Amazon’s Next Ad War

This is AdSpeak from AdWeek. So I think there is some excitement there, but then, yeah, also some trepidation because it's not just media buyers in the audience, it's also a lot of tech vendors who could potentially be threatened by some of these announcements. So towards the end of every year, Amazon, well, unboxes its new ad products at its Unboxed conference. What I like about Unboxed, especially lately, is that it reveals Amazon ads playbook for the next year. That's especially interesting now because, like Meta and Google, Amazon ads has, over the years, become a money printing machine. Its revenue over just the last quarter soared to almost $18 billion, a 24% year-over-year jump. Now, Katherine Lundstrom, our retail and commerce reporter, was on the ground, excuse me, editor. You can call me a reporter. No, no, no, you are an editor. Anyway, you were on the ground last week at this year's Unboxed conference in Nashville, Tennessee, and today she's going to tell us what she heard there, what she saw, and how 2026 could be different for Amazon ads clients, but also very disruptive for Amazon's competitors, but also potentially its partners. Katherine, welcome. Thank you so much. I'm excited to talk about this. I am too because I haven't really debriefed with you about this thoroughly, and so this is going to be kind of our debrief. It's a podcast plus debrief combined. How's that for efficiency? Yes, perfect. All right. So, Amazon, there've been about five or six Unboxed conferences, I think, since it started in 2019. I lost track because COVID just throws everything off. But this year, what was the vibe like compared to the previous year? I mean, so it was in Nashville this year instead of in Austin. Last year was my first time going, and it was just kind of like in town. I popped by, and the vibe for me was different because I traveled for it and did a lot more planning ahead of time, but it was in like a big resort conference center this time. So everybody kind of stayed in the same space, which I feel like maybe was a little bit different, and AI Buzz was a lot bigger this year than last. Last year, the Gen AI announcements that they made, everybody was kind of like, "Really? That's it." This year, it was impressive to the point of threatening. Oh, okay. Let's talk about that. What were the AI announcements this year, and what made them so impressive to the point of threatening? Yeah. I mean, it's like similar to the video generation that we've seen kind of accelerate in the last couple of months. All of a sudden, it's kind of indecipherable from real humans in videos, and people are being tricked by them constantly. The big one that they announced was their creative agent, and you can just talk to the chatbot. They want it to be like a creative director that you're talking to, and it can make a video ad for you in five minutes, which is, it is pretty wild, and it's like they showed an ad that P&G made and is running using the tool, and a few other brands have made ads and are running them. There was some skepticism from the folks that I talked to around how well it will work for everyone from the get-go. There's usually a little bit of a lag. Some bugs that have to be worked out once it gets rolled out to everybody. Right. You see the demo, and you're not sure whether the demo is going to actually translate to everyday use. Totally. That was pretty impressive, and there was a little bit of a, people were like, "Okay, that looks threatening to creative agencies." This isn't really who that conference is for, but if there were any in the audience, how were they feeling about it? I actually talked to one agency that was looking for a creative agency partner at the beginning of the week, and then they saw that roll out, and I was like, "Do you still need one?" They were like, "I don't think so." Oh, geez. Yeah. It's definitely replacing agency work. It sounds very similar to what Meta is doing, and also Google with some of their creative tools for ads generation. Obviously, those companies usually work with the media agencies, not so much the creative agencies. Right. So it's a little bit, I can see how scary, because it's sort of like they're being replaced behind the scenes from these platforms that they usually don't interact with. Yeah, definitely. They also have an ads agent that you can talk to in AMC and across the broader ad platform to help you plan your media, or yeah. That's not as significant too. You wrote about that. Yeah. I mean, AMC has always had, that's Amazon Marketing Cloud. That has been the way you can interact with Amazon data to really power your advertising. Right? Yeah. Yeah. So Amazon has trillions of data points about all of its customers and everything that they've bought and done and streamed on their platform over the last however many years, and for brands to go in and get to play in that and make connections between what ads that people saw and what they bought, it's like a really rich, pretty much incomparable data set. So really cool, really powerful, but from what I've understood, traditionally very, very difficult to use. Right. Like you need to know querying language in order to actually get in there and maximize the value of AMC and the Amazon data. Yeah. So you have to know how to write a SQL query is what you have to do in the past. And there are other AI agents that have been developed to help folks do this, but the ads agent that's embedded into Amazon's ad console that's inside of AMC, it's trained exactly on Amazon's database and it knows exactly how to write a SQL query for that database. So where maybe you could do that with a third party before, now you can do it for free within AMC and it's fine tuned for this specific purpose. I was kind of explaining this whole thing before it was announced to a few people at the conference and they were like, Oh, we use a third party API plugin right now for that specific purpose and now we won't have to pay for that anymore. Which then what does that mean for those API partners? I remember like Habu was a clean room that, and one of their big features I think was Habu eventually got acquired by Axiom, but one of their big live ramp, sorry. Live ramp, right. It used to be the same company, you know, but one of their big features was that they would plug into the Google marketing cloud and help marketers make sense of it. And so that's like a really important capability, but now Amazon has just integrated it straight into AMC. Right. And Amazon has a different level of data than Google does. Like Google has data on, you know, on search, on what you're looking for, and Amazon, what we're buying. Right. So. Which is very, very powerful. Right. Were those the two big product updates that came out of Unbox, would you say? Yeah, I think so. The other thing that felt big to me at least was that they're combining the DSP and the ads console so that you just log in to one thing. And then you can do all of your buying there, which I'm curious to hear like how that feels for agencies. Cause I think I was talking to a couple of folks about that and they were like, yeah, this could be complicated, man. Like those are different teams. And how well is it going to work? There's a little bit of skepticism there too. Like, is that going to break stuff to start? Is it going to be annoying to get in there and try to do the same things we were doing before? There's maybe a little bit of a learning curve, but I think overall like they're trying to make a play, right? To be a bigger player and make it simpler for people to spend money on ads on their platform. Yeah. If you, based off what you said, the theme is consolidation and usability despite the maybe the consternations of that last update that you mentioned, it's really bringing all of these things together rather from the creative side, making it easy to build creative, making it easy to query Amazon data, making it easier to use the DSP. Yeah. Totally. So what does this all say about Amazon's direction heading into 2026? Yeah. I mean, I think it means that they are going after bigger budgets, you know, like we've been kind of saying that for a while, I think, but trying to make it really easy for people to make and buy video ads on their platform. Video is where big, big budgets are and they've already got prime video. They've already got deals with Netflix and Roku like they want big video ad budgets and they seem to be positioning themselves well for that. And then they want the Amazon DSP to be scooping up business from Google and the trade desk. That seemed clear to me and folks mentioned that as well, the people that I was talking to. And Meta as well, of course. Yeah, and Meta. Right. Because you spoke with Kelly McLean and she's the VP of Amazon's DemandZite platform. And this is what she said. Often, you've seen these types of AI driven products like Pmax and Advantage Plus. We're really taking a different approach to performance plus and brand plus in that we've heard from marketers that they want an easy AI driven product through their DSP experience and one that's truly able much more transparent and gives them control. So we've kind of talked about these products as being a crystal box where marketers are able to still have optimization controls. They're still able to have transparency on reporting on the back end, but it brings together a really nice option for them on if they still want all of kind of the traditional complexity of a true DSP, they have all of the full featured capabilities and they can deliver anywhere on Amazon or across the open internet. So Catherine, what do you make of that? I'm not sure about the whole crystal box thing. I mean, I think I've heard that before that that's like something that these platforms are aspiring to, but one agency person that I spoke to during the conference, after this had kind of been announced, said specifically the black box arrived earlier than we thought it was going to. So I don't think the agencies are seeing this as a crystal box. And maybe that will like change. Maybe they'll, Amazon will be able to prove some kind of transparency. There is a level of transparency that is kind of inherent in the whole AMC thing, like that you can see this stuff. I mean, I spoke to one person who said a potential downside of giving people so much access to AMC is they'll know where Amazon's bullshitting on what's working well. Maybe that's just AMC is positioning. We caught in a set earlier, Google knows what you search for, but it doesn't know what you actually bought. Amazon of course knows what you bought. And so because it can make that much more direct connection, it's easier to really see the results of your ad campaign on Amazon versus on Google where you have to kind of like stitch things together. And maybe that can kind of give the illusion of more transparency or maybe that is actually true transparency. Yeah, to an extent, but you're never going to get fully inside of where they're pulling strings and whatever. What also surprised me a little bit about Kelly's quote is she specifically called out performance max, which is Google's AI powered ads tool and then advantage plus, which is Meta's AI powered ads tool. So it definitely seems like Amazon is ready to kind of go to battle against those two specifically. That was a consistent theme in the way that they were talking was that they're like, we're fighting for these big dollars and on par with the competitors, very aware of who the competition is and making that known. And you also spoke with Sarah Yose, who heads up Amazon's agency relationships, and she talked about the play Amazon is making to extend into the open internet. Our conversations with agencies are totally holistic right now, where I started at Amazon ads selling Twitch and being out there evangelizing how incredible the Twitch community is and bringing new advertisers and new categories onto Twitch. And now the conversations that I'm having are not only Amazon across our entire canvas, prime video, sports, all of our commerce capabilities, our DSP, it's now open internet. It's now everything. So I understand a message that powerful, that big is going to take a little bit of time. And thankfully we all know advertising and marketing works. Yeah. So I guess what are your thoughts there? It's this very aggressive play to kind of promote Amazon ads across beyond the Amazon walled garden. Yeah. I mean, I was talking to a few people that said, you know, this is a really notable change for how they are talking about their reach. Previously, it was very much only the walled garden and they didn't seem to care to talk about the rest of the open internet. And you know, when I was talking to Kelly, she said they were holding out on talking about the open internet because they wanted to ink these deals first basically with Netflix and with Roku, like get these better deals to like get more integration so that you're not going through as many hoops and you can get better measurement back from those partnerships. So yeah, it seems like a big expansion effort. So Amazon's really big aggressive foray into the open internet where those Netflix and Roku deals and specifically it's like premium video deals. Right. Yeah. They want the big bucks. Yeah. And it's kind of really interesting because at Brand Week in Atlanta, at week's flagship conference, I was speaking to Stacy Hartnett, who is the SVP of marketing at Choms, which is the meat stick company competitive with like Slim Jim. And she had mentioned that they bought a Thursday night football spot for the first time. And of course, one of the appealing things about it was that because it's on Amazon, you can kind of trace the how that spot leads to sales on Amazon. But they also asked her, does that notably affect sales beyond the Amazon ecosystem? And she said it definitely, it definitely does. So even there, you're kind of seeing this expansion of Amazon, Amazon's influence kind of well away from the owned and operating environment that it controls. Yeah. I mean, that's a good point that Thursday night football stuff and all of their life sports partnerships are, I've been saying Netflix and Roku, but I think that's another big piece of this. And that was evident on stage, the talent that they brought out. It's not unboxed in the upfronts, but they did bring out talent for a few different things. And it was about life sports and about streaming like Twitch. They brought out a couple of podcasters who stream live stream on Twitch. So it's sort of like this full funnel play, right? Like you're at the top of the funnel with Thursday night football, and then you move people down when you start talking about using data from like Amazon marketing cloud. Totally. Yeah. So what Amazon is doing also seems to undermine one of trade desk CEO, Jeff Green's major talking points about its competition with Amazon. I think you covered trade desk earnings relatively recently, and he kind of poo pooed Amazon as a potential competitor because he said Amazon doesn't really compete in the open internet the way the trade desk does. However, this conference seems to indicate otherwise. Yeah. I mean, I think I was asking folks about this, like, is that within striking distance? Like Amazon DSP becoming like more go to than the trade desk for open internet buys? And I didn't get the sense that that's like true yet, but it's very clear that that's what Amazon's trying to do. People that I was talking to said that it's not like they're going to shift all their spend over to Amazon DSP and drop the trade desk. That just isn't a reasonable decision at this point. But who knows? It could be in the future. I mean, you know, you think about it from the media buyers perspective, you really don't want to be locked into a big platform. This was always the argument against Google, against Meta. And obviously, Amazon is an alternative to that, but Amazon is, well, it's a big platform. And the benefit of the trade desk is, you know, despite its size, it is an indie ad platform. They don't own the media that they are selling. Right. You know, that is also like a key differentiator that Meta, Google, Amazon don't have and that might make the trade desk more appealing. Yeah. And I think that was something that was reflected in the agency folks that I was talking to. Like, they don't want to have all their eggs in one basket, no matter what. And the reality is that a lot of people live a lot of their lives in Amazon land and that is really good for Amazon's business. Do you live your life in Amazon land, King? Oh, reluctantly pieces of it. More after the break. If you're an Amazon advertising client or a prospective client, these announcements that came out of Unbox and the positioning feels very exciting. That's kind of my read on it is that the chatter from the buyers that you talk to on the ground. It's funny sitting in a crowd like that. Like there are only a few things. Some people are like working during it. Some people are like paying close attention, whatever, but there are very few things that people like ooh and all that. And there was a little bit of that, the creative agent unveiling where they were kind of showing all those video AI capabilities. There was also like some murmuring about the DSP and the ads console coming together. So I think there is some excitement there, but then yeah, also some trepidation because it's not just media buyers in the audience. It's also a lot of tech vendors who could potentially be threatened by some of these announcements. All right, let's talk about that. We kind of alluded to that earlier in this conversation. Amazon Advertisings Partner Community. So they were trepidatious. Some. I don't think all of them. So I went to their partner awards. Amazon does a lot of like whining and dining of their partners at this point. So they give out awards to like the best use of different tools and stuff. And there is a whole list of awards and it's a lot of agencies and also tech platforms that are or API plug-ins that are submitting for these awards. And yeah, it was kind of interesting because like there was like an AI shop that won one of the awards and that was the same one that people kind of brought up when I was asking about whether the agent was going to take over anybody's business. There was also a little bit of, I don't want to get too conspiratorial, but there was like this like. Get conspiratorial. That's what we're here. There was like, I heard some like frustration from some people about like who got the awards. And then I was like, is that Amazon choosing which partners it wants to keep growing? And like which ones it's like, okay, we're kind of done with you. Like we don't need to like give you an award this year because we got what we needed from you and actually we might be elbowing you out of this whole equation. Oh, that's interesting how some of these companies are reading into the awards because I mean obviously there's sour grapes when somebody wins an award and you don't. But here there's actually like a business impact where those who didn't win an award, which was given by Amazon, feel like they might now be on the outs and that their business might be at risk. Yeah. And then there's also the thing like a couple of weeks ago, Amazon announced in its product notes that it's going to start charging for the SP API. So it's one way that these API partners get data from Amazon and it's not as much on the ad side, you know, Amazon makes money from ads. So it's not trying to make it harder for anybody to buy ads. But there are ways in which you can get data that's like just reporting or like purchase history stuff and stuff that's like not specifically ads related that it's going to start charging for the API calls. It was kind of quietly announced, it's going to start next year and it will have an impact on these businesses that are built on the fact that they can get certain data from Amazon. I heard two conflicting narratives, like one, Amazon's being big, bad, bully and doesn't care about the people it's stolen tech from. And the other one is like, well, you know, part of why Amazon is good at making money is that it's a good at knowing where its cost centers are and accounting for them. Kind of sounds kind of analogous to what happened with Reddit, I think earlier this year, maybe was last year, where they started charging for the API calls and, you know, obviously it cost money for Reddit to accommodate those. But you know, the result was there were a lot of really cool apps that were attached to Reddit that basically had to go out of business. So I kind of wonder if this is sort of like a similar type of situation. People maybe see the writing on the wall because similar things happened with Meta and Google. Yeah, I wanted to ask you about that because this is starting to feel sort of similar to what happened with a lot of the partners that worked with Google and Facebook in the earlier days, where they would build cool technologies, plug into those platforms and add functionality. And then Google and Facebook would notoriously copy those features integrated into their platform and the company, their former partner would just go completely out of business. Are we seeing a repeat of that with Amazon now? Some people definitely think so. Like one person that I was talking to was like, we have seen this movie before. This is the same movie. So yeah, I think there are definitely some folks who like believe that, that that's what is happening. There are other folks that are like, well, you know, this is kind of how it goes. You know, like this is part of the, if your tech was stealable in that way, then you weren't doing a good job of understanding what your long-term business plan was or something like that. Like your moat wasn't big enough. It depends who you're talking to. I mean, it feels like even those who are charitable in their assessment of Amazon, they're acknowledging that, yeah, the partner community is, you know, essentially being copied and integrated into the platform. And the actual, or the capabilities provided by the partner community is being integrated into the platform and those partners are, it's basically just different ways of accepting death. Yeah, like maybe there's some people who are like, yeah, well, you knew what game you were playing. So. Yeah. And other people are like, how dare they try to shoot at me. And others are like, yeah, you know, we were comes for us all. Yeah. So, I mean, I mean, given this, it seems likely that there would be a winnowing of Amazon partners in the coming years as the platform itself gets richer in features. Yeah, it's definitely possible. I'm really curious to see what happens. One person that I spoke to was like, you know, there's kind of always been this tension between like Amazon, like whining and dining, its partners, and then stealing from other ones. And you want to make sure that you're on the right side of that. If this movie is indeed the same movie that we have seen before, then yeah, I think that would mean that it's not going to look the same in a couple of years. Maybe there won't be any partner awards because all those features will be part of Amazon itself and free. Why would anybody pay for those features anymore? Yeah, you go to the partner awards. Sometimes it's a feast. Sometimes it's the red wedding. Yeah. So, who would you say were the biggest winners and losers based on the tea leaves that you read at this year's Unboxed? Oh, Amazon is making a lot of money. I think Amazon is the winner. That's our headline, folks. I think it's interesting to think about like whether these tools that Amazon claims are really like democratizing ads, giving access to smaller bootstrapped sellers on the marketplace. Like, if that's really the story here, that this is making things more accessible or if it is really just stealing from partners and putting it into the platform. Because I mean, the point that some person made to me was like, every dollar that's spent with a tech vendor is a dollar that's not spent on Amazon ads. So like, there's an obvious incentive there. So I don't know, maybe it's too early to tell, but I do think any player that was making like AI-powered ads, like video ads, like what Amazon just rolled out that was charging for it, that's going to be a harder sell unless it really doesn't work as well as Amazon said. I don't see how somebody who is selling on Amazon's platform would bother paying for that elsewhere versus just using Amazon's tools. So I think anybody that has a tool that looks a lot like what was announced, they're like maybe getting nervous right now. Creative AI tools and like the clean rooms that sort of like work alongside like the AMCs of the world. And then I potentially, these API partners, I think there's definitely a risk there and it's unclear how that's going to shake out too. So it feels like every year for the past five years, probably even longer really has been huge for Amazon ads. Are you expecting anything different in 2026? Future? I don't know. Potentially. No, any headwinds? No headwinds? I don't know. Does that sound naive? It does feel like they're building an Amazon land and this like big ecosystem is feeding itself and it's cannibalizing anything that's in the way. It feels like I'm not so sure what the headwinds would be there. Yeah. A flywheel that everyone wants. It seems like Amazon has built. Yeah. Yeah. Katie, thank you so much. Yeah. No problem. Thanks. This is fun. AdSpeak is a production of AdWeek. Did you enjoy what you heard? Leave us a review, especially if it's a rave or tell your friends to listen in. And remember to follow us on Apple podcasts, Spotify, or wherever you get your podcast so that you never miss an episode. And be sure to visit us at AdWeek.com for all of the latest on creativity, advertising, and technology and how it all comes together to impact your life. And you can also drop us a note at [email protected]. We're produced by Rococo Punch. I'm Ryan Joe, the editor-in-chief and your host, and thank you so much for listening. [MUSIC]