Amazon Acquires Sizmek Ad Server

Amazon Acquires Sizmek Ad Server

Amazon announced on Friday, 31st of May 2019, that the company has acquired Sizmek Ad server.

Although terms of the deal were not disclosed, one company that was also bidding on Sizmek’s ad server believes the Sizmek was seeking about $30 million for its ad serving tech. Sizmek filed for bankruptcy on March 29, leaving its ad server, demand side platform and data management platform up for grabs. Sizmek was looking to capture between $50 million to $60 million for all its parts, but decided to offload the DSP and DMP to Zeta Capital for an estimated $36 million, the person involved in the bidding said.  Of the three businesses, the ad server was the only one that was profitable, as it generated between $75 million and $80 million last year, up nearly 10 percent year-over-year, this person said.

In a statement, Amazon said that once the deal closes, “Sizmek Ad Server and Sizmek DCO [Sizmek Dynamic Creative Optimization] will operate separately from Amazon Advertising for the time being. We look forward to working with the team, and we’ll share more updates as we invent and create new opportunities to better serve our advertisers over time.”

Generally speaking, Sizmek’s ad server competes directly with Google’s Marketing Platform, which help marketers place digital ads and measure their effectiveness. There also aren’t many ad servers that exist within the market, especially not at the scale that Sizmek offered.

Amazon’s move to acquire Sizmek’s ad server will allow marketers to use its rich data – which includes both what people actually buy and what they search for – to target consumers with ads outside its own walls. The combination of Amazon’s robust data and the ability to target consumers outside its walls could also potentially challenge market-leader Google. What’s more, Amazon could be getting paid to drive consumers to its website through ads marketers buy and place outside its platform.

“Usually, you pay to get traffic to your site, but Amazon is going to be making money to drive traffic to its store – it’s just so Amazon-y,” says Jon Bond, chairman at SITO Mobile, a data location company. “Though Amazon’s greatest competition might not be Google, but instead the government, because it sounds a lot like vertical integration and at a certain point, a monopoly.”

Amazon captures nearly 50 percent of all eCommerce sales, or roughly $258 billion, according to eMarketer.

What it means for marketers

Within the past 12 months, there has been a massive mind-shift with brands who are now beginning to view Amazon not just as a retail partner, but as a powerful advertising platform that rivals Google and Facebook, says Joshua Kreitzer, founder and CEO of Channel Bakers, an agency that’s specialized on advertising through Amazon’s platform since 2014.

“Amazon knows our shopping behaviors, which makes their data extremely valuable to manufacturers. But equally as important, Amazon over-indexes sales performance within the e-commerce industry,” Kreitzer says.”In other words, brands get the best of both worlds by targeting relevant shopper audiences and closing the sale within the same ecosystem.”

Amazon only has one dynamic creative type, dubbed “Dynamic e-commerce Ads,” which are hardly dynamic. The format only features the product’s image, title, price and review rating.

Yet the move to acquire Sizmek’s ad server will allow Amazon to “make very aggressive moves with video ads through its video in search product and over-the-top,” Kreitzer says. “Sizmek’s ad server will help them provide advertisers with more robust dynamic creative placements.”

Still, Amazon’s potential to challenge Google isn’t without issue.

“One large pain point for holding companies is Amazon needs to immediately address its reporting capabilities,” Kreitzer says. “With their search console it’s hard for holding companies and agencies to shape traditional advertising metrics like paid versus organic, lifetime value, demographic insights, mobile versus desktop and geographic data.”

Hugo Loriot, managing director at data consultancy Fifty-Five, points to another tech powerhouse that made a similar move: In 2013, Facebook acquired Atlas, an ad server that would be used in a similar fashion to how Amazon likely intends to use Sizmek’s. Despite the obvious synergies, the acquisition was a failure, as Facebook shut down its ad server just three years later. 

“From a technical standpoint, an ad server like Sizmek will not be easy to integrate,” Loriot says. “Facebook basically failed to integrate Atlas into the bigger Facebook ecosystem, and something similar could happen to Amazon.”

“It’s far from guaranteed that Amazon’s move will be successful,” Loriot adds. “I’m really curious if they will be more successful than Facebook, but I doubt they will be. Yes, Sizmek’s ad server would bring creative optimization and reporting, that is, if they actually get it to work. I’m just curious how they will integrate it and to me, that will take at least two to three years before it is really ready to hit the market.”

Sourced from: adage

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