How Ad Serving Businesses Help Google and Amazon Disrupt New Industries
Feb 24 2020 | 07:45 PM | 4 Mins Read | Level - Intermediate | Read ModeJohn Mruz SVP of Strategy, Flashtalking
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An accomplished business leader with successful track record in implementing programmatic advertising platform solutions to drive marketing performance and ROI. John love's leveraging technology, data and analytics to solve complex & challenging business problems, but am equally invested in implementing the solutions and realizing the benefits.
Google and Amazon are steadily encroaching on new industries as the enter new lines of business, and meanwhile most of their new competitors freely give their data to Amazon and Google's ad servers. Flashtalking's John Mruz believes this is a mistake.
Google recently announced that it would be moving deeper into the financial services realm with the launch of customer checking accounts. While Google instantly represents a formidable competitor in any industry it targets, analysts have been quick to point out that this move is far less about new revenue and far more about more effectively competing with Amazon—another financial services disruptor—by acquiring new streams of customer purchase data.
For incumbent brands in any industry where Google or Amazon is making forays, this level of strategic positioning is alarming and can invoke a deep sense of helplessness. After all, what’s to be done when the titans of the world not only encroach on your industry but also represent significant must-spend line items within your media budgets? Do today’s brands have any choice but to continue to bankroll the very companies that are looking to disrupt their business models?
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The simple fact is that Google and Amazon will continue to expand their businesses into verticals like finance, retail, health, and gaming, and they will do so successfully by virtue of their deep understanding of so many areas of consumer behavior. What most incumbent brands don’t realize is that they’re putting more power into the hands of these giants than they should. While Google’s and Amazon’s size and strength give them an edge in every conceivable sense, today’s brands can take back some of their strategic advantages in one key area: ad serving.
The Industry’s Overlooked Duopoly
While both Google and Amazon are facing their fair share of antitrust scrutiny in their core business areas, very little attention has been paid to the scope of these companies’ dominance when it comes to ad serving. However, Google Ad Manager is the largest ad server in the world, and Amazon recently purchased Sizmek’s ad serving capabilities in perhaps one of 2019’s most underappreciated acquisitions. Together, Google and Amazon are a dominant force in today’s ad serving space, and that represents a serious concern for virtually any brand that considers Google or Amazon a current or possible future competitor. Google’s and Amazon’s ad serving businesses aren’t just revenue streams for the companies; in fact, the incremental ad serving revenue is rather paltry compared to their core revenue streams. However, their strategic value cannot be overstated: these ad serving businesses are invaluable sources of industry intelligence that give them an added competitive edge in a landscape where the deck is already stacked in their favor.
Through their; serving businesses, Google and Amazon have a direct view into the entire customer journey within any given vertical, and they are able to pinpoint the exact moment of conversion among competitors’ customers. This kind of intelligence is gold when a company is looking to enter a new product category. In choosing Google or Amazon as their ad serving partners, incumbent brands are giving these companies a clear window into one of their most valuable streams of customer insights.
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Reclaiming a Competitive Edge
Many brands even those that consider Google and Amazon their most concerning competitors, have resigned themselves to giving at least a portion of their budgets to these titans. After all, Google dominates today’s search and online advertising space. If you want your customers to find you, you’re beholden to at least some level of advertising through Google. Likewise, if you’re peddling a product, there’s a good chance Amazon represents a “need to be there” environment for your brand.
Ad serving, however, is a different story. Despite Google’s and Amazon’s prominent positions in the ad serving landscape, brands do not need to use Google or Amazon (Sizmek) as their ad serving providers. Alternatives do exist. And in employing an alternative, brands can reclaim a valuable source of first-party data that is currently flowing freely into Google’s and Amazon’s insights engines and informing their competitive ambitions.
By cutting off ad serving through Google and Amazon, brands can ensure an important piece of customer data remains invisible to these companies, thereby ensuring these titans can no longer stitch together the entirety of the customer journey within the industries they seek to disrupt. Today’s brands need every edge they can get in the battle to protect their turf from today’s tech giants. Ad serving represents one of the rare areas where such an edge can be gained.