Can Amazon beat the duopoly?
Last week, James Hercher from AdExchanger tried to answer one of the frequently asked questions in our industry – Can Amazon chip away duopoly and beat them in the future?
If all goes well for Amazon, it can get Facebook, but not Google in the foreseeable future.
First, we have to look at the headstart. Google grew its ad revenue by $21 billion last year to hit $116.3 billion. Amazon doubled its revenue from $4.6 billion to $10.1 billion during the same period. So, even to match with Google, Amazon has to double its revenue for the next two years successively and even if happens, Google has a huge $100 billion headstart.
Let’s compare it to Facebook. Facebook pulled in $55 billion and when we look at the current growth rate of Amazon, it seems attainable. But it wouldn’t happen passively.
“To close that gap in the medium term would require either Amazon making a number of midsize ad-supported media acquisitions, or for Google or Facebook to be broken up, and we think that is still a low likelihood, notwithstanding Senator Warren’s recent polling strength,”
– Dan Salmon, Managing Director, BMO Capital Markets.
Next, consumer attention. Both Google and Facebook designed their business to capture consumer attention. But, Amazon’s prime video – that captures most of the users’ time is ad-free. So, there’ll be a cap on how much Amazon can run ads on its users.
“Time is a proxy for commercial opportunity”
– Brian Wieser, GroupM’s Global President, Business Intelligence.
Third, it still has a fairly new self-serve ad platform that lacks the sophistication of the duopoly. Google and Facebook have field-tested platforms that work exceptionally well for advertisers. Of course, Sizmek was supposed to bring in the tech capabilities for Amazon, but the integration is far from over and we still haven’t seen it in action.
Google Will Integrate IAB’s CCPA Specs
Surprisingly, Google is going to adopt IAB’s CCPA Specs in the upcoming weeks. We know Google still didn’t adopt IAB Tech Lab’s Transparency and Consent Framework (TCF) yet, but it is expected to do so in Q1 2020.
Similar to GDPR’s daisy bit, the CCPA framework will create a string to let the vendors know whether the user has agreed to a sale of his/her data to other parties or not. According to AdExchanger, CCPA will be live within AdSense, AdMob, Google Ad Manager, and DV360.
“We’re committed to supporting our advertisers, publishers and partners as they work to comply with CCPA”
– Google Spokesperson.
Also, Google wouldn’t use the framework’s standard contracts as it has product-specific contracts in place already. The way it works is quite straightforward. When a user doesn’t opt-out of a sale of personal information, Google would send ad requests as usual. When a consumer opt-out, it won’t pass the ad requests from its products (AdSense, Google Ad Manager) to third-parties via real-time bidding.
On the other side, DV360 won’t bid on impressions from users who opted-out. In case you are wondering, it isn’t clear yet whether Google will implement the specs as a part of its consent management platform, Funding Choices. As always, we’ll keep you posted.
Data Transparency Label
Data is a necessary part of programmatic trading and both the sell-side and the buy-side rely on it to identify users and value each impression. As there are plenty of data providers in the market, it has become hard for advertisers and publishers to match up/assess audiences from different providers.
To put it simply, there’s no standard way of defining an audience segment. Well, it might change soon. IAB Tech Lab is working on data transparency label to label the data segments from the providers based on their quality, modeling or origination, etc.
There are 20 standardized fields to help you assess the data. While you may not be actively buying or selling data at the moment, but with the declining third-party cookie usage, you’ll be required to collect or buy from other publishers/marketplaces. So, just a heads up.
What’s Next in Supply Path Optimization (SPO)?
Supply Path Optimization isn’t something new. Media buyers realized that they can cut down the number of SSPs to reach the optimal path to buy impressions without sacrificing scale and quality. In fact, some agencies directly partnered with ad exchanges to curate special inventory for them to buy.
Last week, Digiday interviewed agencies to understand where are we with the SPO and it seems, we’ve taken a few more steps.
Direct to SSPs:
Agencies are now going beyond not just DSPs but also exchanges to ink deals directly with SSPs. It can reduce the cost for the buy-side and better deals can be negotiated (finding undervalues inventories for lesser ad prices).
Rather than just finding the best supply path to buy impressions, agencies are creating their supply path starting from the SSPs. This way, resellers, and unwanted vendors are completely removed from the chain.
“We have seen that reducing the number of exchange partners hasn’t had an impact on scale or performance and has allowed us greater control over where and how we are buying”
– David Newman, Managing Partner for Programmatic, Dentsu Aegis, U.K., and Ireland.
Have any examples?
Omnicom Media Group buys display and video impressions from just 10 SSPs in the U.S.
“We’re working with SSPs to change the actual inventory they send us in the bid request to our buying platforms”
– Ryan Eusanio, Director of Programmatic, Omnicom Media Group.
The traders are passing a list of sites that they would buy the inventory from when they talk to SSPs. This means they’re trying to create a direct path (no hops) to buy impressions programmatically. But they don’t have to pay premium ad prices as publishers aren’t setting up a special PMP set up to enable this transaction. SSP is doing it for the advertisers.
As you have guessed, publishers couldn’t find any value-add in this process. If agencies start to trim the number of SSPs and set up a direct path to buy inventories, they fear that the competition will decline.
“Supply-path optimization isn’t doing anything for us”
– European Publishing Executive.
Ensure you’re encouraging multiple DSPs to compete for your impressions at all costs. If a buyer needs a direct path, then push for a PMP or programmatic guaranteed deal.
Privacy for America
Last Tuesday, ‘Privacy for America’, a new organization comprised of American Association of Advertising Agencies, Association of National Advertisers, Digital Advertising Alliance, Interactive Advertising Bureau, and Network Advertising Initiative released a framework for data and privacy legislation.
Read it here.
Moments that Matter
How social media is powering The Economist’s subscription growth – Digiday.
Click farms and buying traffic trickle into podcasts – Digiday.
Forbes Media acquires a stock prediction tool to help diversify its revenues – Digiday.
GroupM anticipates slower ad growth in 2020 – Digiday.