With Microsoft in tow, Amazon’s DSP tightens its grip on the open web

Start with the Microsoft deal: By March, Microsoft’s demand-side platform (Microsoft Invest) will shut down. Over that time, advertisers across North America, Latin America, the European Union and Asia Pacific will have had the chance to move over to Amazon. Many likely will. When they do, they’ll be onboarded via Amazon Ads reps or through the ad tech activation partner program, depending on their size, agency ties and service-level agreements. It’s the equivalent of a concierge handoff into what’s fast becoming one of the most powerful ways to buy ads on the open web. 

OK so this is an onboarding announcement? Sure, it’s an onboarding announcement. But it’s also part of a bigger play. By bringing Microsoft’s programmatic marketplace Monetize into the fold, Amazon continues to stitch more of the open web into its DSP. That consolidation makes the sales pitch to advertisers even easier: buy through Amazon, get the performance edge of its shopper data, and in some cases a lower take rate. Amazon offers discounts on DSSP fees where advertisers use it to buy third-party inventory. Reach, data and pricing power — all in one place.

“We recognize that moving to a new media buying system is a change for the migrating advertisers. Amazon Ads is committed to making the transition seamless for Microsoft Invest customers. Customers will receive high-touch transition support combined with the measurable performance, extensive reach, and differentiated AI capabilities offered by Amazon DSP,” said Alan Moss, vp, global ad sales. “In addition, expanding our Certified Supply Exchange program to include Microsoft Monetize represents a meaningful step forward towards increased collaboration beyond the customer migration period.”

Amazon’s DSP has been on a tear: Over the last few months, Amazon’s DSP has picked up inventory deals with Roku, Disney, Netflix, Spotify, SiriusXM and, most recently, Microsoft. Taken together, the partnerships amount to a broad — and increasingly enviably — streaming footprint. In the U.S. alone, Amazon DSP advertisers can now reach 80 million CTV households through a combination of Amazon-owned inventory and Roku. That growing footprint solves for scale. The next frontier is performance. To close the gap between how campaigns perform on Amazon versus the rest of the internet, the company has spent the year deepening relationships with publishers like Hearst. The goal is to make Amazon DSP not just big but effective — on and off its own turf. For advertisers, the pitch is straightforward: the scale of the open web, the precision of Amazon, and performance that doesn’t drop off once beyond the commerce behemoth.

And then there are the fees: True to form, Amazon is doing what it does best: applying pressure on margins by leveraging its scale. According to ad buyers Digiday has spoken to throughout the year, Amazon’s DSP fees typically range between 4% and 8%. In some cases, those fees drop as low as 1% — and occasionally disappear altogether. It depends on spend levels, agency relations and the type of inventory being bought. Bottom line: Amazon is willing to undercut the market to win share, especially when it comes to pulling dollars into its DSP.

Advertisers are taking notice: not that it should come as a surprise. Amazon is handing them the ad industry’s holy trinity: reach at scale, measurable performance, and pricing that undercuts just about everyone else that matters. The ad dollars are following. Over the second quarter, Amazon’s ad business pulled in $15.7 billion, up 22% over the same period a year ago. Unsurprisingly, the DSP has done a lot of the heavy lifting. Ad buyers told Digiday their spend on the platform is already up this year by anywhere from 12% to 45%.

Does that mean it’s a threat to The Trade Desk? Yes, Amazon is capturing ad dollars that might’ve otherwise gone to The Trade Desk, but the shifts so far are incremental, not sweeping. Holding companies are reallocating spend between DSPs, but it’s in the low hundreds of millions — i.e not the kind of scale that dents a company pulling in nearly $700 million a  quarter, as The Trade Desk did in the second quarter. What’s changed is the market dynamic. Amazon has shown that exclusive deals are no longer a long-term differentiator for DSPs — those can be replicated. What matters now is first-party data. On that front, Amazon has a structural advantage.

Why now? Because Andy Jassy needs advertising to carry more of the load. The push is about profitability. With rising costs elsewhere in the business, Amazon has made clear that advertising — like AWS before it — needs to become a core profit engine. Jassy said as much in 2023, and the company has since overhauled its DSP to match that ambition. But it was this year that those plans really started to metastasize. Amazon ad execs positioned the DSP as a primary on-ramp for ad dollars across the open web. It’s not there yet but few doubt it will get there — a notable shift for a company that, until recently, treated advertising as a side bet. The goal is to make the Amazon DSP the default way to buy ads on the open web, not just within Amazon.