Why Amazon Fire TV Cleared Out Third-Party DSPs – And What That Means For Programmatic

Two years ago, Amazon announced a programmatic Fire TV program with The Trade Desk and dataxu as inaugural DSP partners.

“This agreement is an important indicator of where the industry is going, and will become just one of many, over time,” The Trade Desk CEO Jeff Green told employees at the time.

But the dream of an open programmatic Fire TV platform was short-lived. A few months later, dataxu was acquired by Roku. Amazon ejected the DSP from the Fire TV program, rather than empower its main OTT rival with advertising ID data.

A year after that, The Trade Desk was quietly phased out, and now only the Amazon DSP can buy Amazon’s Fire TV inventory.

Green was correct when he said that the Fire TV programmatic partner program was an indicator of where the market was going. But his prediction that an open programmatic Fire TV would entice other big tech platforms to open up proved a pipe dream.
The Fire TV partner program turned out, in the end, to be yet another example of the ruthless hoarding of ad tech and media into walled gardens.

Amazon needed outside DSPs to bring more bidders and fresh creative to Fire TV. But once Fire TV reached a critical mass of advertiser demand, Amazon would let no third parties benefit from its flywheel.

Outside DSPs can still buy ads on Fire TV. The Trade Desk can make a direct deal with NBCUniversal, for example, and some of those ads may play on Fire TV. What they no longer have access to is Amazon’s SSP inventory – the 30% cut of ad impressions controlled by the CTV service.

But that’s the juiciest inventory.

When a broadcaster serves ads to Fire TV viewers, those are generally linear ads bought and sold ahead of time, not biddable, real-time impressions that come with a deal ID, said Jeromy Rew, associate director of Wunderman Thompson’s commerce media group.

Removing dataxu made clear competitive sense, said Prerna Talreja, biddable media co-lead for the agency Crossmedia. But dropping the independent DSP The Trade Desk marked the end of Amazon’s programmatic collaboration.

“It suggests Amazon is confident at this point that enough buyers will go directly with them,” Talreja said.

And Fire TV’s ad business doesn’t appear to be suffering from the loss of third-party bidders.

“Fire TV is Amazon’s baby for video,” Rew said, in part because the video streaming platform is growing incredibly fast, beating out the competition.

In programmatic, market dynamics should reward openness: More bidders mean higher rates and creative diversity (i.e. avoiding the frequency capping issue that plagues CTV), so it makes sense for Amazon, YouTube or any major CTV inventory source to embrace third-party DSPs.

But walled garden platforms have market dynamics of their own.

Fire TV vs. Roku

The video streaming platform most similar to Fire TV, Roku, takes a more open programmatic approach.

Roku uses a waterfall bidding process, and ensures its DSP has choice inventory selections and can meet all guaranteed deals, Talreja said. Even with that setup, a DSP like The Trade Desk still has near total visibility across Roku inventory, and bids against the Roku DSP.

Roku still holds walled garden-like advantages that guard its user data. The Roku advertising ID is obfuscated, so outside DSPs can’t track across Roku apps (similar to how Apple’s IDFA changes make it harder to track users going from app to app in iOS), or connect open web audiences to Roku audiences.

But Roku’s open programmatic approach stymies its own DSP adoption, said Vinny Rinaldi, head of investment and activation for the GroupM agency Wavemaker.

Rinaldi knows the walled garden perspective, too, since he was principal of the Amazon DSP’s programmatic partnerships with agencies until he joined Wavemaker in April.

Advertisers making direct deals with Roku might get favorable rates compared to buying the same inventory on Roku’s programmatic market, Rinaldi said. But The Trade Desk has a strong pitch as well, that it sees across all programmatic video and CTV, and can place Roku audiences in a broader advertising campaign, or control for frequency across media instead of on a single CTV service.

If an advertiser wants to show an ad to a user 10 times in a week, for example, Roku can target that same individual at a favorable rate, compared to any other platform buying those 10 Roku impressions.

The Trade Desk’s pitch is that they can target that individual 10 times in a week, (including a couple times on Roku), with the other impressions coming from other CTV sources. Overall, The Trade Desk’s 10 impressions may be cheaper, despite having paid more for those Roku spots.

“That’s where the platform control factors are starting to come into play,” Rinaldi said.

The move to close off outside DSPs may backfire on Amazon, if buyers end up going directly to broadcasters for Fire TV ads, Talreja said. But does Amazon’s first-party data advantage make it compelling enough to disregard the programmatic market?

“I guess we’ll see,” she said.

But if history is any guide, Amazon Fire TV won’t turn back to its former open programmatic approach.

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