This article was originally published by AdAge.

Amazon’s brutal efficiency, obsession with automation and ruthless pricing tactics have helped it disrupt or conquer market after market, starting with books in 1997. Now it’s bringing those tactics to bear on the company’s latest target: the ad business.

To shoulder its way into an industry overwhelmingly dominated by Facebook and Google, Amazon is making bold new moves into self-serve programmatic advertising. It plans to spend the next year aggressively expanding the infrastructure that it hopes will get more brands buying ad space on its websites and through its ad platform, according to people familiar with the matter. (They and other unnamed sources quoted in this article spoke on condition of anonymity to discuss details that Amazon has not publicly disclosed.) To do so, it will work with ad-tech companies, agencies and media companies to create platforms that make buying Amazon ads as easy as filling up an online shopping cart.

“The biggest game changer is the ability to programmatically buy ads on Amazon,” says Eric Heller, CEO of Marketplace Ignition, an agency owned by WPP that focuses on building Amazon sales for its clients. “That’s where the fastest change is happening [in Amazon’s ad business]. This is going to move tons of dollars there.”

Even Google is building for Amazon’s ad platform, in a sense. Google’s DoubleClick supports buying search ads on Microsoft Bing and Yahoo, and it’s developing the same capability for Amazon, the people familiar with the matter say.

The universe where ads appear on Amazon and through its marketplace is growing too.

Amazon, for instance, is building an ad offering through its Fire TV device, where ads run inside streaming-TV apps much as they do on Roku.

It’s even exploring opportunities for ads inside Amazon Channels, the hub in Prime where studios and networks stream their programming, and the possibility of slipping ads into a free-trial period for its main Prime Video.

Borders

Despite Amazon’s plans, Google and Facebook aren’t likely to suffer the fate of the bookstores that Amazon helped usher out of business. They are leagues ahead of any other company in digital advertising, certainly including Amazon: The so-called duopoly’s share of U.S. digital ad revenue will tick down to 55.8 percent by 2020 from 56.8 percent this year, according to eMarketer; Amazon’s share will grow to 4.5 percent from 2.7 percent this year.

But Google and Facebook haven’t faced an incursion like this before.

Amazon already appears likely to outpace expectations: eMarketer forecast that it would generate $3.7 billion in worldwide ad revenue this year, but Amazon’s earnings report last week suggests that its ad business totaled more than $2 billion in the first quarter alone. (Amazon reports ad sales inside what it calls “other” revenue, but they are the “majority” of that segment, according to the company.)

“Advertising continues to be a bright spot both from a product standpoint and also a financial one,” Brian Olsavsky, Amazon’s chief financial officer, said during an earnings call to discuss the results. Olsavsky added that advertising was a “strong contributor to profitability.”

And Amazon has established a grip on more than 40 percent of the e-commerce business, eMarketer says, while Google and Facebook have no significant reach there, as much as they’d love to. That grip provides Amazon’s not-so-secret weapon in digital advertising.

“Amazon is putting the screws to Google,” says one digital agency executive. “I have clients asking why they have any money with Google search, if they can just go spend on Amazon and get better return and know they’re driving sales.”

Advertisers are only now getting wind of Amazon’s ad platform and the data it offers compared with Google, according to Collin Colburn, a researcher at Forrester. Amazon is “richer than any other player out there in terms of purchase and behavioral data,” Colburn says.

No other major platform is so plugged into what consumers buy. Amazon doesn’t need to close the loop from ad to sale by reading uncertain data about when a person saw an online ad and when that led to an actual purchase. Amazon is the loop.

Amazon agencies

Over the past year, there has also been a rush to develop Amazon ad services across Madison Avenue—agencies like 360i, VML and Possible and holding companies WPP and Omnicom are all getting into it. Go to any ad agency and there is likely a new unit promising to hand-hold brands through Amazon’s expanding ad offerings.

“We’ve noticed elevated levels of service from Amazon and a willingness to develop more meaningful partnerships on the level of a Facebook and Google,” says George Manas, president of Omnicom’s Resolution Media. “It has been very obvious Amazon is going to be the Third Estate. Google has AdWords, launched in 2000, then Facebook got serious about advertising in 2011, both through APIs, and now it’s obvious Amazon is heading that same direction.”

Agencies and media holding companies are using Amazon’s ads API (application programming interface) to build ad-buying technology they can then offer their brands. They partner with marketing tech firms like Kenshoo and Marin Software, which also are building buying technology to mesh with Amazon’s API.

In a classically savvy Amazon move, the company is often steering new business from brands to the agencies instead of working with the brands directly.

“They want to move completely to a programmatic model and that’s a pretty ballsy position,” says one agency exec. “They’re pushing programmatic as the primary investment model as part of these retail relationships that Amazon has. It’s a very interesting way of doing business. You won’t see that from Walmart.”

Amazon will run premium managed services for top brands and vendors, to be sure—those that sell hundreds of millions of dollars in products through the e-commerce platform. And it’s undoubtedly beefing up its advertising team. When Amazon said last fall that it will move the headquarters of its ad operations to New York City’s Hudson Yards this year, it said it would hire 2,000 people there over three years, though it would not say how many of those jobs would be devoted to advertising.

Seth Dallaire, VP of global ad sales and marketing, is the face of Amazon’s ad business, the liaison to the agencies and holding companies. “He’s the one driving the overall vision and the enterprise strategy around advertising,” the agency exec says. “He’s the first point of contact for us to build advantages into the Amazon ecosystem for our clients.”

But the broader move to automation is ripped straight from the Google and Facebook playbook, which saw both companies recruit agencies and ad-tech marketing partners to plug into their platforms and build the next generation of ad-buying tools.

“Amazon is opening the API and letting other people do the work,” says a shopper marketing executive at a top agency.

“We are continuing to hire and grow our managed service teams,” an Amazon spokeswoman said in a statement. “We are also continuing to build and improve our products and tools, which includes self-service and our API program, to better support agencies and all of our advertisers as our business scales. We aim to serve our advertising customers in a number of ways, based on their needs and goals.”

A new pixel

To make the case for its advertising, Amazon is running a test with select brands and their agencies, tagging ads with a pixel to track when they lead to sales on Amazon. It’s a simple technology, but it’s a first for Amazon, according to people familiar with it.

Here’s how it works: Brands put the Amazon pixel on ads that run outside of Amazon properties, such as YouTube and other websites. The pixel detects computers that view an ad and can record when that leads to a sale on Amazon.

The pixel could show brands that ads running outside of Amazon’s platform are not as effective as ads served on its platform, people familiar with the tests say. Brands that use Amazon’s platform are able to lean on its consumer data, targeting people who have shown interest in a product or recently bought a product that’s complementary. “Amazon wants to show how much better it is at everything,” says an agency executive familiar with the test.

A number of Amazon rivals in internet advertising have similar media attribution and measurement programs, and Amazon provides similar traffic analytics in areas such as its web stores, the e-commerce pages brands run on its site.

“Amazon Ad Platform is a lot like the leading platforms in the marketplace with some advantages,” says another agency exec. “Advertisers can leverage Amazon’s specific data for targeting, there’s unique access to inventory through Amazon properties, and there are unique analytics by virtue of its sales data.”

The Amazon pixel to measure sales conversions could also give a data lift to the company, because it will see how brands are mixing their ad dollars on other platforms, providing a rare peek into the buying that gets done outside its walls, the people familiar with the test say.

Open arms

At the same time, Amazon plans to grow its advertising base by expanding access to the Amazon Ad Platform that connects to display and video inventory outside of its own. Long reserved for wholesale vendors that have Amazon handle sales with actual consumers, the platform later this year will start allowing ad buys from brands and sellers that retail on Amazon, people familiar with that plan say. The sellers will also gain the ability to tap into the same Amazon data that other brands use for targeting.

“They’ll be opening up the ad platform to everyone that’s got a product on Amazon,” says an agency executive who works closely with Amazon. “It doesn’t matter if they’re selling it to Amazon or selling it through Amazon, which will probably drastically increase the amount of ads you’re seeing.”

To expand its pool of outside inventory, Amazon is undercutting Google on ad-tech fees as it recruits for Amazon Publisher Services, a division offering ad marketplace services that go head-to-head with DoubleClick for Publishers.

Google offers similar ad-bidding technology for publishers, but it takes up to 5 percent from deals. “Amazon doesn’t take anything,” says a top publishing programmatic executive. “But obviously they’re privy to a ton of bid data and they’re smartening themselves with information on inventory and audiences.”

Amazon also dangles its own ad spending in front of publishers, promising to spend its marketing dollars on their sites but only if they participate in its marketplace, according to publishers.

It’s a hard-nosed tactic, publishers say, but effective when Amazon is spending millions to promote Prime shows from Amazon Studios. “That’s the typical conversation they have,” says another programmatic publishing executive. “There are marketing budgets Amazon will only run through [its ad platform], and that carries a lot of weight for smaller publishers especially.”

An Amazon spokeswoman declined to comment on specific publisher discussions but said the company manages its own marketing efforts apart from its publisher services group.

Video everywhere

And Amazon is looking for more places to serve video ads, which typically command the highest ad rates in digital. Agencies and brands are talking with Amazon about creating video ads for the platform too, though many of them say Amazon is cagey about where it would run all of them. “Amazon hasn’t fully figured it out, but they know they’re sitting on a rocket ship, specifically in video,” the agency exec says.

Chief contenders include Fire TV, the streaming-TV device similar to Roku, and Prime, the Netflix competitor with original programming and video on demand from outside studios.

For now, Fire TV displays ads on its home screen that can be bought through Amazon Ad Platform, while apps on Fire manage their own sales through their video-tech platforms. Amazon is talking with top digital and traditional studios, including AMC and Fox, about developing an ad platform that would be competitive with Roku, according to a person familiar with the discussions. The digital video app channels would plug into the broader ad marketplace Amazon runs through Publisher Services.

Roku is expected to do $300 million in ads in the U.S. in 2018, according to eMarketer. It makes most of its ad money through the apps showing commercials amid the content, and has its own channel with ad-supported movies and shows.

Other ideas include running ads inside some channels that are available through Amazon’s video-on-demand platform, which are accessed through Amazon Prime but considered separate video offerings. Amazon has also considered a teaser version of Prime, offering an ad-supported free trial, ad execs say.

“There may be opportunities over time to have more advertising in our videos but we choose to not do that now,” said Olsavsky, the Amazon chief financial officer, during last week’s earnings call. Amazon also re-upped a deal to stream NFL games for another two years—with commercials, of course.

“Amazon is in a privileged position because it sits at the intersection of media and retail,” says a media executive. “That excites the heck out of advertisers because it presents an opportunity where we have this Third Estate that has the ability to entirely collapse the funnel and deliver on total attribution.”