When we talk about Amazon’s Ads, the focus is usually on the size and the scale of the business. But what if the real prize for Amazon isn’t just selling ad space, but selling the infrastructure that’s aiming to power all digital advertising?
Amazon is launching a managed cloud network called AWS RTB Fabric, built specifically to handle high-speed, data-intensive transactions for programmatic advertising.
AWS RTB Fabric is a specialised computing environment built inside Amazon AWS to host and move real-time bidding traffic – the trillions of bid requests and responses that go between the ad tech vendors, advertisers and publishers.
AWS RTB Fabric uses ‘RTB Broker,’ which is supposed to cut integration times between ad tech partners from months to hours. Once live, AWS RTB Fabric delivers bid requests at single-digit millisecond latency, and Amazon says it can cut the networking costs associated with doing this by up to 80% compared to standard cloud rates.
Why is this interesting for AdTech vendors?
AdTech vendors have faced a costly choice: run their platform on their own infrastructure (expensive) or rely on the Google or Microsoft, which will add latency and data costs. Most split the difference, running latency-sensitive workloads on owned hardware and the rest in the cloud.
AWS RTB Fabric still means there are trade-offs, but Amazon can go after one of the fastest growing parts of tech – AdTech – while still being in the ‘AdTech game’ themselves.
This is something we have seen before: Amazon are still in the ecommerce business while offering Amazon AWS to other ecommerce businesses.
Perhaps their advertising business is merely the “gateway drug” to managing the infrastructure of advertising: after all, industry analyst Karsten Weide says “AWS is absolutely central to Amazon’s advertising play. They are already making a lot of money, but they are also controlling more and more of the infrastructure that powers how digital ads are bought, sold, and measured. That translates into long-term strategic strength.”
With AWS generating US$30.9bn revenue and US$10.2bn in operating income last quarter, accounting for roughly 70% of Amazon’s total profit, it’s clear where the company’s ultimate priorities lie. As Florian Clemens of Tesco Media and Insights says, “Amazon defaults to building platforms.”
What if Amazon is betting on a ‘faster horse’?
Bryan Gildenberg, Confluencer and Retail Insights Leader, asks: “Is it possible all this RTB talk is the ultimate in ‘faster horse’ technology from the Biddable Media Industrial Complex…given the daily diminishing in importance of keyword-based advertising?”
Gildenberg’s point highlights the paradox: Amazon are trying to perfect a mechanism (RTB) at a time when the underlying capabilities (keyword and third-party cookie targeting) are becoming obsolete. The real value is shifting toward first-party retailer data and full-funnel measurement, areas where Amazon’s own retail media network thrives.
Ben Foulkes of Kevel believes that for AdTech, buying into RTB Fabric would be “out of the furnace into the fire” and that “many are blinkered by an over reliance on RTB as a fix for-all. For established retailers or publishers’ independent technology is a priority in safeguarding their businesses. Building an eco-system that helps the retailer develop direct relationships with brands who value the audience,” should be the priority.
The Amazon superpower: removing friction
Regardless of the “faster horse” argument, the significance of RTB Fabric lies in Amazon’s ability to create and control critical infrastructure. Gildenberg’s slightly tongue in cheek point is that
“Amazon’s superpower is their ability to build an express lane with a toll booth literally anywhere on the information and commerce superhighway where one doesn’t exist. They’re the WD-40 of commerce – a simple solution to remove friction wherever you find it.”
AWS RTB Fabric solidifies this strategic control. It ensures that even if an advertiser chooses not to spend money on an ad on Amazon, their media dollars — spent on Google, The Trade Desk, or any other major platform—will likely flow through Amazon’s low-cost, high-performance cloud network.
This two-pronged approach of offering a highly profitable advertising platform and selling the underlying infrastructure at scale insulates Amazon from market volatility and embeds them deeply into the core financial structure of the digital economy.
They’re not just selling ads; they’re selling the most efficient way to buy, sell, and measure them.
Originally published on InternetRetailing