Amazon buys part of ad tech company Sizmek

Key Points
  • Amazon will acquire Sizmek's ad server and its Dynamic Creative Optimization unit. 
  • Sizmek and Amazon Advertising had "many mutual customers"
  • Sizmek Ad Server and Sizmek DCO will operate separately from Amazon Advertising for the time being, Amazon said. 
Jeff Bezos, founder and chief executive officer of Inc., listens during an Economic Club of Washington discussion in Washington, D.C., U.S., on Thursday, Sept. 13, 2018.
Andrew Harrer | Bloomberg | Getty Images

Amazon has agreed to buy part of ad tech company Sizmek, including its ad server. Amazon announced the deal Friday.

Amazon said it agreed to buy Sizmek Ad Server and Sizmek Dynamic Creative Optimization, which is a tool that helps personalize ads using data. Amazon said its own advertising unit, Amazon Advertising, and Sizmek "have many mutual customers." The two Sizmek units will operate separately from Amazon Advertising for the time being.

The deal comes as Amazon is a growing contender to take on the digital ad duopoly of Google and Facebook. The acquisition of Sizmek's assets will help Amazon further encroach on Google's ad business, experts say.

The deal will bring an ad server, which is a tool to actually place advertisements around the web, to Amazon. It will also give Amazon "dynamic creative," which is an industry term for ads tailored to a consumer's data. For instance, it could help make ads that are tailored depending on geographical region, stock prices or even the local weather.

Sizmek filed for Chapter 11 bankruptcy in March. In a voluntary petition filing, the company estimated its assets at between $100 million and $500 million. The company said in a press release on March 29 it was aggressively seeking to access its existing cash, and "intends to fully resume normal-course operations as soon as possible."

In April, Zeta Global said it had agreed to buy Sizmek's data management and demand-side platforms for up to $36 million. Sizmek also owns Peer39, which provides contextual targeting tools.

Amazon did not say how much it spent for Sizmek's assets.

Collin Colburn, a Forrester analyst, said the deal may bring some speed to Amazon's ad business.

"They've been slow," he said. "It just feels like they're very slow to come to market with innovations in their ad products. I'm hoping with buying a more traditional ad tech provider, the people that come along with it will be able to bring some of that expertise, some of that know-how."

Colburn also said the deal would allow Amazon to work with advertisers that don't sell products on Amazon — like airlines and restaurants — but want to use Amazon's data and target Amazon's customers.

Ratko Vidakovic, the founder of ad tech consultancy AdProfs, said Sizmek's server was considered to be the main indie ad server outside of Google's Campaign Manager. He said the server was likely the most valuable part of Sizmek's assets, followed closely by Peer39. Amid Sizmek's bankruptcy dealings, Vidakovic said the deal for Amazon was likely partly opportunistic and partly strategic.

Though Amazon could have instead built a server in-house, this speeds up the process, Vidakovic said. "You can have all the engineers in the world, but it's a shortcut of getting to market." Since Sizmek already has certifications in place, existing customer relationships and a base of agencies using it, this is likely a time saver for Amazon.

Vidakovic said such a deal signifies Amazon's intention to be a strong competitor and player in the display advertising world. "I think it's very, very early days for them still."

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