The Case For Amazon's Sizmek Shift Into Ad-Supported OTT

While there is some 11th-hour drama surrounding Maurice Levy’s Ycor bid for Sizmek, most observers expect Amazon to acquire the independent ad server. That could have some profound implications for Amazon’s video strategy.

While some are still scratching their heads over why Amazon -- predominantly a commerce platform -- would want to get into the ad-serving business, the obvious answer is: because they can.

Amazon already is approaching a $10-billion digital advertising market share, based largely on brand marketers running ads to drive search and conversions through Amazon.



But why does Amazon need to bolt an ad server on to its tech stack? One reason might be video. While Amazon’s Prime Video OTT service is an also-ran to Netflix, it's growing faster. According to recently released data from Comscore, Amazon Video now reaches 44% of OTT households in the U.S. -- up from just 33% two years ago.

While Amazon faces new competition from Hulu and a pack of new and soon-to-be-launched vMVPDs and/or SVOD services, its scale and the fact that it's adding an ad server suggest that Amazon may be considering expanding its advertising market share into pure-play video.

The move makes sense for a number of reasons. One is that video remains the preferred format for brand marketers. Another is that it may be a way for Amazon to extend its reach in the video marketplace -- and possibly even to recruit new members to its Prime service, which bundles video with its free shipping and discounts services.

Some of the new Amazon Video users attracted via a free, ad-supported version might ultimately decide to convert to Amazon Prime.

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