Dive Brief:
- Amazon signed a 15-year lease for 360,000-square feet in Brookfield Property Partners L.P.’s Five Manhattan West, per The Wall Street Journal and Bloomberg. The space will be the primary location for its advertising division along with teams for marketing, product design and engineering.
- The e-commerce giant will invest $55 million in building out the space and the office is expected to create more than 2,000 jobs for New York City. The deal included $20 million in tax credits from New York state retained for the next 10 years. Separately, Amazon is committing to creating 2,500 jobs at a new Staten Island fulfillment center according to the Journal.
- Amazon’s recent acquisition, Whole Foods, also signed a lease for a 60,000 square-foot location at Five Manhattan West.
Dive Insight:
Ad industry tea-leaf readers might find significance in the announcement. It’s happening right before Advertising Week, the annual NYC gathering for the advertising industry, and Five Manhattan West is steps away from many major ad agencies. Given the office is going to serve as Amazon’s primary location for its ad division, the move could be interpreted as just how serious Amazon is taking its advertising business.
WPP CEO Martin Sorrell has already gone on record citing Amazon as a major up-and-coming player in digital advertising, going as far as to predict it is a threat to Google in search ads given that brands can buy ads on a platform where people are ready to make a purchase whereas search ads on Google require consumers to click to get to a purchase site. Earlier this year, BMO Capital Markets forecast Amazon's ad revenue would reach $3.5 billion this year and grow 63% next year for a total of $5.7 billion. While still a drop in the bucket compared to the $22 billion in ad revenue that Alphabet reported in Q2 alone, Amazon's influence is still likely to continue to grow.
For its part, Amazon has been steadily adding to its advertising offerings. Late last month it expanded its programmatic offerings by opening its Amazon Media Group as a self-service platform to agencies and it began allowing sellers to buy high-value headline search ads.
