Amazon is not a newcomer to the online advertising market. Through its A9.com subsidiary, it has been involved in the online ad ecosystem for some time

But 2017 could see the online retail giant become a real force in the space with the introduction of a new platform called Amazon Publisher Services (APS).

As detailed last week by the Wall Street Journal, Amazon's first two products launched under the APS umbrella, Transparent Ad Marketplace and Shopping Insights Service, are potential game-changers for the company and signal that Amazon could be ready to make a big ad tech splash.

Shopping Insights Service

Amazon has perhaps the most deep, and therefore valuable, customer database in retail, and its Shopping Insights Service enables publishers to tap into that. Through the service, publishers can gain insight into their audiences based on Amazon's shopping data. 

Shopping Insights Service has been tested by a number of publishers, including Time Inc., which discovered using Amazon's new service that its Real Simple website is popular with new moms who are interested in purchasing baby products. The media company says that it will be able to use this data to lure advertisers. 

Amazon's new service shouldn't be a hard sell for publishers. While other companies, like Google and Facebook, offer tools that companies can use to gain insights into their audiences, neither Google nor Facebook has the kind of shopping data Amazon has, so it's likely that publishers will be eager to use Shopping Insights Service.

Transparent Ad Marketplace

The second product under the APS umbrella, Transparent Ad Marketplace, is a cloud-based header bidding solution. Interest in and adoption of header bidding has exploded in the past year thanks to publisher (and even retailer) motivation to maximize ad revenue.

But header bidding, which enables publishers to conduct simultaneous bidding for ad inventory across multiple providers, has also proven to be problematic. The most common header bidding solutions are implemented on the client side, which can impact page performance negatively.

Amazon's Transparent Ad Marketplace aims to alleviate that problem. As Amazon VP of Worldwide Advertising Platforms, Tim Craycroft, explained to the Wall Street Journal, Amazon's header bidding technology operates in the company's cloud, not on the client-side.

"That should let publishers pull in multiple sources of demand without clogging up their websites with lots of code from different header bidding providers, and slowing down their page loads," he said.

In addition to addressing performance concerns that have been a thorn in the side of today's most common header bidding implementations, there is also the potential for Amazon to apply its shopping data to the header bidding process to the benefit of both publishers and advertisers, something that could make Transparent Ad Marketplace particularly attractive.

Amazon's advantages

Amazon's advantages for making a big ad tech splash aren't limited to its data. Observers note that Amazon's ownership of AWS, its cloud computing platform service, offers it access to lots of computing power, something that is necessary for the kind of data crunching that drives the increasingly programmatically-driven digital advertising economy.

And Amazon's access to that computing power comes at perhaps a lower cost than any other company.

That might explain why Amazon will reportedly not charge publishers for access to Shopping Insights Service or Transparent Ad Marketplace, although the company says it might offer paid features and products in the future.

Success is not guaranteed

Despite its advantages, Amazon's success as a major ad tech player isn't guaranteed. For instance, its cloud-based Transparent Ad Marketplace is attractive on paper, but its viability will likely depend on Amazon's ability to forge relationships and build integrations with header bidders. 

Google, which is threatened by header bidding, is working on its own header bidding solution. If it can appease publishers with that, Google could disrupt the header bidding market that exists today and make it harder for Amazon to compete with its offering.

But Amazon's ad tech success might depend less on tech than the current politics of the ad industry. Publishers and advertisers alike are increasingly concerned about the dominance of Facebook and Google, and while they might be wary of a giant company like Amazon, it's possible the market will decide that a Big 3 is better than a Big 2.

Patricio Robles

Published 14 December, 2016 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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