Amazon Launches An Ad Exchange To Rival Facebook And Google

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Amazon has created a real-time bidding ad exchange, according to Adweek, putting it in a head-to-head battle with Facebook and Google for so called retargeting dollars.

Here's how it will work: If you're browsing on Amazon but decide not to buy that DVD of "Star Wars," Amazon will drop a tracking cookie on your browser. When you go elsewhere in Amazon's exchange network -- which includes Amazon, IMDb, DPReview, and various ad exchanges and publishers that Amazon has a relationship with -- you might see an ad pop up offering you another chance to buy "Star Wars."

It's pretty much exactly what Facebook has done with its FBX RTB exchange. Some analysts believe that Facebook may be able to generate $1 billion a year from FBX.

The advantage Amazon will have, however, is that it can use its vast trove of shopping data to target users with ads based on their purchase histories. Neither Facebook nor Google (which also does RTB retargeting via DoubleClick) can do that. Adweek says:

The self-serve RTB platform would hypothetically function similarly to Facebook’s Ads Manager in terms of how buyers could target their ads. Sources said Amazon is extremely protective of its data and wary of providing outside access, so like Facebook, Amazon's platform would enable buyers to create targeting segments such as “men; aged 25-34; in California; interested in high-definition TVs; who have purchased how-to books and home improvement tools.” But Amazon is not about to hand over its customer's names or individual buying histories.

The three giants -- Amazon, Facebook and Google -- now face off in RTB like this:

Amazon: Owns the best database of actual shopping history and purchases. This type of data is like gold for advertisers. Clients have long awaited the day when "the sleeping giant," as it is known in the ad biz, finally wakes up to advertisers. That day has dawned, it seems.

Facebook: Owns the best database of personal information about consumers. 1 billion users strong, with all their interests and friends, it's terrifically useful stuff for marketers.

Google: Has traditionally dominated the "purchase intent" sector of the category. When people search for "Star Wars DVD" online, that's a pretty good indicator they want to buy said movie. Google has been serving ads (and retargeting ads) against such requests for years. But its data on shoppers and their histories has never been as good as Amazon's or Facebook's.

Disclosure: The author owns Facebook and Google stock.



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