Watch out World – Amazon is Coming for TV

Amazon’s Prime Video was one of the last streamers to announce the addition of advertising. Now that it has though, the company is clearly itching to get off the sidelines and into the game — and its 11-year exclusive with the NFL for Thursday Night Football is set to play a starring role.   

In September, Amazon announced that it would be following the lead of nearly every other streaming service by running ads on its Prime Video programming beginning in early 2024. A new ad-free tier will also be introduced, costing U.S. Prime members an additional $2.99 per month. This shift will make Prime Video “the largest premium ad-supported service, reaching an estimated 115 million viewers in the U.S. on a monthly basis,” touted Amazon Ads’ VP of Global Ad Sales Alan Moss at the Amazon UnBoxed, the company’s annual conference for advertisers. “This means that for the first time ever, advertisers will have the opportunity to reach Prime Video’s global streaming audiences while they watch the TV shows and movies included in their subscription.”

While adding ads to Prime Video is the big move, Moss was clear that Prime Video is just one piece of Amazon’s “growing entertainment offering,” which also includes “Amazon Freevee, our ad-supported streaming service, which is up 44% in hours viewing our originals; Twitch, our interactive livestreaming service where 35 million streamers come together each day to engage over shared passions; Fire TV, which has sold over 200 million devices worldwide; Amazon Publisher Direct, which helps brands show up in ad-supported Prime Video channels in over 100 streaming TV apps from leading publishers. And of course, Thursday Night Football where we’re recently kicked off our exclusive second season.”

With the vast changes taking place in digital advertising and TV viewership, connected TV (CTV) has become one of the hottest new advertising channels, largely because it gives advertisers more advanced targeting and measurement capabilities that aren’t available through traditional linear TV. Not only does Amazon want a piece of those ad dollars, but given the company’s foundation in retail, the opportunity to explore additional opportunities in the realm of shoppable TV experiences is a no-brainer.

All of this was abundantly clear at UnBoxed, where Amazon executives focused the majority of the event’s two keynotes touting how advertisers can reach consumers through its burgeoning slate of streaming video content. Among the biggest TV-related announcements at the event were:

• The upcoming debut of the first-ever Black Friday NFL football game, which will bring together America’s favorite sport and one of its biggest shopping events in a way only Amazon could do;
• New opportunities to harness the power of digital in streaming TV with capabilities that aren’t possible on linear, such as impression-based pricing and audience-specific targeting; and
• A hint at what’s in store for advertisers when Prime Video becomes available to them in 2024, including shoppable TV integrations that link to the Amazon store.

What TV Advertising Could Mean to the Amazon Business

As UnBoxed closed out on Thursday, Oct. 26, Amazon executives elsewhere gathered to announce the company’s Q3 earnings, where advertising continued to take center stage.

Most of Amazon’s divisions reported growth in the quarter, but advertising was the star, with revenue for that division up 26% year over year. (AWS was up 12% YoY; ecommerce grew 7%; and physical stores grew 6%.) However, Amazon’s advertising business is still being driven primarily by ads sold on its ecommerce site, with CFO Brian Olsavsky saying on the earnings call that top-of-funnel awareness spending of the kind that most often encompasses TV ads, was actually slowing down this year.

Amazon is clearly banking on shifting that trend with the addition of advertising on its core Prime Video service, and it will come not a moment too soon since Amazon’s ecommerce advertising business is a core focus of the FTC’s banner antitrust lawsuit against the company.

Amazon isn’t new to the world of TV advertising: Freevee (which was rebranded from its original name, IMDb TV, last year) has been an ad-supported video-on-demand (AVOD) platform since it debuted in 2019; livestreaming platform Twitch has long supported some advertising and last year at UnBoxed, Amazon announced that it was adding new advertising opportunities for businesses in verticals that aren’t available on Amazon; and advertising is a staple of Amazon’s banner live sports program, Thursday Night Football.

Still, the core Prime Video service is where most of the company’s top content sits. At UnBoxed Amazon touted its latest hits like The Summer I Turned Pretty, Creed 3, Swarm and Gen V (while notably downplaying the Lord of the Rings spin-off The Rings of Power, which despite being the most expensive TV show ever made has been, by all accounts, a flop).

There’s a clear upside for Amazon in adding advertising to Prime Video, aided by the fact that most of its competitors have already done it. But Amazon’s announcement of the news took an almost apologetic tone, touting all the other benefits included in a Prime membership and promising that membership prices won’t increase in 2024 (except for those who opt for ad-free streaming). Jay Marine, VP and Global Head of Sports at Prime Video also promised during UnBoxed that Prime Video “will have the lowest ad load rate among all streaming services, and far fewer than linear TV obviously,” which he presented as good news for both viewers and advertisers: “That means fewer ads and fewer interruptions for viewers, and it also means an opportunity for brands to be more relevant, more engagement, which means more valuable ads,” he said.

Staying true to the company’s famed motto of always “putting the customer first” is becoming a tricky balancing act for Amazon, whose customers now include not just consumers, but also the merchants that sell on its website, and increasingly, advertisers. In this regard, it’s notable that the two-day UnBoxed event kicked off with a keynote from Colleen Aubrey, SVP of Ad Products and Tech at Amazon Ads, where she extolled the company’s “willingness to be misunderstood for long periods of time.” As examples of this, Aubrey pointed to the “hotly debated” decision over 20 years ago to turn Amazon into a third-party marketplace and the creation of Amazon Web Services, which she said many people thought “was a crazy idea, especially for a bookseller.”

“We continue to look for ways to delight customers, and this means that we might make moves that may not solve an immediate-term problem but require a longer-term point of view; this same approach applies for our advertising business,” she said, adding that Amazon is “on a mission to reinvent advertising. … The digitization of TV has opened up new opportunities for publishers and advertisers alike.” (And for Amazon.)

Tapping into the NFL Gold Mine

Amazon’s TV advertising efforts will be anchored initially on its Thursday Night Football (TNF) programming, which has been a runaway success for the company. Notably, it also brings in an audience already accustomed to advertising breaks every other day of the week.

According to Amazon executives at UnBoxed, TNF is the most watched content on Thursday across all TV formats, including broadcast and cable, and viewership this year is already up 25% from 2022. The program’s season opener on Sept. 14, 2023, “shattered the NFL’s record for the largest streaming audience ever” with 15.1 million viewers, according to Moss.

Amazon also is using its platform to innovate on the football-viewing experience, incorporating optionality and interactivity that’s not possible on linear TV. For example, every game, the company offers several “alternate broadcast streams” that give viewers the opportunity to watch the game in different ways or with different hosts. In fact, Amazon won an Emmy this year for the offering.

And it turns out that the viewership on TNF is different from the traditional NFL audience, bringing in fans that are seven years younger than the NFL’s linear TV audience, more affluent and more engaged, with the average viewer watching TNF games 10 minutes longer than other NFL games.  

“That’s streaming with scale,” said Danielle Carney, Director of NFL Ad Sales at Amazon Ads. “And we’re using this scale to help drive innovation in advertising by creating ways to connect premium live sports directly to commerce for all brands.”

Yep, you heard that right — Amazon is bringing shoppable advertising to the world of sports. In fact, it already has, through interactive ads on Fire TV devices that allow brands to take viewers right to their Amazon product page “with the click of a remote,” said Carney.

Amazon is also trialing a range of new advertising capabilities on TNF that tap into the digital advantages of CTV over linear television. Among these are remarketing, which allows advertisers to connect with NFL fans after the last whistle blows across the Amazon ecosystem. Impression-based advertising packages are also available for TNF advertisers (again, something that is only possible on digital), which Carney said is lowering the cost barrier for brands to advertise in the NFL.

Amazon’s newest TNF offering might be its most exciting though: audience-based creative, which allows brands to deliver different creative to different audiences at the same time. Columbia Sportswear is one brand that has trialed this capability, creating two different ads that ran during TNF: one geared toward outdoor enthusiasts and a second that spoke to consumers that are “newer to the outdoors.” According to Moss, tests of this new capability during the current TNF season are showing a 28% increase in product searches for advertiser brands when compared to the standard TNF ad spot.

And last but not least, Amazon is upping the ante this year by bringing a whole new event to the NFL roster — the first-ever football game on Black Friday. This is something that perhaps only Amazon could do, being a company with strongholds in both content and commerce. “We’re excited to combine America’s favorite sport with one of the biggest shopping days of the year,” said Carney. “We’re going to organically find ways to include brands and products in the game, and to help our customers kick off this new tradition, we’re thrilled to make the game available and free to non-Prime members.”

Bringing Ads into Prime Video

While executives didn’t say so explicitly, it’s a fair bet that most of what Amazon is currently offering for TNF advertisers will be available to Prime Video advertisers as well next year. “[Bringing advertising to Prime Video] is a big deal for us, and it’s a big deal for advertisers,” said Marine who also said that the company’s ultimate goal was to make “Prime Video the single destination for viewers to find everything they’re looking for in one place” so that viewers “spend less searching and more time watching.”

Part of how it plans to do that is by reinvesting the money it makes on advertising into content, said Marine so the company can continue to bring in new viewers for longer: “We believe if you start with what’s great for viewers, it’s also great for advertisers. The key is [to get] viewers coming back to Prime Video more often and watching for longer.”

Prime Video also will become more integrated with the broader Amazon ecosystem through this advertising, with interactive video ads that bring interested viewers to the Amazon.com store, and the new ability for advertisers to use their existing Amazon.com ad creative in Amazon’s TV ecosystems. For brands that don’t have creative that will work in streaming, Amazon is offering a slate of services to help them make it.

Importantly, the new Sponsored TV self-service option comes with no minimum campaign spend, no minimum daily spend and no upfront commitments. “TV is prestigious and has [historically] had dozens of barriers to entry,” said Melissa Burdick, Co-founder and President of the ecommerce advertising platform Pacvue in comments shared with Retail TouchPoints. “This release makes TV accessible to anyone, including the ability to target and plan creatively to get the most bang for ad spend. This could prove to be one of Amazon’s strongest performance-driving mediums given its lack of skip ability and its high recall and engagement.”

“TV no longer sits in a silo, and as marketers, it’s critical that you’re able to measure it, just like everything else,” said Kelly MacLean, VP at Amazon DSP. “Digital advertising has always promised enhanced accountability compared to traditional media, and today we’re not only realizing that potential, but [also looking at] how to unlock and accelerate the future of advertising.”