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Amazon’s Ad-Tech Advance on E-Commerce

Opinion

Amazon’s Ad-Tech Advance on E-Commerce

By Nader Bitar

Earlier this year I wrote about how Amazon tends to disrupt and realign any industry it chooses to lay claim to. Some seven months on, that turned out to be fairly prophetic as the e-commerce giant has now officially entered the ad-tech fray with the full might of Sizmek’s tech stack behind it.

It’s not as though this comes as a surprise. After all, Amazon has been quietly assessing and building on its advertising offering for the last two years, but now having acquired Sizmek’s ad server and DCO, they are no longer operating under stealth, but instead outrightly challenging Google to its advertising crown. Facebook will also be watching with a wary eye, but much of the duopoly dominance we hear about is skewed in Google’s favor, pretty much controlling the programmatic space right now.

Nader Bitar, Deputy GM, MMPWW. Picture courtesy of MMPWW.

Yet, as industry silos continue to breakdown (remember Amazon used to sell books and Google was just an evolution of ‘Ask Jeeves’) the next era of e-commerce looks set to belong to ad-tech if Amazon’s example is any indication. We could soon see other retail giants start to leverage their own transactional data and jump on the bandwagon, with the likes of Walmart and Target looking to compete with Amazon and the other walled gardens on their own terms.

But, we’re getting ahead of ourselves. Amazon still has some way to go before it can compete with the big players in terms of scale, as it will need time to consolidate this ad-tech into its current offering and they are still relatively new in comparison to the other two. Still, this is encouraging for us regionally, especially with Amazon’s takeover of Souq now completed and the recent launch of Prime; the Middle East is clearly one market it wants to take advantage of and grow quickly.

While we may have been slow on the uptake initially, we’re certainly embracing e-commerce in the region now, with online sales estimated to reach $28.5billion by 2022 across MENA. It’s almost inconceivable that this figure was likely in single digits some five years ago, and now here we are, attracting major foreign and regional investment in a sector that some had all but written off.

The e-commerce market has gone from novelty to powerhouse in a relatively short space of time, a shift only made possible by the implementation of the right technology. We’re living in a unique consumer age, one that demands a personalized experience at every touchpoint, which in turn has bolstered the value of data in this industry. The use of analytics and specific data sets to create user profiles for better targeting is no longer a ‘nice to have’ – it’s essential and this is the direction we’re seeing the tech giants, as well as clients and publishers going in. They are actively aiming to give personification and personalization to everything, be it a website, a product or service – that’s the power of what we’re dealing with right now.

What’s clear is that the next frontier of e-commerce will continue to be led by tech innovation, which is where Amazon will be looking to play its ace card. A force to be reckoned with that goes way beyond the realms of just e-commerce, they have long since conquered the world of online retail and now they want to leverage their massive data advantage to create an attractive proposition for advertisers. It’s true they have captured some market share already, wrestling some ad dollars away from Google and Facebook, but with this new injection of ad-tech into its offering, it will further enhance its measurement and attribution capabilities, adding to its appeal.

Nailing consumer intent is the golden goose to unlocking value for brands, and in turn, fuelling the next stage of growth for the industry overall. If you think about it, Amazon are the natural home for effective advertising because their shoppers have far more purchase intent than their main competitors. That being said, if they do prove a success in this space, it will be interesting to see where this could lead for other retailers looking to implement a similar model.

Amazon are actively breaking down these industry barriers, and as much as they polarize retail opinion most of the time, they are the best kind of disruptive force because they keep competitors on their toes. We’re already seeing these walled gardens beginning to crumble in the wake of increased competition in the space, making way for a more fluid and flexible ecosystem, open to anyone who collects, trades and capitalizes on data.

As such, we’ll start to see more ad-tech, mar-tech and ‘MAdTech’ solutions emerge to enable this new frontier of e-commerce to go mainstream, using tech like machine learning and data science to adjust advertising to be more predictive and personalized. We’re still trying to find the sweet spot between assumption and assertion, which will propel marketers to look more closely at engagement metrics and specific solutions that can help them measure effectively.

What we’ll need to be mindful of is ensuring whatever technology we deploy is used to enhance e-commerce for the better. Amazon’s commitment to creating a viable ad-serving arm of the business shows serious potential in providing value to both advertisers and the end consumer, but and it’s a big but, they need to put in the leg work to really understand the many nuances that come with a space as multifaceted as ad-tech.

At the end of the day, tech may be the ultimate enabler, but we should start with the need and then work from there, not the other way around. Amazon may well have gotten into the ad-tech business for entirely different motives, yet we can’t deny that they may well prove just what the industry needs. 

Nader Bitar is the Deputy GM, MMPWW.

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