The Amazon Inventory: Will the Black Box Turn into the Glass Box?

September 5, 2019

MediaPost’s Data and Programmatic Summit, hosted in Lake Tahoe August 21-24, covered a deep dive of several topics that reflect both the inherent challenges that still exist in the industry today, as well as the most important opportunities and solutions that we continue to work towards. 

Lyle Seebeck, Supervisor of Programmatic Investment at ForwardPMX, joined a panel of talented experts from the industry to speak about Amazon and the online advertising goliath that it has become. With Amazon opening its Fire TV and fire stick inventory to third-party DSPs The Trade Desk and Dataxu last month, and conversations around “link-in versus link-out campaigns” continuing, the question of whether Amazon will encourage an open ecosystem has been a topic of lively discussion amongst industry insiders. As Jordan Berry, Senior Manager of Amazon Programmatic at Tinuiti, posed it, “will the black box turn into a glass box?”

This Amazon Inventory panel covered challenges, opportunities, best practices for advertising on Amazon and what the future for the platform may hold. We’ve highlighted some of the top takeaways below. To watch the panel replay in full, follow this link.

What are the primary challenges of advertising on Amazon?

Attribution: Across the board, all the panelists agreed that attribution has been a persistent issue with Amazon’s DSP. Sarah Koch, Programmatic Strategy Director at Havas, explained how it affects advertisers. “Attribution is challenging, especially when trying to tie back to other channels. More centralized reporting is important, especially if we’re running OTT and it’s an off-seller, and we can’t get that data back.” Lots of brands running on multiple DSPs wonder if they’re overlapping and competing with themselves.

Competitors: One distinguishing aspect of Amazon versus other online platforms is its variety of competitors across industries. Lyle gave insight into what that implies for inventory and data access.

“One of the bigger frustrations for me has been, in general, who can use their data, and when they can use their data. We were talking about the competition policies – they compete in so many different verticals that you don’t always realize, so if you’re a direct competitor with Amazon, you can’t just use their DSP to drive directly to your site. So, it was a surprise to us when we learned that one of our clients in the financial vertical competed with Amazon, and so we weren’t able to run through there. You wouldn’t expect that.”

Jordan examined competition from another angle. “Because of marketplaces like Amazon, everyone is so brand agnostic.” Her stat that just one out of ten categories on Amazon have high repeat brand purchases indicates that introducing your products and creating brand loyalty are difficult in this type of buying environment.

Education: Considering the evolving nature and vast number of Amazon ad products, the panelists found that Amazon often falls behind on keeping marketers up-to-date on best practices and new use cases. Jordan elaborated, “This creates friction when it comes to putting out a strategy that makes sense, and having the client understand why they should follow through, with proof of concept.”

Unification: Lyle alluded to how silos within Amazon’s organization can impair marketers’ attempts to unify strategy. It leads to a scenario where the agency media planner interfaces with Amazon’s brand lead, programmatic buyer works with their DSP support, and search manager interacts with an AMS expert. One approach to breaking down barriers is a holistic marketplaces team, which oversees and leads all strategy across Amazon touchpoints.

What are the biggest opportunities, and benefits for advertising on Amazon?

Moving Up Funnel: Amazon’s wealth of shopper data is well known for unlocking lower-funnel conversion, but the trend to watch is how they approach consideration and branding. Lyle suggests an analogy to Facebook, where  “we might be using DPA, and we’ll want to move up the funnel into prospecting. We’d start with the 1% Lookalike, because that’s going to perform the best in terms of using Facebook’s data most effectively. From there, you can get comfortable and [expand].” Especially now that more consumers are beginning their purchase cycle by using Amazon search for exploration, the opportunity will be there to build out differentiated upper-funnel audiences.

Audiences & Targeting: Another benefit to retailers is how Amazon can help guide them towards new users. For instance, when running a campaign, it can be hard to figure out which new audiences to test. Rather than throwing dollars at educated guesses, brands can use Amazon data to their advantage and show the segments which index highest with the core customer.

OTT Capabilities & Measurement: The growth in the overall OTT ecosystem cannot be overstated, and Amazon with its popular Fire TV device wants buyers thinking of it in the same sentence as Roku. Outside of the ability to overlay shopper data for audience targeting, Amazon’s DSP has an advantage in measurement. Being able to link an amazon.com purchase to a Fire TV ad via a single sign-in could lead to increased clarity where other platforms continue to struggle.

What will the future hold for Amazon’s DSP?

At the conclusion of the panel, Lyle gave his thoughts on the motivations for Amazon to open up their DSP.

“From a high-level perspective, right now Amazon is figuring out how to build demand for their advertising product. One way we’ve start to see them do that is by opening up their inventory to The Trade Desk, because they know that advertisers use The Trade Desk.” After that they’ll likely come to a crossroads of what’s healthier for their overall business: a highly profitable product like AWS which is open to all, or a sophisticated engine used exclusively for driving incremental revenue on amazon.com.

With a product and policies which constantly reinvent themselves, it can be difficult to project what role Amazon’s DSP will play in six months. Lyle advised that it’s still smart to strategize and take advantage of the current state of the platform, yet ultimately stay nimble enough to evolve those strategies as Amazon changes in the future.

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