About the same time that it became exquisitely clear that Microsoft had opened a stealth and aggressive front in the battle to dominate buy-and-sell sides in ad tech, Amazon announced for the first time early last month that it had earned $31.2 billion from its ad business in 2021. Wrapped inside that new nut of knowledge was a serious indicator not just of where the business has been, but where it is going: In the Q4 2021 holiday period alone (of course generally a standout for ad spending), Amazon’s ad business revenues were $9.7 billion, or 11.6% of the year’s total take, and up 10.3% over 2020. Talk about Bezos rockets! Watch out, 2022!
So now, operating in the top tier of the highly competitive marketplace of digital advertising, Amazon is alongside Meta (Facebook and Instagram) and Google as well as Apple, Bytedance (makers of TikTok), Microsoft, Comcast, The Trade Desk, Verizon, ViacomCBS (now Paramount) and more.
And yet all these companies (and any others that aspire to be serious players in the digital advertising ecosystem) are in the sights of yet another new bill being cooked up in DC This time it’s from Sen. Mike Lee (R-UT), who announced late last year that he would be stepping up to introduce a bill just about now that would bar large tech firms from doing what they do best: deliver seamless options for reaching media audiences all in one place with ease, especially important for smaller businesses which can’t hire teams of people to run their media buying and placement and measurement.
While the specific target of the bill right now may seem to be the Big Three in digital ads (Amazon, Google, Meta), it could well affect any company that acts as a broker for a buyer or seller of ad space and that also owns the exchange where ad space is traded. The whole thing is catering to the mistakenly populist agenda to kneecap what is a fiercely competitive and constantly evolving set of leaders in digital advertising.
The draft bill, dressed up to pretend it’s aimed at preventing potential conflicts of interest, could effectively force ad tech companies to sell or spin off major parts of their advertising technology operations. The bill is based on outdated ideas of how “publishers” sell advertising inventory and how ad buyers select to use publishers to reach an audience. As large marketers and even the corner deli know, any of the biggest players provide DIY ad auctions and outright buying that anyone can do. (If you want a quick course in how simple and effective this all is, simply check out Amazon’s fabulously easy tool. It’s not “murky” or suspect at all.) This means of course that the publisher providing the options for buying is also the seller and the exchange. That’s the very efficient and new way that digital advertising works and this relatively youthful sector of the economy has boomed as result—not just for publishers and platforms, but for untold thousands of smaller businesses that once were limited to ineffective and inefficient phone books or” back of the book” classified advertising.
“When the first ad was displayed on the internet, it had to be integrated into the site on which it was displayed… a cumbersome process,” said David J. Moore, CEO, BIGToken, and one of the original thought leaders and practitioners of ad tech and, among other accomplishments, co-founder of 24/7 Real Media, one of the earliest pace setters for what would grow into the major business of digital ad networks. “Ad tech has come a long way since then and has streamlined the business of buying, selling and placing ads. As a result, digital has become the biggest medium, displacing traditional television spending. Most of the attempts turn back the clock on time and progress, potentially in that process displacing the many thousands of good paying jobs that digital advertising has created.”
Yo, Congress, wake up! Don’t just believe what a few interested parties might be telling you. Fact is, a revolution took place and the buyers and sellers are better off for it. Things changed because the marketplace saw the immeasurable benefits resulting from a new order of business—and competition got fierce fast as Yahoo and AOL dominated, then got supplanted by Google, Facebook, Instagram and now Microsoft, which is back in fighting shape, and Amazon , which is doing tens of billions in ad sales. These are fiercely competitive businesses that generate huge numbers of economic benefits, not least of which is employment in Utah and the other 49 states.
The bill, meant probably to protect a few smaller and imaginably well-connected interests, couchs its assault on the best efficient and largest businesses with apple-pie terms like “fiduciary duty.” The truth is the bill is attempting to overturn decades of changes in advertising that the digital age rendered outmoded. Not wrong or suspect, just simply no longer preferred and therefore consigned to the trash bin of media history by buyers and sellers in their own good judgment.
As if the idea of yet another new bill that doesn’t get how digital works weren’t enough, there’s been talk that David Cicilline (D-RI) and Ken Buck (R-CO) are considering a possible companion bill in the House .
In case you missed it, and it bears repeating, the ad-supported internet economy contributed $2.45 trillion to the nation’s $21.18 trillion GDP in 2020 alone. Why are DC lawmakers always trying so hard to throttle one of the country’s biggest growth engines?
Perhaps these senators and congresspeople are rushing to show their anti-digital bona fides to those supporting companies that were once upon time publishing giants but are now having to compete in ways that previously didn’t exist (back when one newspaper, for instance, and Its editorials endorsing local candidates, could dominate an entire media market and not have a national or global efficient competitor around to bother its cozy, feathered, money-printing nest). Perhaps, too, so are Amy Klobuchar (D-MN) and Chuck Grassley (R-IA), who have proposed a bill which would bar Amazon, Apple, Google and Meta from competing against other companies that use their platforms to sell products or services. (That mind-boggling bill that would actually impede competition just passed a key hurdle in the Senate, by the way).
These bills, and others like them, are both complementary and conflicting at the same time. Each asks companies in this marketplace to make long-term, or even medium-term, decisions in a context that threatens to undo their very business models. How long will there always be another Senator or Congressperson proposing yet another bill that hobbles them? And while the claim about this latest Senate bill is that it’s aimed only at the largest easy targets, all the bills should worry every big ad tech player that has a healthy and growing ad ecosystem that could draw the potential future attention of lawmakers.
It’s a scary precedent that should give everyone who cares about a free and open internet, a competitive marketplace for buying media, nightmares.