We’ve become immune to news of Amazon disrupting long-standing industries with acquisition after acquisition—Amazon spent $1.65 billion on acquisitions in 2018, headlined by Ring and PillPack. The year before, Amazon acquired Whole Foods for $13.4 billion. Whatever way you look at it, acquisitions have a reoccurring role in Amazon’s headline show. However, their purpose spans beyond business diversification. When it comes down to it, each of Amazon’s acquisitions bolsters its advertising business.
Let’s start with one of Amazon’s larger acquisitions: PillPack, which it bought for more than $750 million in 2018. On the surface, this looks like a pure-play designed to crack the $500 billion prescription business. And at its core, that is what it is. But there’s more below the surface. By acquiring PillPack, Amazon gets a ton of audience data—data that you can potentially use to power your advertising. Imagine a world where a PillPack user logs into the system to order medication, and during checkout, sees a series of ads with recommendations for shaving cream, toilet paper and nail polish from a nearby drugstore. This is the world Amazon is working toward.
But Amazon’s acquisitions reach far beyond consumer goods. Take one of its very first acquisitions, IMDb (the world’s biggest online movie/tv show database). At the time (1998), this was early in Amazon’s evolution and was, in all likelihood, a move exclusively to diversify beyond books. As time went on, however, and traditional video transitioned to digital, the value of this acquisition increased. Today, it serves as the backbone of IMDb TV, an ad-supported and free way to stream TVs and movies via the IMDb website or Amazon Fire TV.
Amazon’s acquisitions span beyond tangibility, too. That’s what we’re dealing with when we talk about Amazon’s acquisition of Sizmek’s ad server. While this acquisition won’t get you faster delivery or more content on your screen, with Sizmek now under Amazon’s proverbial wing, Amazon Advertising will get a whole lot stronger. Assuming Amazon connects Sizmek’s ad server with its advertising business, you’ll get a host of benefits, like better attribution. You also get dynamic creative optimization (DCO), which uses data to pick out the right ad to serve a person, as a bonus.
At the end of the day, Amazon’s acquisitions are all playing the same game: giving the company a more diverse business portfolio while simultaneously making it exponentially more appealing to you, the advertiser. When you combine the added audience data from acquisitions like PillPack and IMDb (plus the new services like IMDb TV) with the technological advantages of an ad server like Sizmek, you’re left with a can’t-miss digital advertising opportunity. How can you say no to that?