Amazon is reportedly developing an ad network, which, coupled with its recent acquisition of Twitch, could make it a competitor to watch out for.
As the ink dries on Amazon's nearly $1 billion acquisition of video platform and gaming community Twitch Interactive, the e-commerce giant is also reportedly developing an ad network that could leverage the data it already has on its roughly 250 million users, to challenge Google and Microsoft by delivering better targeted ads.
According to the Wall Street Journal (WSJ), Amazon may begin testing the platform, Sponsored Links, this year. Citing people familiar with the matter, the WSJ says Amazon initially plans to replace the ads on its pages that Google currently supplies.
Amazon did not respond to a request for comment.
However, insiders say not only can the Twitch deal help Amazon develop great gaming content of its own, it also gives Amazon new channels for video advertising, a new audience to target, and additional data on the behaviors of said audience, which, in turn, can help make it an even more formidable adversary in the ad network space.
Amazon has been involved in gaming for some time and Twitch can provide a new channel for video advertising, notes interactive media strategist Tessa Wegert.
"Where online video advertising is concerned, Twitch puts Amazon on more equal footing with sites like YouTube and shores up its video offerings for digital marketers and brands," she adds.
In addition, Jay Gould, chief executive of online video advertising platform Yashi, says Amazon has "a tremendous amount of first-party data for incredible ad targeting capabilities" and, after the Twitch acquisition, this means it has a great programmatic offering.
"Twitch provides them with quality content and a huge online video audience, both in display and pre-roll video," Gould says. "Amazon and Twitch together will deliver a unique value proposition that most other companies cannot emulate - the layering of reach and purchase intent data that is the holy grail of advertising."
Indeed, according to a press release, more than 55 million unique visitors viewed more than 250 million hours of content on Twitch in July 2014.
Gould says it will be interesting to see if Amazon continues to make acquisitions in the ad-tech vertical to layer on additional programmatic technology.
For his part, online marketing expert Bryan Eisenberg says Amazon is adept at using data to deliver great experiences, such as it did with the hit series it developed after providing free video to consumers via Prime. Thanks to Twitch, it has a similar opportunity in gaming now.
"It's about being able to tie it back to users and what they play and enjoy so [Amazon] can plan for better games, upsells, and huge, huge data placements, which feed right back into the ad network," Eisenberg says.
Whereas most ad networks know about preferences and search history, Amazon knows what consumers have purchased, browsed, and clicked on, Eisenberg notes, adding that it even knows what users' friends have liked and that puts it in quite a powerful position as well.
Amazon is also really good at leveraging data, including minute details such as how customers move their mouses to add items to their wishlists and what items they share. Consequently, it has the ability to create a pretty competitive ad product even though it won't necessarily have as much inventory as Google and YouTube, Eisenberg says.
He adds that there are 1 million participants in Amazon's affiliate program who are now able to monetize with other ad units. This might very well tempt them to move away from Google.
"It should be fun to watch," Eisenberg comments. "I think Google took a big gulp."
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Lisa Lacy is senior staff writer at ClickZ. In addition to ClickZ, her work has appeared in The Huffington Post, The Luxury Spot, LearnVest, MarthaStewart.com, GoodHousekeeping.com, amNewYork, and The Wall Street Journal. She's a graduate of Columbia's School of Journalism.
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