For digital ad buyers, the U.S. Federal Trade Commission’s lawsuit against Amazon’s on-platform search advertising business appears to be a tempest in a teapot. Marketers have not been panicking and haranguing their agencies for information on the e-commerce giant’s shifty ad auction dynamics, according to agency executives.“No one has necessarily come to me concerned or asking hard-hitting questions. It’s still business as usual overall,” said one agency executive.
“Business as usual” is an apt description for Amazon’s auction dynamics under FTC scrutiny. What the FTC has flagged Amazon for seems to be a gross violation of digital advertising’s auction standards, but in reality it appears to be more a latent confirmation of how opaque these auctions have become.
“We’ve been living with this already [in the programmatic display ad market], so maybe that’s why I’m not totally shocked [by Amazon’s auction dynamics],” said another agency executive.
One thing that the FTC has dinged Amazon for is a move away from the second-price auction format – in which the winning advertiser only pays $0.01 more than the runner-up advertiser’s bid – without properly notifying advertisers of the change. That lack of disclosure is not ideal, per agency executives, but it’s not being taken as that big of a deal. And that’s because so much of the digital ad market had already moved away from second-price auctions. Meta and the programmatic display ad industry had done so last decade.
