisers exactly what they’re looking for. The Advertiser Perceptions study confirms that the most important aspect that advertisers look for in a DSP is audience targeting, which gives them peace of mind that their ads are being displayed to the right people, at the right time, for best results. Amazon has demonstrated an ongoing commitment to better meeting advertiser needs through a host of new features that have been launched within the past year.
Among some of the latest introductions is the new tab for audience discovery that came in October 2020 that makes it easier for advertisers to build audience segments. Segments can now be created based on a range of lifestyle factors and can be custom built to improve ad placement relevance and generate more conversions. At the same time, a new filtering feature was introduced that allows advertisers to create more relevant, tailored audience reports depending on their overall advertising goals. Amazon is currently one of the most feature-rich DSPs, making it very attractive.
4. Future Proofing
Over the past few years, we’ve all seen just how quickly things can change. And so it’s not surprising that one of the main priorities for today’s advertisers is future proofing. At a time when third party data standards are set to change, advertisers must be doing what they can to reduce reliance on this data, and ensure that they have access to first party data. And not just any first party data, either. Valuable first party data.
According to the Interactive Advertising Bureau, ‘first party data is the most critical data’, especially during this period of change. The IAB states that ‘if we don’t own the data, we can’t leverage the data’, and they’re right. But don’t other demand side platforms other than Amazon hold important first party data, rather than just third party?
Yes. They do. Google is the biggie here. The search engine giant does indeed hold more than its fair share of first party data. Primarily, it knows better than any other platform what its users are interested in. It highlights trends. It can identify purchasing habits. And it definitely does have value. Yet Google’s data can, at best, estimate.
Why? Because although it can highlight purchasing trends, it lacks Amazon’s authentic purchasing data that it’s able to gather through its retail platform. Google’s data tells advertisers what audiences might buy. Amazon’s data tells advertisers what audiences ARE buying. And this is the sort of data advertisers really need to shape their approach.
Leading into the Future?
Amazon’s demand side platform has been knocked from the top spot before. And it might be again. But for now, it’s leading the way, and it looks set to continue leading the way throughout 2021, and beyond.
With Google having ‘won’ during Q1 2020, it’s clear that Amazon’s rise to the top has been heavily driven by the pandemic, and by changing behaviours during the crisis. Yet many of the reasons we’ve explored for advertisers favouring the Amazon DSP aren’t temporary; they’re going to stick around.