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Watch out, YouTube. Amazon is coming after your ad dollars.
The e-commerce giant has begun slotting preroll ads within the latest crop of Amazon Studios-produced original series pilots to stream through its Netflix-rival Amazon Prime Instant Video service. The move combines two of advertisers' biggest wishes -- premium content and a measurable audience -- on a service that venture capitalist Mark Suster once called "the biggest threat to YouTube."
Yes, Amazon has an ad-supported video business, which puts it on a collision course with YouTube, Hulu, Yahoo, AOL, and to some extent, TV.
Geico has signed on as the presenting sponsor for Amazon's "pilot season." As part of the deal, Geico has banners running on the program's landing page and 15-second repurposed TV spots streaming before the first episode of each non-kids series, such as "The X-Files" creator Chris Carter's "The After." Amazon users can voice which of the pilots they'd like to see greenlit into series distributed on Prime Instant Video.
If Geico's preroll ads are themselves a pilot program for a bigger Amazon video play -- such as a free ad-supported tier of Amazon's streaming video service -- Amazon VP-Global Advertising Sales Lisa Utzschneider isn't saying.
"We're testing and learning. It's early days, and we're looking at all different video formats. We're focused on creating a great experience for our customers," Ms. Utzschneider said. If it's any indication, she said Amazon isn't "currently" scheduled to present at this year's Digital Content NewFronts, but is "working with a handful of advertisers" on video campaigns.
Foray Into Video
Amazon's foray into video advertising started in the fourth quarter of 2013. People who watched the first episodes of certain TV shows on Amazon's Kindle Fire tablet were shown video ads. Not only did Amazon strike deals with TV networks to bring ads to their shows, the e-commerce company was also able to negotiate control of ad sales. And earlier this month Amazon announced a deal with video ad-tech firm FreeWheel to slot pre-roll ads within videos on its product search results pages.
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"That partnership [with
Another way, would be to convince some YouTube networks to defect to Amazon which the company attempted to do last year. Ms. Utzschneider declined to comment on those talks.
Geico's pilot season sponsorship extends beyond video inventory. The deal included placements across Amazon.com, on the Kindle Fire "wake" screen and on Amazon-owned movie site IMDb.com, Ms. Utzschneider said. On President's Day, a Geico banner ran on the Amazon.com home page. "The deal was structured so that it takes advantage of Amazon as a property," said Jason Smith, digital media director at Geico's media agency Horizon Media. He declined to disclose the price tag.
Amazon doesn't break out its ad revenue, but eMarketer projects it raked in $707.7 million from advertisers last year, primarily thanks to display advertising. (The research firm revised down its previous estimate after noting that the international growth of Amazon Web Services made up a bigger slice of the company's "other revenue" bucket that includes advertising revenue). By comparison, YouTube sold $850 million in video ads in 2013 and accounted for 20.5% of the $4.15 billion domestic online video ad market, per eMarketer.
A Buy Button
Ms. Utzschneider said Amazon's primary motivation for its video ads is "how to create a more relevant experience for our customers while they're shopping." She said Amazon has been experimenting with a button on long-form video ads that people can click on to learn more about a product or navigate to a product page.
Neither Mr. Smith nor Ms. Utzschneider would explain how their companies will measure the brand-awareness campaign's effectiveness, other than to say they will, somehow. Amazon has faced criticisms for not being transparent enough with advertisers about data related to their campaigns.
That's not the case here, Mr. Smith said. "We should be able to walk away from this and get a better understanding of how the pilots and our partnership with Amazon are driving that brand association that we typically look for," Mr. Smith said.