Friday, October 4, 2024

Amazon Shook Up the Streaming Ad Market in 2024. Will It Do It Again Next Year?

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Earlier this year, Amazonā€˜s Prime Video shook up the world of advertising.

The streaming giant flipped a metaphorical switch, and turned on ads for all of its Prime Video users. Prime subs could pay a couple of dollars extra per month to avoid ads, but by all accounts very few did.

The switch instantly made Prime the largest ad-supported subscription streaming service in the world, and it took full advantage of the move, securing more than $1.8 billion in upfront commitments this year, per The Information.

Now Amazon is in prime position (pun intended) to continue that growth into 2025, as a number of strategic moves appear set to converge.

To start, Prime Video is expected to add more inventory to the service, though the exact nature of what that will look like remains unclear. It could mean more ad slots, or it could mean more types of marketing opportunities, as formats like the pause break and various forms of sponsorship continue to proliferate.

An Amazon advertising executive, Kelly Day, told the FT that Prime Videoā€™s ad load would ā€œramp up a little bitā€ in 2025, though the company is expected to keep its overall ad load pretty light.

An Amazon spokesperson tells The Hollywood Reporter that ā€œwe have not changed our plans to have meaningfully fewer ads than linear TV and other streaming TV providers, and evaluate advertising volumes to help ensure weā€™re delivering a great customer experience.ā€

Regardless, any move by Amazon to expand its ad business is sure to give its competition heartburn, as viewers flock to shows like Fallout and sports like the NFL.

When the company brought ads to Prime Video earlier this year, the streaming video ad market was flooded with inventory, and two top ad sales executives with rival streaming services says that they felt the pain, missing internal targets, even as their streaming ad revenue rose healthily compared to the year prior.

A repeat in 2025 could pose similar issues.

That is particularly true given Prime Videoā€™s strength not only in reach, but in live sports. Thursday Night Football is averaging nearly 15 million viewers per game, according to Nielsen, 25 percent above last yearā€™s numbers.

Any questions about Prime Videoā€™s ability to draw a mass audience has been put to rest with those numbers. Amazon says that more than 50 new brands have signed on as sponsors to TNF this season, with Verizon, Subway, State Farm, AllState and JCPenney returning as presenting sponsors of pre- and post-game coverage, halftime and other programming.

The company also introduced shoppable and interactive ads to games, expanding strategic priorities and leaning into Amazonā€™s retail strength.

ā€œLive sports content continues to drive scale and at Amazon we create meaningful opportunities for brands by combining customer reach with our first party insights and innovative ad tech,ā€ said Danielle Carney, head of live sports and video sales for Amazon Ads, in connection with the TNF kickoff. ā€œWe provide full funnel capabilities that work for all advertisers, not just brands that sell on Amazon.ā€

And next year, Prime Video will add the NBA, a dramatic expansion of its sports content, and a place to offer a slew of advertising opportunities to sponsors looking for a bigger piece of the sports pie.

To be certain, advertising has become a big business for Amazon as a whole. In Q2, it reported $12.7 billion in ad revenue, up 20 percent from a year earlier.

Most of that still comes from its retail business, but Prime Video is expected to be a growth driver, with sports, new entertainment programming, new ad formats and perhaps that expanded ad load all serving as catalysts coming in the next year.

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