Now, it’s a major contender in the streaming wars.

How will the tech-turned-everything company approach programmatic advertising?

In 2013, Digiday called Amazon the ‘sleeping giant’ of media. Now, it seems, the giant has awakened.

In this post, we’re talking about Amazon, the media company, not necessarily Amazon, the eCommerce platform.

Amazon has slowly transformed into a media company, replete with the Fire Stick, Kindle Fire, Amazon Prime, and owned and operated sites like IMDb.com.

What has Amazon done with this owned content, and where is it going?

Amazon, the Third Largest Ad Platform in the US

Now firmly established as a media company, Amazon has quickly increased its advertising game.

“For more than a year now there’s been a steady murmur about Amazon’s encroachment on the territory of the Facebook-Google duopoly,” writes Nicole Perrin in a report for eMarketer.

But Amazon is slowly taking a piece of that total digital ad spend, percentage point by percentage point.

In 2018, Amazon accounted for 4.1 percent of all digital ad spending in the U.S.

In 2021, Amazon was expected to account for 8 percent of the digital advertising revenue; by 2026, that number will reach 13 percent.

It doesn’t sound like much, but it makes Amazon the third-largest programmatic ad platform in the U.S., behind Google and Facebook. In 2021, Google, Amazon, and Facebook accounted for 64% of all US ad spending.

Amazon isn’t exactly new to the programmatic advertising environment. Kindles have been around for a decade, and Amazon has offered sponsored spots at the top of its results pages for at least as long.

But the company has made critical changes to how it approaches programmatic advertising—changes that may contribute to making it a bigger player.

Amazon’s advertising business grew by 19% in Q4 2022, while Google and Meta saw ad revenue slow. That said, Facebook still beat estimates in Q4.

The growth is particularly impressive given the recession and financial anxiety many people are experiencing. But it does highlight the premium advertisers are putting on retail media networks and where they’ll fit into media mixes for years to come.

Where Is Amazon Going With Programmatic Advertising?

The ‘first steps’ in doubling down on programmatic advertising came in September 2018, when Amazon consolidated its advertising offerings.

Before, advertisers had to navigate Amazon Marketing Services (the full suit of CPC ad formats), Amazon Media Group (the unit that sold display ads on Amazon devices and properties) and the programmatic advertising platform itself. Now, these are all operated under one roof as Amazon Advertising.

“We’ve unified our product offerings under the name ‘Amazon Advertising,’” said Paul Kotas, SVP of Amazon Advertising. “This is another step towards our goal of providing advertising solutions that are simple and intuitive for the hundreds of thousands of advertisers who use our products to help grow their business.”

With simplification and accessibility as the goal, Amazon offers five features in one console:

• Sponsored Products specifically for the eCommerce platform
• Display ads for both Amazon and third-party sites
• Video ads for Amazon devices and properties like IMDb
• Amazon Stores to create branded stores
• Amazon DSP for CPC bids and monitoring

What does this mean for Amazon’s expansion into the programmatic advertising market?

Garett Sloane at AdAge writes that while there won’t be a major difference in the status of Google and Facebook as a duopoly, there will be a differential in what Amazon offers. “No other major platform is so plugged into what consumers buy,” Sloane writes. “Amazon doesn’t need to close the loop from ad to sale by reading uncertain data about when a person saw an online ad and when that led to an actual purchase. Amazon is the loop.”

That difference means Amazon will continue strengthening its impact on the programmatic advertising market. And it will certainly change what, why and how advertisers buy on a programmatic platform.

Retail Media Is the Future

Amazon isn’t just walking on Google and Facebook’s hallowed ground. It’s also ushering in a new era of advertising: retail media.

According to WPP’s GroupM, retail media represents 10.7% of global ad spending and is expected to grow 60% by 2027. The growth is staggering, but it makes sense.

Retail media networks give advertisers instant access to shopper-level data they can use to hyper-target consumers. For example, advertisers for Colgate could target Amazon shoppers who’ve bought a competitor’s product in the past 30 days.

That level of precision would catch the attention of advertisers under normal circumstances. Still, given the impending demise of third-party cookies and Apple’s App Tracking Transparency, the value increases exponentially.

As retail media continues to go mainstream, Amazon will evolve.

At the same time, other retailers looking to get a piece of the pie will invest. Walmart and Target are prime examples.

For more insights, sign up for MediaRadar’s blog here.

Say what you want about TV Upfronts — a tradition-mixed-with-business-event going back over half a century — but the week offers a glimpse into what networks have on offer and what media buyers can expect in the year to come.

Short on time? Download our free TV Advertising Trend Report!

More recently, the lines between traditional broadcast TV and streaming services have become blurred, a fact showcased in everything from rejiggered ad loads to innovative ad formats. At the same time, some of the upfronts reminded everyone that traditional broadcasting is here to stay — at least for awhile.

These are our top three takeaways from the busy week focused on the 2019-2020 slate.

Digital is now the norm: Broadcasters are reducing ad load, streamers are pitching primetime

“Stuffing seemingly interminable commercial blocks into programming is a losing battle when consumers can avail themselves of ad-skipping technology and ad-free platforms,” writes Marisa Guthrie at The Hollywood Reporter.

This is precisely why many of the broadcasters made a promise for a lower ad load per hour in their upfront presentations.

Turner and Viacom have made similar promises in the past few years; this year, NBCUniversal promised to reduce ad load by 20 percent during prime time in the last quarter of 2019 and Fox made the ambitious promise to reduce ad totals to two minutes per hour.

At the same time, ad formats are getting increasingly innovative with the overlap between traditional TV and streaming TV. NBCUniversal, for example, introduces prime pod ads for reduced ad load in conjunction with a new shoppable ad unit.  

With these innovative ad formats, the lines between digital and broadcast media are becoming increasingly blurred. After both NewFronts (the digital equivalent of Upfronts) and the TV Upfronts week, Amanda Martin at AdWeek wrote on the overlap: “The content of both events is converging today, with Facebook looking for upfront commitments and WarnerMedia addressing targeting and measurability via Xandr this year.”

Maintaining a competitive edge amidst this growing overlap is key for both the digital and traditional TV. In the TV landscape, it means a wealth of new information, concepts, and strategies. Becoming programmatic-literate and staying up to date on the evolution of programmatic TV, for example, is a new opportunity ushered in for networks to explore.

Broadcast TV is increasing its digital streaming presence

For its part, NBCUniversal took a couple of shots at Netflix in its presentation. The first was the (largely accepted but largely unsubstantiated) claim that The Office (an NBC show) remains the most popular show on the streaming platform. The claim planted a “subtle dig in advertising buyers’ minds that the streaming giant’s own original programming isn’t of the same quality as programs that come from old-school suppliers,” writes Whitney Friedlander at Fortune.

The other, more serious commentary was from Linda Yaccarino, chairman of advertising and client partnerships. Yaccarino announced that NBCUniversal’s upcoming streaming platform will be free to consumers (due to advertising) and have fully transparent data.

The announcement is not a surprise, with news surrounding the expansion of CBS, AT&T and Comcast into streaming services making headlines for at least the past year. But the NBC upfront confirmed: it will be direct competition for the top.

While streaming is in the docket, the collective pitch to brands was that the traditional broadcasters represent a better opportunity for advertising.

“The networks represent a “safe” environment for their messages, and the partnership with sponsors is still prized, despite the collective pivot toward subscription-based streaming services,” writes Brian Lowry at CNN.

Long story short: where advertisers spend their budget into 2020 will be telling in the ongoing conversation surrounding traditional and streaming TV.

Take a look at the top spending TV advertisers!

Of course: Disney showcases its staying power

While much of the week focused on the new, in many ways Disney showcased its staying power in the media giant’s first upfront after its acquisition of 21st Century Fox’ assets.

“Considering how many networks now fall under the Mouse House’s roof, it’s a miracle the Tuesday presentation isn’t still going on,” write Tim Baysinger and Tony Maglio at The Wrap.

Jokes aside, Disney’s upfront was just as much about the long lasting nature of some of its shows as it was about its new content. As Jason Lynch at AdWeek reports, one highlight was Disney spotlighting the full cast of Modern Family. The show first aired 10 years ago and is now heading into its last season. “It was a good reminder of how seismic an upfront presentation can potentially be,” writes Lynch.

Seismic or otherwise, each of the upfronts from earlier this month paved the way for new partnerships, advertising opportunity and platforms in 2019 and 2020.

The predictions below come from Todd Krizelman, CEO and Co-Founder of MediaRadar.

In each of the last three years, there has been a torrent of merger and acquisition deals in the media space. Media investment bank, JEGI, Inc., published that there have been nearly 2,000 of these deals made annually. Last year, more than 1,700 mergers and acquisitions were completed specifically.

Of those approximately 1,700 deals, three have stayed alive in our minds because of both the prominent nature of the companies involved as well as the high value of the transaction itself. Below are those three large deals in order of price.

3 of the Biggest Mergers and Acquisitions from 2018

1. AT&T purchased Time Warner, the cable television company, for $85 billion 

This merger, closed in June 2018, “would be the fourth largest deal ever attempted in the global telecom, media and entertainment space, according to Thomson Reuters data” and “the 12th largest deal in any sector.”

But, it was met with a lot of pushback. The Thomson Reuters article noted that the U.S. Justice Department felt like the deal would especially harm customers and provide AT&T, the second best wireless carrier, with an unfair advantage against its competing pay TV providers.

2. The Walt Disney Company buys Twenty-First Century Fox, Inc. for $71.3 billion

In the same month, The Walt Disney Company, a mass media and entertainment conglomerate, shoveled out about $35.7 billion in cash and around 343 million new shares to the shareholders of the other mass media corporation, Twenty-First Century Fox, Inc..

This acquisition allowed The Walt Disney Company to expand its direct-to-consumer (DTC) offerings and international presence.

3.  The Meredith Corporation acquired Time, Inc. for approximately $2.8 billion

In a January 2018 press release the mass media corporation, Meredith, announced its official acquisition of the American media conglomerate. In an all-cash transaction, the latter shareholders earned $18.50 for each share.

The deal aimed to increase readership, paid circulation, and monthly unique visitors to the site, as well as expand Meredith’s reach with the Millennial generation.

Will There Be a Strong Merger and Acquisition Environment in 2019?

Goldman Sachs doesn’t think so. The investment bank and financial services company was quoted in an article from TheStreet, stating that “November [2018] data does not capture the recent market selloff (SPX down 4% MTD), suggesting a modestly weaker M&A environment” as we advance into the new year.

Morgan Stanley is on the same page. Economists from the company predict a “15% chance of a recession in 2019.” This is not only an indication that the overall economy is failing, but also a sign that companies will spend less for new businesses.

More Consolidation, but Pricing is Coming Down for Media Companies

CNBC reported that the telecommunications corporation, Verizon, spent $4.4 billion for AOL in 2015. Then, just one year later, it acquired Yahoo for $4.8 billion. By December 2018, Verizon was dissolving around half of its $9 billion investment in Oath (a company combined of AOL and Yahoo) and recording a $4.6 billion loss from the two buys.

But, AT&T struggled even more.

The television business and news channel, CNBC, noted that, while shares of Verizon “were up about 1% to about $59,” shares of AT&T were down.

According to the same CNBC article, after the telecommunications conglomerate ruined its $49 billion DirecTV acquisition and basically halved the total value of the deal, it committed a similar mistake.

In October 2016, AT&T bought Time Warner for $107.50 a share, which was 40% more than when Bloomberg News first reported the potential acquisition, announced CNBC.

CEO and Co-Founder of MediaRadar, Todd Krizelman, expects merger and acquisition deals to continue, but predicts that their price points will probably lower.

There is reason to believe that their pricing will be on the decline in the year 2019.

Many companies will merge to achieve scale and a greater degree of competitive advantage, or sell in distress. Remember, even very large companies like Verizon and AT&T can struggle.

The Fuse Media: The Convergence of Technology & Media conference is the only hosted buyer event that brings together top technology executives in media. The seminar brings together some of the brightest minds in media and technology to discuss how these media companies can adopt the right tech quicker and more efficiently.

The 2018 Fuse Media conference was held in Philadelphia, PA from Monday, October 1st to Wednesday, October 3rd. This year, attendees benefited from:

1. Expert analysis of next gen publishing technology and trends
2. Case studies that probed leading tech tools and solutions in a no-holds-barred setting
3. Intel and high-level meetings with leading vendors
4. Connections with like-minded industry technologists that are elevating the media business

Attendees stayed in the heart of Center City – at the Loews Philadelphia Hotel.

3 Takeaways from the 2018 Fuse Media conference:

1. Data and technology is changing what it means to be a media company

2. Artificial Intelligence (AI) can be transformative … if you’re willing to fail

Kartik Hosanagar, University of Pennsylvania technology and digital business professor at The Wharton School, spoke. He talked about the history and opportunities surrounding Artificial Intelligence (AI). Here is Hosanagar’s list of five practical steps to start in machine learning:

• Set up an AI brain trust of 8 to 12 people in the organization (insiders and outsiders)
• Brain trust identifies a set of activities within your organization that you can automate using machine learning (ML)/Artificial Intelligence (AI)
• Classify them into short-term and long-term initiatives
• Construct a two-year ML portfolio, consisting of four to five short-term projects and at least one long-term project
• Figure out how the AI team will fit into the organizational chart: build or buy versus centralized or decentralized

In Hosanagar’s eyes, media companies should continue experimenting with AI, even if they fail early on, and to consider underlying business adjustments required to take advantage of AI, such as organizational learning and consensus building.

3. Inefficiency is a real problem. Time – not budget – is the #1 obstacle to tech adoption

Brian Kroski, American Media’s Digital Strategic Advisor, and Rob Keenan, the President of Keenan Media, explored objectives and obstacles associated with tech adoption. For instance, media companies often lack the time and resources to evaluate new technologies when making technology investments.

Kroski and Kennan were also the first ones to discuss Publishing Executive’s newest research report entitled “Tactics for Creating a More Agile Digital Tech Buying Strategy.” In this presentation, they dove into the tactics media companies are employing to streamline their technology evaluation and adoption efforts.

To overcome that lack of time and resources, Kroski and Kennan offer media companies the following solutions: invest in the brains of the tech stack – audience analytics, social media, and search engine optimization (SEO).

The overall 2018 FUSE Media Summit confirmed technology is here to stay and here to enact change in the media industry. As publishers, we need to find the right technology and continue experimenting with others like AI. If we want to survive and thrive, it’s vital to adopt technology sooner rather than later. It is also important to allocate both time and financial resources to ensure success with tech adoption and implementation.