Buyers cite Amazon’s pricing, inventory access and flexibility as key advantages

Advertisers are shifting millions of dollars in ad budgets, particularly in connected TV (CTV), from The Trade Desk’s demand-side platform (DSP) to Amazon’s. Key reasons include lower fees, improved user interface, greater measurement visibility, exclusive live sports, Prime Video’s growing reach, and a more collaborative partnership model.

One global auto brand moved approximately $80 million in annual ad spend from The Trade Desk to Amazon’s platform by the end of Q1, according to an adtech executive familiar with the deal, speaking anonymously to protect industry relations. Part of the reason for the move is that the brand can now sell its cars on Amazon.

A second global tech brand redirected nearly $5 million of ad spend for a single campaign to Amazon’s DSP, but continues to spend with The Trade Desk, the source said. While The Trade Desk’s technology is effective, Amazon has been aggressively building out its tech stack, they added.

At PMG, 80% of clients have shifted tens of millions in CTV budgets to Amazon’s DSP over the past year, money that was previously going to The Trade Desk, said Mike Treon, PMG’s head of CTV and video strategy.

“At a time where budgets aren’t growing significantly across the board, [Amazon’s gain] does come at the cost of some of the incumbent folks,” Treon said.

Amazon’s ad revenue grew 18% year-over-year to $13.9 billion in Q1. The Trade Desk, meanwhile, reported a 25% YoY increase, generating $616 million in the same quarter.

A spokesperson at The Trade Desk said the company has seen “solid growth” and is “growing faster than Amazon,” citing its Q1 earnings. “Amazon can offer very cheap reach because it directs advertiser demand to its own platform, notably Amazon Prime. TTD doesn’t own or operate any media, so our value proposition to clients is very different, [helping] advertisers objectively decide between all ad impressions on the open internet,” they said.

Some buyers are cautious about Amazon prioritizing its own inventory, but others are enticed by its unique access.

A first media buyer at an agency, who spoke on the condition of anonymity, said 30% of its clients shifted a bulk of their CTV and display budgets from The Trade Desk to Amazon, particularly around Thursday Night Football.

A second media buyer at an agency, speaking anonymously to preserve industry relations, said 30% of the agency’s clients shifted 100% of their total annual ad budgets from The Trade Desk to Amazon in the past six months. Last year, only 10% of the agency’s clients moved budgets. The source wouldn’t share exact figures.

Over 40 brands at Tinuiti have increased their budget on Amazon DSP by 12% collectively as of Q1 this year, according to Elizabeth Marsten, vp, commerce innovation. In Tinuiti’s case, this spend was moved from several DSPs, including The Trade Desk.

Flexibility in inventory access and deal terms  

ADWEEK spoke to nine sources for this story and most said that it appeared to them as if Amazon had been making a play to lure The Trade Desk’s clients, partly because the DSP has been offering lower prices and improving its tech stack. Part of Amazon’s appeal has long been that buyers can use its DSP to buy across third-party CTV inventory, beyond Amazon’s owned-and-operated (O&O) properties.

An Amazon Ads spokesperson referred ADWEEK to a blog post and said it is giving “advertisers the control to choose where ads are delivered whether that be APD, third-party exchanges or any combination in between. Advertisers can even exclude Amazon properties if desired.”

According to Karsten Weide, principal and chief analyst, W Media Research, advertisers and agencies are moving budgets from The Trade Desk to Amazon’s DSP, particularly for CTV and cost-sensitive campaigns. “Amazon’s DSP market share has been bigger than The Trade Desk’s for a few years now,” he said. “However, both companies are still growing market share, so Amazon’s market share gain has not come at the expense of The Trade Desk’s share.”

Still, some buyers have other reasons for switching DSPs. A third media buyer at an agency pointed to a lack of flexibility in The Trade Desk’s upfront deals, which require brands to commit to minimum monthly spend thresholds—this amount varies by brand. However, if a brand doesn’t meet the required monthly media spend, they still need to pay a baseline platform fee, which varies. The Trade Desk did not respond to specific questions about its upfront deals.

“The Trade Desk is perceived as vulnerable at the moment,” the first buyer said, adding that, given the way Amazon has touted its pricing, inventory and exclusive programming, it appears to them as if “Amazon’s strategic approach is to really go after The Trade Desk, and their pricing is compelling and trying to eat up market share.” 

Competitive fees and pricing structure 

Amazon is offering tech fees on programmatic guaranteed deals as low as 1% of the ad buy across all media—below the 7% to 15% typically charged by other DSPs, according to two sources. Amazon has also reportedly lowered its DSP fees by up to 3 percentage points, per Digiday.

For some types of transactions, Amazon is charging tech fees under 10%, two media buyers said. Treon described those fees as “aggressive,” making it cheaper for buyers to access third-party inventory. Last year, most DSP tech fees hovered around 10% to 12%, he added.

Amazon did not respond to comment about its fee structure.

Beefing up third-party supply

Over the past nine months, Amazon has ramped up efforts to drive more third-party supply through its DSP, according to Treon, striking deals with players like Hulu on Fire TV devices and securing exclusive access to that inventory.

Most recently, Amazon signed a resale deal with Samsung TV Plus to resell its inventory.

“The most unique thing about Amazon is being able to use Amazon data on third-party inventory,” Treon said. “When you’re presented with a more advantageous platform fee, unique reach, and incremental data, we have to chase that in these times where we’re demanding efficacy and efficiency out of media.”