Amazon is poised to become a mobile ad juggernaut. Its ad business has come off an absolute tear seeing its US share of digital advertising spend increase from 7.8% in 2019 to a predicted 14.6% in 2023. I believe that Amazon is on the cusp to becoming a major player in the mobile landscape and not just in banners. How is Amazon taking over mobile? What are its secret weapons? Who are it's top TAM partners?
Handicapped growth
As of writing this Amazon Publisher Services (APS) is by far the most red velvet roped off ad network for mobile publishers. Its usage is only available by either invitation or qualification. For example, out of 8 applications I’ve submitted on behalf of clients I've only been accepted once. The thinking here is that they’re prioritizing mobile games and apps that have a high match rate with their Amazon ID, which their bidding algorithm is based on. No high match rate, no access.. In gaming I’ve seen that evergreen titles (Chess, Mahjong ect) have been getting access to APS quicker than they’d been able to press the application button. I’m pretty certain that the rule of thumb here is that if you have a user base that has high purchasing power and that’s active on Amazon you’ll be in.
TAM the Secret Weapon - Your margin is my opportunity
Transparent Ad Marketplace or TAM (Amazon apparently loves acronyms) is what currently sets APS’s performance in Ad monetization in a league of their own. APS has their own direct eCommerce demand which competes nicely in terms of eCPMs against gaming demand from other networks. But APS also bolster its network demand by grouping it together with a bunch of DSP demand. APS then charges a commission somewhere between 15-18% for these DSPs to use its piping and to take care of payments. This is quite standard in the industry, but APS does this a bit differently, they allow you as a publisher to reach out to DSPs directly and strike a IO deal (TAM deal) which means that the APS margin goes from a percentage to a fixed cost that’s just a couple of cents on impressions. Publishers of course then have to invoice the DSPs directly but the results speak for themselves. Results below show APS Banner ads earnings over time. APS was integrated on 10/10 and TAM deals were struck 11/01.
TAM deals enable APS to go from a top 5 or 6 networks in terms of revenue to a top 2 network on banners. APS is now in the Top 3 Share of Revenue for Banners for this particular publisher and the word among ad monetization managers is that this is not an isolated incidence but the norm once 3 or 4 TAM deals are made. In my experience the top DSPs currently to strike TAM deals with on APS are:
InMobi
PubMatic
Xandr
Sharethrough
OpenX
LoopMe
MobileFuse
Smaato
Rubicon
Index Exchange
Video end cards an untapped potential?
For the last 24 months we’ve witnessed a video creative end card arms race that was started by Ironsource and quickly reproduced by Applovin. Now we live in a mobile world where video end cards on interstitial and rewarded ads have playable end cards that require users to click 2 or 3 times to exit. At the cost of user experience this has massively increased CTR and Instal rates for networks that super impose these end cards. APS does not yet technically support these types of end cards on its network, but it’s on their roadmap for this year. That means there's tremendous growth on the Video side that's not yet priced into APS. The of results below show these end cards effects on CTRs when an unnamed exchange implemented them (source Tomas Yacachury).
APS Mobile Supernova
The fact is that APS is artificially stunting its growth by slowly onboarding publishers. But when these publishers are approved they're able to strike direct deals with DSPs that massively increase their earnings. Also at some point this year APS’s video inventory is about to get an order of magnitude better conversion rates on video. It’s hard to see a world where when Amazon Publishers Services choose to open their gates to all how they do not explode onto the mobile ad market and dominate.
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