Coupled with Amazon's ascent up the ranks of digital advertising was its acquisition of Sizmek Ad Server and Sizmek Dynamic Creative Optimization in Sizmek's chapter 11 case. Sizmek was a leading online advertising, campaign management and distribution platform for advertisers, media agencies and publishers, and it assisted clients with reaching and engaging a broad consumer audience with advertising and other content. Sizmek delivered advertising and digital content across multiple online media channels, such as digital video and mobile apps. It did so by providing a suite of tools for buying and selling online media, targeting online consumers using data-driven methods, delivering online advertisements, and tracking advertisements as they get passed from advertiser to website publisher, and then from the website publisher to the consumer's device. Sizmek derived most of its revenue from volume-based fees for use of their digital campaign management and distribution platform.
More specifically, Sizmek's business fell into three business units:
1. Creative - an internet advertising delivery service that helps publishers generate advertising income, where Sizmek served and tracked digital advertisements for around 1,500 advertisers.
2. Media - running a Demand Side Platform that allows advertisers/agencies to buy digital media in an automated fashion and assists in determining which ads should be delivered to consumers. This included a Managed Service Business and a Self-Service Platform
3. Data - consisting of (i) services that analyze website and classify them based on content in order to prohibit or target certain types of advertising and (ii) Data Management Platform that processes non-identifiable information to develop audience segments for targeted advertising.
Sizmek's bankruptcy filings present some interesting information on business trends in 2016-2018: with respect to their Media business, the market apparently shifted to the lower-margin Self-Service campaigns (significant decline in Managed Services) - and diminishing the business case for maintaining their DSP. Together with Sizmek's costly acquisition of Rocket Fuel in 2017, Sizmek's top-line was severely impacted.
So what did Amazon see in Sizmek? A pair of DigiDay articles discuss some of the key benefits & challenges. A few interesting points are as follows. Amazon purchased the assets for $30 million - assets that were not part of Sizmek's issues in Media/DSP - as a benchmark, leading into chapter 11, Sizmek's projected 2019 revenues were $170 million. Also, Sizmek's ad server business has a number of high profile clients, including Volkswagen, Chrysler, Uniliver, Chanel, H&M and Apple, and could buttress Amazon's DSP business and accelerate growth in advertising. In terms of challenges - noteworthy will be whether Amazon will be able to retain key product talent to build and maintain ad servers - which incidentally, Sizmek was in the process of migrating to upgraded servers while it was suffering financially.
In any event, this appears to be a low-risk bet for Amazon given its cash reserves - even though it will most certainly will require significant time and investment to integrate with Amazon Advertising - and could help Amazon take the next step in breaking some ground into the Google/Facebook stranglehold on digital marketing.
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