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Amazon to Buy Sizmek's Technology to Boost Ad-Initiatives

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Amazon (AMZN - Free Report) is making every effort to disrupt the digital advertisement world backed by its aggressive initiatives.

This is evident from Amazon Advertising’s definitive agreement to buy the core ad-serving and personalized ad-creation technologies from Sizmek Inc.

While Sizmek Ad Server aids in placement of ads across the web, Sizmek Dynamic Creative Optimization (DCO) helps in creation of personalized ads for specific audience.

The move is in sync with the company’s continued focus toward strengthening ad initiatives. Further, these tools will bolster its advertisement business which in turn is expected to aid advertisement revenues.

Intensifying Ad-Competition

An eMarketer report shows global ad-spending by companies in 2019 is pegged at $333.25 billion, up 17.6% from 2018.

Further, a report from Statista, digital advertisement space is expected to generate revenues of $63.5 billion in 2019. Additionally, video advertising space is anticipated to generate $35.6 billion revenues in 2019. Further, the market is anticipated to hit $58.8 billion in 2023 at a CAGR of 13.4% between 2019 and 2023.

We believe Amazon is well poised to reap benefits from this potential market driven by robust ad business which has been gaining steam of late.

Apart from its latest acquisition plans, the company is reportedly rolling out video ads on smartphones by selling video spots on its online shopping app. This in turn bodes well for advertisers as they currently favor spending money on brief video clips.

Additionally, Amazon is leaving no stone unturned to leverage the popularity of its video game streaming services via Twitch in the advertisement space.

Furthermore, it has launched a free ad-supported video streaming channel, Freedive, via its IMDb movie website, which will help Amazon in attracting advertisers.

All these strong endeavors present a huge competitive threat to the ad-duopoly of Alphabet’s (GOOGL - Free Report) Google and Facebook (FB - Free Report) . Moreover, companies like Twitter (TWTR - Free Report) and Snap are also likely to face rising competition from Amazon’s strengthening position in the in the booming ad space.

Google-Facebook Duopoly in Danger

According to eMarketer’s report, while Google’s share in the U.S. advertisement market is pegged at 37.2% in 2019, down from 38.2% from 2018.

Per a report from Statista, the digital advertisement market in the United States is anticipated to generate $34.9 billion revenues in 2019.

Facebook’s share is expected to reach 22.1% this year, slightly up from 21.8% in the last year in this growing market of the United States.

However, Amazon which acquired 6.8% share in this particular market in 2018, is expected to grab 8.8% market share in 2019.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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