Amazon is boldly entering new markets, disrupting the status quo and challenging its competitors. Today, the world of ad-supported streaming has arrived, and Amazon is stepping up.
Why do you ask? Because starting today, Amazon is giving marketers a staggering 115 million monthly subscribers in the U.S. alone, thanks to a bold move to make the ad tier the default for tens of millions of subscribers around the world. Because it provides an opportunity to reach your audience.
Speaking of scale, this kind of reach is sure to put existing advertisers, especially the big ones who tend to spend big on TV, deep into Amazon's pockets. In fact, Amazon is already knocking on the door to retain a group brand team to fan the flames of its interest. Let me tell you, we're in the middle of a presidential election cycle and a Super Bowl spending frenzy.
Could a relatively high CPM (cost per impression) of $36 kill these discussions? Not a chance. Advertisers are enthusiastically embracing the opportunity to partner with Amazon because of the valuable retail and e-commerce data it provides and a robust closed-loop attribution system that is difficult to match.
Add it all up, and there's no doubt that this will be a boon for many marketers.
Of course, they have to buy Prime Video ads through Amazon's ad technology, and those purchases don't include Thursday Night Football games or Amazon Freevee. But the truth is, that's not what scares them. Those same marketers can take advantage of the ease of use of a managed service to take a seat in the driver's seat and advertise across Prime Video and licensed Amazon Originals in TV and movies through sponsorships, purchase guarantees and the aforementioned CPM pricing. Not when you can choose one of the preferred deals. Of course, these prices will go up and down depending on your audience, falling into the mid to low $30 range.
“What I'm most excited about is getting more buyer signals and seeing who our brand partners are paying attention to today,” said Steven Tyler Regan, who is considering advertising on Prime Video. I think it's really understanding your audience that helps you understand what you're doing.” In his capacity as president and chief strategy officer of global retail media and marketplace agency Macarta, a division of MindGroove. “But we also overlap that with business and brand goals.”
Such comments were not uncommon in the coverage of this article. Buyers seem genuinely excited about advertising on Prime Video. They don't think they'll face the same uphill battle that other ad-funded streaming platforms have faced.
Industry observers from The Winterberry Group to Insider Intelligence are predicting that Amazon will be the driver of CTV ad spending in 2024 and beyond. The real question is how big of a driver it really is. Estimates range from $3 billion (Bank of America) to $6 billion (UBS), with Amazon likely to make a net profit at the bottom.
What's in store for Amazon in the future?
Remember, ad-supported and ad-free content on Amazon already share your time, so going from no ads to all ads won't happen overnight. It's been happening in stages, perhaps dating back to May of last year, when Amazon moved his 100-plus Amazon Original series and movies from Amazon Prime Video to Amazon Freevee, a free streaming service with ads. This marked the first time that marketers could advertise on this batch of content in traditional ad formats. Spending has changed accordingly, and will likely do so again now that all Prime Video is open to advertisers — at least to some degree.
Ross Benes, principal analyst at Insider Intelligence, said: Prime Video he said will inject “billions of dollars” into the CTV advertising market by 2024. While not definitive, data on Amazon's estimated ad revenue from streaming across Amazon (including Prime Video, Freevee, Twitch, Fire) in the US provides a glimpse of what's to come. can. Amazon is expected to account for 10.7% of its advertising revenue this year, up from 7.3% in 2023. Some of this growth will come from ad spending from traditional TV, Benes said, and some from other streaming platforms. Not to mention the positive impact of an overall increase in streaming ad spend as more ad inventory becomes available, he continued.
Regardless of where the money comes from, it's likely to be used by experienced Amazon marketers, those who have mastered advertising on Amazon's search and display ads and are hungry for more investment in video. It will be. Seven ad buyers interviewed by Digiday for this article also share this common sentiment, and their clients are already strategizing how to grow existing Amazon deals through Prime Video ads.
“What Amazon is doing with Prime Video is exciting because my team is working with unique partners to explore incrementality and the idea of expanding their digital shelf beyond optimizing for sponsored product ads. We can talk about it,” said Molly Hopp, executive vice president of electronics for Havas Media Networks. Commerce business Havasu Market.
But don't get me wrong, that money is not the end goal.
Ultimately, Amazon needs ad-supported streaming to attract a new wave of brand money to its advertising business. This way it becomes a place where all advertisers, not just those with stores there, can spend more money.
Everything is included in the pitch to advertisers. Amazon wants to cater to as many users as possible with Prime Video, placing less emphasis on advertising as a standalone service and instead positioning it as an integral part of a comprehensive media buying strategy.
And this approach seems to be resonating.
What Amazon Offers
Marketers who have been pitched by Amazon have been particularly impressed with the platform's flexibility and adaptability. Gone are the days when you had to deal with the complexities of working with the Amazon Web Services team. The Amazon Web Services team wasn't always the most flexible in accessing such critical data. Now, we can do this through our demand-side platform, thanks to our integration with Amazon Marketing Cloud.
These technical adjustments enable marketers to blend their first-party data with Amazon's vast array of data within the Amazon Marketing Cloud clean room. This allows you to promote your brand, increase sales, and even prepare for subsequent purchases across the Amazon ecosystem without worrying about data integrity.
Additionally, Amazon's advertising business is packed with all the bells and whistles marketers have come to expect from an advertising business of this size.
Consider third-party verification so advertisers can enforce the rules for their ads that Amazon wants them to check. Additionally, there's also standard demographic targeting, enhanced with additional context and lifestyle features.
Additionally, expect predictive segments, data partnerships with the likes of GrubHub, and smart algorithms to prevent people from seeing the same ads over and over again.
These are not the typical Amazon fees that advertisers are accustomed to. In the past, putting together your total Amazon investment was like solving a complex puzzle. But now the tide has changed and things are becoming much simpler. Sam Bloom, Head of Partner Strategy at PMG, explained: You can bring your data to Amazon and say: There are people who can help. It doesn't just end with a place called Amazon Marketing Cloud or Amazon Web Services. Everything is connected and available for purchase in one place. ”
Add all this up and it's a bit of a head-scratcher as to why early predictions of Amazon getting into ad-funded streaming are so safe. The buyers we spoke to aren't doing their best to promote it either. They say advertisers are “coming in,” which basically means advertisers are interested but not fully committed. But dig a little deeper and it all starts to make sense.
There's a lot for marketers to understand. The way you advertise on Amazon could be undergoing a major change with the arrival of advertising on Prime Video. It always took time for marketers to get over this. The challenge here, as Bloom states, is whether a marketer will use his 5% of the platform or his 80%. Amazon needs to prove itself, especially to performance advertisers who are testing this new inventory early. If the results don't stack up, they might leave.
That said, Amazon is now wielding more bargaining power than ever to convince even the most skeptical advertisers to invest. They have incentives in their arsenal. Some are tied to specific campaigns, so if a marketer spends his $50,000, the free impressions earn him a 20% rebate. Of course, these deals come with some conditions. This means those free impressions are ineligible media.
On the other hand, there are other incentives associated with vendor media joint venture plans and agreements. If a vendor commits a certain amount of money and participates in a large-scale retail program or partnership, Amazon can offer top-of-the-funnel managed service media through Twitch, IMDb, or other video channels it owns. We will provide an additional $100,000.
See the full proposal materials below.
