Amazon Prime Video will Soon Have Ads. It’s a Game Changer for Brands.
Jan 18, 2024
Amazon just showed the kind of business acumen that has turned them into the world’s leading online retailer and global juggernaut. Amazon consumers and brands were just notified that Amazon Prime Video will shift to an ad-supported model on January 29th, with an option for consumers to pay an extra $3 fee every month for no ads.
The emergence of Amazon Prime Video's ad-supported tier is a critical moment in digital marketing that joins the best of retail media’s data and measurement solutions with premium video entertainment at scale.
“I'm genuinely excited to work with marketers to harness this unique inventory and tap into the wealth of data within Amazon’s expansive retail landscape.”
Director of Video, Kepler
Here’s why launching Amazon Prime Video Ads is a win-win for marketers and Amazon:
Amazon’s Prime Video content is exactly the kind of programming brands want for their streaming dollars: With hits like The Marvelous Miss Maisel, The Boys, and Jack Ryan, Amazon touts some of the strongest original programming across the streaming ecosystem. This marriage of premium big-screen and mobile content and proprietary addressable data with advanced measurement is limited to a small subset of options; now, almost overnight, Amazon graduates to “must buy” appeal for media buyers.
Amazon’s shopper data is still king: Amazon has always ranked highly in our DSP benchmarking exercises, thanks to the quality of their first party data for both activation and measurement. Now brands have even more ways to reach their highly desirable audiences on suitable, brand-safe big screen inventory. Looking for parents of children aged two to three years old for a video campaign? Or maybe you need everyone who bought size five diapers and is shopping for toddler-related household goods? Both can be done and measured, with optimized creative assets to boot.
Amazon welcomes your data: A brand’s first-party CRM data can be gold. And if it’s already hosted in Amazon Web Services (AWS), Amazon is making it even easier to reach and re-engage those customer segments across premium publishers using a data clean room. Kepler’s audience segmentation and addressability solution within the Kepler Intelligence Platform, KIP Audiences, is also integrated with Amazon DSP, allowing for easy activation of desirable personas.
Amazon has to keep fighting off Walmart Connect: While Amazon will make up 75% of retail media share in 2024, this actually represents a loss in share loss compared with 2023. Walmart Connect’s deals with Roku, Google’s DV360, the Trade Desk, and TikTok make it a powerful network partner for CPG and other brands looking to capitalize on their enormous in-store sales footprint. Walmart Connect revenue is projected to double by 2025 from $3.19b to $6.18b and Amazon Ads needs to continue evolving if they want to combat the scale, data, and offsite opportunities that the Walton family is looking to bring to advertisers.
Amazon isn’t the first, but they’re making a real splash: Streaming companies have often struggled to launch ad-supported tiers (also known as AVOD: ad-supported video on demand), perhaps initially keeping their paid subscriber plan separate from ad-supported. By opting all Prime members into the ad-supported tier from the outset, inventory demand shouldn’t be an issue. Additionally, Adweek reports that Amazon Prime Video CPMs are expected to launch at lower, more efficient rates compared to those of its competitors, likely in the mid-to-low $30 range. This news will be received extremely well by advertisers and media buyers.
Ad Revenue Diversification: Amazon sponsored ads revenue is projected to grow 20% in 2024, well below the approximately 50% year-over-year growth in 2020 and 2021. Amazon Prime Video is expected to be another hockey-stick growth engine for the Amazon Ads unit, driving new advertisers and more downstream activity on Amazon properties, thus increasing revenue upwards of $5 billion this year.
Kepler is extremely optimistic about the great value potential that Amazon Prime Video will bring to advertisers, whether a brand is sold on Amazon or not (e.g. financial services, travel, B2B, etc.). The convergence of scaled premium video with exclusive data and advanced measurement is a unique combination. Stay tuned for case studies and upcoming product updates which we expect to come quickly as the product matures.
If you’re interested in accessing Amazon Prime Video inventory, contact us. Our Amazon Sales Partner status uniquely allows Kepler Commerce to provide Amazon technology licensing and media services for both agencies and brands globally.
Article written by:
Zach Ricchiuti, AVP of Kepler Commerce, Kepler
Garrett Dale, Chief Partnership Officer, Kepler