Amazon’s expanding ad platforms casts shadow on ad tech cottage industry

By Kimeko McCoy • March 5, 2025 •

Ivy Liu

Amazon’s ads business is muscling in on the same ad tech players that once fueled its rise.

Granted, it’s been edging into that cottage industry for years but its latest moves make those earlier steps look like a warm-up. Recently, Amazon has been rolling out features and services that were once the domain of companies like Skai and Pacvue. As Amazon tightens its grip, some casualties may be inevitable.

Amazon’s UnBoxed event last November revealed the writing on the wall. The tech behemoth announced a flurry of announcements and new tools, including a complete overhauling of its demand-side platform (DSP). That overhaul included the launch of its Performance+ tool, its AI-powered, black-box style ad campaign that was designed to woo non-endemic advertisers. Amazon also introduced AI-powered creative tools and a multi-touch attribution model. (Amazon did not immediately return a request for comment.)

All signs point to Amazon’s continued push to expand its ad ecosystem and capture ad dollars from businesses of all sizes. But the more tools Amazon launches, the more it encroaches on the vine of ad tech companies, like Skai and Pacvue, that have built their businesses on helping brands optimize their Amazon ads. There could be a world where Amazon cripples said companies, but three media buyers anecdotally say the industry isn’t there yet.

To put some numbers to it, Amazon’s latest earnings reported $17.3 billion in ad revenue, a 17% spike from the same period last year, according to Digiday’s previous reporting. Amazon’s DSP is likely the linchpin for the growth spurt, letting advertisers access its data to buy ads. But there’s still a value proposition to be made for third-party ad tech companies, sources said.

“There will never really be an end to the ad tech necessity as it pertains to the ‘A’ word [Amazon],” said a media buyer who spoke on the condition of anonymity. “Because even as they continue to evolve their capabilities, there’s always going to be space for someone to add a creative layer on top.” Or at least a chance for third-party companies to make the case for themselves by adding everything from audience insights to machine learning bidding to their suite of offerings.

At least that’s the case for Skai, according to Nich Weinheimer, evp of strategy at Skai. “To remain relevant as a solution provider to the world’s leading brands and agencies in the shadow of these major platforms requires a David and Goliath approach to solutions that drive value on top, performance gains beyond the native platforms, and tools driving transparency, efficiency, multi-tenancy, and scale,” he said.

Pacvue’s head of retailer partnerships, Clare Hogan, noted that the media landscape has evolved significantly over the last few years, forcing Pacvue to adapt. A few years ago, that meant investing in streamlined RMN experiences, beefed up optimization automation and improved reporting. “These days it means providing customizable ecosystems for brands to understand their category landscape, how different media and organic channels are impacting their retail business and action it efficiently,” Hogan said in an emailed statement to Digiday.

Ad tech players have been here before with the rise of Google and Meta, Weinheimer said. And this isn’t the first time Skai has had to revamp its pitch to advertisers to maintain its competitive advantage. The goal post has continuously shifted for the last two decades, pushing Skai to offer more holistic ad offerings, both brand awareness and performance marketing tactics, and other tools to “eke out multiple percentage points of ROI/ROAS,” he said.

For Stackline, a technology and services company that specializes in retail and commerce, it’s a similar story. The playbook moving forward is instead to focus on audience insights and “demystify” shopper data as the competitive advantage, according to Jake Bevis, senior director of professional services at Stackline.

Amazon’s walled garden is a win and a loss. The tech giant has seemingly never ending audience insights collected from its various properties as a retailer, publisher and media company. But advertisers are limited to Amazon’s ecosystem, and Amazon guards that intel like Fort Knox, said Katherine Cartwright, principal at Criterion Global, an independent media buying and planning agency. Media buyers aren’t keen on the idea of putting all their eggs in one basket when competitors like Skai and Pacvue work across a variety of retailers.

“You’re not just pigeonholed to just the Amazon universe. You’ve got a little buffet of retail media options,” she said, “and depending on where you’re distributed, it’s a nice way to cover your bases in a retail media universe.”

Still, Amazon’s encroachment could make for a wave of consolidation as the ad tech players look to stay competitive with Amazon’s continually tweaked ad offerings, but that’s a risk further down the road, per the three media buyers and retail media experts Digiday spoke with for this piece.

“In the future, we might see these types of companies get acquired by Amazon versus the company using resources to build out the tech themselves,” a second anonymous agency head of retail told Digiday.

https://digiday.com/?p=570779