Amazon courts media buyers with loss-leader tactics to compete with other major DSPs
Amazon Ads’s quest to become the first programmatic port of call for media buyers is intensifying.
It’s courting media agencies across the industry hoping that more will treat its demand-side platform (DSP) as their go-to programmatic provider. According to 11 media buyers who spoke to Digiday, its pitch to decision-makers emphasizes a refreshed user interface, CTV inventory, and, in select cases, financial incentives. Along the way, it hopes to expand its advertiser base to include more non-endemics.
While it’s far from winning over the industry, it’s gained media buyers’ attention — and likely that of market incumbents The Trade Desk and Google’s DV360.
Amazon’s offer to buyers
One agency buyer, who asked to remain anonymous, told Digiday the platform’s reps had made an unusual offer: for video investments made on behalf of new advertisers, including spend on Prime Video, the platform would offer an additional 10% worth of the client’s buy, up to a ceiling of $250,000. They told Digiday the offer was part of a broader pitch “pushing” Amazon DSP’s upper-funnel capabilities.
According to another anonymous media buyer, Amazon had reduced its usual “tech fees,” charges applied by a DSP when an agency uses its tech, in the last six months to induce agencies to spend more on its platform. The company showed “a healthy appetite to lower tech fees,” the buyer said. In this agency’s case, the fees had been cut to 10%.
Though rates differ among DSPs depending on the media agency involved (another media buyer told Digiday such fees could range anywhere between 3% and 15%), it’s a sign that, using the same loss-leader logic supermarkets apply to milk and bread, Amazon is content to slice its own margins if it persuades buyers and brands to entrust more ad spend with them.
“If you were going to make a decision between an individual DSP … Amazon eating some of the costs or fees or taxes would be a factor that would be relevant,” said Harry Inglis, head of activation at Media by Mother.
According to The Information, Amazon has also offered discounts to clients using Amazon Web Services to tempt them to spend more on ads.
An Amazon Ads spokesperson told Digiday in an email: “Amazon DSP helps advertisers reach an average ad-supported audience of more than 275 million in the U.S. alone. We’re focused on making Amazon DSP the best place to buy advertising through our continued innovation to increase efficiency and lower campaign management costs, while delivering outsized performance.
“By combining our trillions of purchasing, streaming and buying signals, diverse ad-supported properties, and advanced technology, we’re able to create meaningful connections between brands and customers that drive measurable business results at scale.”
