Matt Byrne, UK Director at FastPay, says Amazon’s header bidding solution is strong, but publishers need to maintain diverse revenue streams
Earlier this week, Amazon announced the launch of its header bidding solution, the Transparent Ad Marketplace (TAM), to further evolve its offering across web, mobile and video. This is a sensible move, as header bidding has seen a 220 per cent year-on-year growth in impressions. With a focus on transparency, simplicity and a better user experience for consumers, Amazon seems to be promising a solution that will address a lot of the issues that currently exist within the advertising ecosystem.
This side of Amazon’s business has grown rapidly and is now worth over $1bn (£734m). Amazon has two main sides to its advertising offering. Paid search ads are suitable for brands that desire greater prominence on the search result pages, such as a small brand looking to increase exposure, or a large brand looking to own a category or control featured products.
Its DSP offering allows brands to advertise with display creative both on Amazon and partner sites, and leverages the data that many feel is Amazon’s major strength. Whereas Google knows what people look at online and Facebook understands people’s relationships and interests, Amazon knows what people actually buy and for any eCommerce advertiser, this is vital and surely a major factor behind Amazon’s growth in this area.
Having a presence on Amazon is a prerequisite for using its advertising solutions. Brands are only able to direct customers to their products within Amazon, rather than to their own site. However, despite these restrictions, Amazon’s advertising and the additional scale it offers is another compelling reason to attract businesses large and small to the site, even if it ultimately just means more money and more consumer data in Amazon’s pockets, further strengthening its position. 38 per cent of all eCommerce searches in the US now start on Amazon, meaning that a presence on Amazon either through product listings or advertising can have a huge impact on a brand.
With TAM specifically, Amazon is building on the solution’s success in the US market and stepping up to the plate to take on other major tech players in Europe as IAB ad spend figures show digital media continues to grow at a rate of knots, with 13 per cent growth year-on-year. TAM’s focus on app developers helps to address the issues facing in-app header bidding that we’re hearing about from a number of FastPay’s mobile clients, and makes a lot of sense given that mobile now accounts for 57 per cent of all display spend, 70 per cent of video spend and 83 per cent of social media spend. As apps play a growing part of the mobile experience, this solution will go some way to giving publishers control over content and ad views, rather than the ad platform that automatically gains this from SDKs.
Additionally, from a financial perspective, any solution that removes a few links in the payment chain from advertiser to content owner is good for publishers, all else being equal. TAM has real potential to help publishers that are struggling with the management of multiple demand partners and direct clients to make monetisation of content easier.
Also, those that are suffering from long payment terms from tech partners could find them shortened. If Amazon follows Google, Facebook and other ad tech platforms that don't hold up publisher payments as agencies do, partners could benefit from improved working capital due to 30 day terms versus 90-150 days typically seen with large agency groups and brands themselves. However, over-reliance on one SSP partner can lead to problems, and content owners looking to grow their businesses need to understand that investors and lenders typically prefer businesses to have more diversified revenue streams. While this is a positive development, it's important that publishers don’t put all their eggs in one proverbial basket.