Amazon is drawing billions of dollars every quarter from marketers vying for the attention of the throngs of customers that visit the website every day, posing a serious threat to the market leaders in digital advertising, Meta and Google.
But it’s no longer only about digital ad revenue, and Amazon’s maiden appearance at this year’s Upfronts events is the clearest evidence that the e-commerce behemoth is preparing to take on traditional media.
Amazon made its debut at the Upfronts, a yearly advertising sales event where major media companies like Disney are present, on Tuesday.
together with Comcast
NBCUniversal is it. Traditionally, streaming services like Amazon Prime Video and others have been highlighted during Newfronts, the digital media equivalent of the Upfronts. However, online video providers like Netflix have taken center stage.
and in recent years, Google’s YouTube joined the fray.
As it approaches a pivotal moment, Amazon is presenting a new pitch to the advertising sector. Digital advertising continues to receive more funding than linear TV. According to eMarketer, they are expected to spend approximately $18.8 billion this year on traditional TV advertisements during Upfronts, a 1% rise from the previous year. In contrast, it is predicted that this year’s Upfronts and Newfronts digital advertising would increase by 32% to reach around $16.5 billion.
There are now more ad-supported streaming services in the market, giving marketers even another option to traditional TV, whose viewership has declined. Along with Freevee, a free streaming TV service, and Twitch, a popular livestreaming website among gamers, Amazon announced that it will start running advertising on its Prime Video streaming service in January.
According to TD Cowen analysts in a note to investors on Wednesday, the business may make up to $3 billion in U.S. ad income this year from an estimated 58 million households that will view commercials on Prime Video content. The company rates the shares of Amazon as a buy.
“When are you going to introduce advertisements on Prime Video?’ was the most common question I received from all of you when I joined Amazon over four years ago.Vice President of Global Ad Sales at Amazon, Alan Moss, stated on stage. “At Amazon, we enjoy fulfilling client orders. By adding commercials on Prime Video, we’ve established the largest ad-supported premium streaming service in the world.”
According to the firm, the number of Americans who watch its ad-supported streaming content each month has increased from over 120 million in 2021 to 175 million. It also revealed that 200 million people use Prime Video worldwide, with 115 million of those users being in the United States.
The main source of revenue for Amazon’s advertising division is still the fees it charges brands to advertise on its many platforms, from sponsored listings on its website to commercials on Fire TV streaming devices. The advertising industry saw a 24% increase in revenue to $11.8 billion in the first quarter.
Additionally, Amazon has invested billions of dollars in live sports content in an effort to draw in more advertisers and streaming users. By obtaining the exclusive rights to a National Football League playoff game for the upcoming season, the organization has demonstrated its unwavering commitment to live sports.
With a full slate of original programming and a parade of celebrities, like Reese Witherspoon and Jake Gyllenhaal, promoting it, Amazon officials attempted to woo advertisers on Tuesday. The business also highlighted the “billions of customer signals” that enable advertisers to target advertisements.
When it started running advertisements on its website eighteen years ago, Paul Kotas, the head of Amazon’s advertising division, said the company “made a big bet.” He demonstrated how the company has changed to offer digital video advertisements on Prime Video.
Being on stage tonight means so much since we’ve been working for this moment for years, Kotas stated. Of course, innovation is a constant at Amazon.
— Alex Sherman and Lillian Rizzo of CNBC contributed tothis report.
