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As Amazon U-turns on New York HQ, local agencies hold onto power for another day


By Katie Deighton, Senior Reporter

February 15, 2019 | 6 min read

Amazon’s retreat from locating a headquarters in New York City’s Queens has been met with anger from many in the local business community. Yet the decision means the city’s marketing companies will be able to square up to tech platforms for a while longer.

Yesterday (14 February) saw Amazon pull out of building a campus in Long Island City, Queens, just three months after it confirmed the location as the site of its second headquarters. The company said it will not reopen the search for HQ2 at this time.

The tech giant, which was due to add more than 25,000 jobs to its 5,000-strong base employed across the city, placed the blame on politicians who ‘have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City’.

The news was celebrated by those concerned that the project would exploit and over-gentrify the area – which has been slow to move beyond its industrial past – as well as by parties that criticized the city’s willingness to play into Amazon’s continent-wide HQ2 search with a bumper incentive package.

However, a number of pro-business leaders and organizations expressed disappointment at the decision to back out of New York.

Kevin Law, the president and chief executive of the Long Island Association, said the withdrawal would “go down as one of the biggest debacles in New York State history”, while Julie Samuels, executive director of technology association Tech:NYC, described it as “a blow to our local economy and the tens of thousands of people the company would’ve employed here”.

She added: “New York City is today one of the most dynamic tech hubs in the world, but there is no guarantee we will maintain this status in the future, which makes this news so disappointing.”

Agencies versus Amazon?

However local marketing firms remained ambivalent about the news.

It’s unlikely Amazon’s presence in the city would have guaranteed them more business: the company has a history of procuring creative by talent and not location, with the UK’s Lucky Generals creating its Super Bowl ads for the last two years, for instance.

Moreover, it was understood the headquarters would have been staffed primarily by experts in software engineering, product management, operations, sales and marketing. Gartner predicted the office could have acted as Amazon’s “marketing headquarters”.

If true, the erection of HQ2 in Long Island City could finally have tipped the marketing power scales of New York City from ‘Madison Avenue’ agencies towards the tech platforms.

Tech giants, including Netflix, Twitter, Pinterest and Facebook, already house marketing teams in the city, alongside Amazon’s existing hubs.

“Madison Avenue dodged a huge bullet today,” said one industry commentator, who wished to remain anonymous. “There’s no question that a lot of those 25,000 jobs would have been marketing roles.

“With agencies as vulnerable as they are, I think the sigh of relief is huge.”

Andrew Lipsman, eMarketer’s principal analyst, was unsure if HQ2 would have caused a substantial brain-drain away from agencies. However, he agreed its growth as an ad platform “does have an impact on agencies’ role in the ecosystem”.

“Amazon having a massive presence in NYC would likely accelerate this shift in the balance of power toward platforms, so in that sense, agencies might be breathing a small sigh of relief,” he said.

“But I also don’t want to overstate it – I don’t think they were losing sleep over it.”

Kate O’Neill, a strategic technology consultant and author of the book Tech Humanist, agreed Madison Avenue may be feeling “some relief that their talent won't leach away to tech jobs (at least not as quickly)”, however believes it to be imperative that agencies realize “the missed opportunity here”.

“Overall, it's a shame that all parties didn't come to discussions with a more strategic, inclusive approach to bringing value both to New York – and all its constituencies – and to Amazon,” she said.

LIC on top

Nevertheless, over in Long Island City, the vibe is positive – and resilient.

“Amazon underestimated New York City and New Yorkers,” said a Long Island City agency co-founder, who did not want to be named.

“We’re not against people or businesses wanting to come here and thrive, but we’re opinionated, proud of our communities, compassionate of those lesser-off, and we hate a bad deal. We need to build for the future, and tech needs to be a part of that, but it needs to be done right – with community input.”

When asked if they were concerned with Amazon’s looming marketing power play, the person said: “Amazon hiring would have been a relatively slow long-term process over, so we were never really worried about brain drain,” adding, “if anything, it would have made our company more attractive.”

It’s a philosophy echoed by business leaders in the area. The Long Island City Partnership stated it felt the U-turn was a “tremendous disappointment and blow to Long Island City residents, businesses, non-profits and more”, however, “on the brighter side, the world is getting to see what Long Island City has to offer as a home for great companies and great people”.

It continued: “Having one of the largest companies on the planet make Long Island City its first choice to locate one of its new headquarters highlights just how far we’ve come with even more opportunities on the horizon."

Lipsman added that despite the setback, he predicts Amazon's presence in the city will grow and thrive regardless. It's a view echoed by Zenith's head of innovation, Tom Goodwin.

"The reality is that Amazon has about 5,000 staff in New York, including 2,000 new people in Hudson Yards, who I believe are tasked with growing the advertising business," he said. "Regardless of HQ2, there will be a renewed focus on building out ad teams, which – given the importance of the city in the national and international media scene – was always likely to be NYC based.

"So, I'm not sure there’ll be any effect on Madison Avenue as the same changes will happen regardless."

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