Amazon's opening of Fire TV ad inventory to Dataxu, The Trade Desk has restrictions

UPDATE: August 7, 2019: Amazon will not provide Dataxu or The Trade Desk with Fire TV or IMDb TV ad inventory it sells through its own advertising services, indicating that the cracking open of the online giant's CTV marketplace to third parties has harder limits than previously expected, The Wall Street Journal reported citing people familiar with the matter. Dataxu and The Trade Desk will also not have access to data on what users have browsed or purchased via Amazon's e-commerce platform, according to the report.

Dive Brief:

Amazon is providing third-party ad tech firms greater access to the ad ecosystem on Fire TV. The company announced in a blog post Friday that all connected TV (CTV) apps using its publisher services can negotiate private marketplace (PMP) deals through two external demand-side platforms (DSPs), Dataxu TouchPoint and The Trade Desk, along with through Amazon's DSP.
PMPs, which are typically invitation-only, create a more direct connection between publishers and advertisers while still providing scale, and have grown in favorability as open programmatic exchanges run into transparency issues. In the blog post, Amazon said that advertisers using DSPs available via Amazon Publisher Services should see improvements around ad repetition, maximizing campaign reach, quality of inventory, supply access and fee transparency.
In opening more inventory to outside ad tech firms, Amazon takes a step toward breaking down the walled garden approach many digital ad platforms have adopted, according to CNBC. Jeff Green, CEO at The Trade Desk, said in an internal memo seen by CNBC that the move was the "most important initiative" in the CTV space to date and demonstrates Amazon is more supportive of an open internet than its big tech peers. Dataxu's chief executive Mike Baker in a statement to the publication echoed the sentiment, saying that the deal "changes everything" for the CTV market.

Dive Insight:

Amazon's decision to open Fire TV inventory to third parties breaks with the approach taken by digital rivals like Facebook and Google, where the inner workings of their ad ecosystems are kept close to the chest, often to the frustration of publishers and ad tech firms alike. The development will likely be a welcome one among Amazon's partners, and arrives as engagement with CTV is growing quickly. However, as The Wall Street Journal's Aug. 6 report makes clear, the deal includes limitation on which Amazon data Dataxu and The Trade Desk will have access to. The platforms will not have access to data on what users have browsed or purchased via Amazon's e-commerce platform. What advertisers will get are standard measurements for digital video ad buys, like reach, frequency and completion rates. They will also be able to buy CTV ads across platforms.

CTV advertising made up 49% of all video ad impressions served to viewers in Q1 2019, a 60% year-over-year jump, according to recent research from Extreme Reach. The strength of CTV and similar channels like over-the-top (OTT) streaming has bolstered the programmatic video market generally. EMarketer in May revised its programmatic video ad spending forecast upwards, attributing the growth to CTV, OTT and social video ads.

But given its newness and the ways in which it blends aspects of digital and TV together, CTV poses some challenges for advertisers. The space generally lacks the standards applied for its linear counterpart, and remains incredibly fragmented. Amazon providing more flexibility to DSPs like Dataxu, a firm described as "connecting the dots" in CTV by CEO Baker, could be a way to establish a larger framework for the industry.

Fire TV is among the biggest players in CTV, reporting 34 million active users in May. Those figures bested major competitors like Roku, which reported 29.1 million active accounts in Q1 2019. Amazon's change could be a means to score more investments in the service as ad sales remain a big engine of growth. In earnings results released last week, the e-commerce giant said its "other" category that mostly consists of advertising rose 37% to $3 billion in Q2.

The growth in ad sales outpaced peers like Google and Facebook, but came as Amazon reported a slowdown in its cloud-computing business and a pinch from rising shipping costs. Amazon's advertising growth has also decelerated in recent quarters, a potential sign that the company's ad business in reaching a new level of maturity after a period of rapid expansion.