“Compared to Netflix, this offering is mature,” said one top digital ad executive, who spoke with Ad Age on condition of anonymity. “It will have mass reach to start and depending on what they finally come out with on price, it will probably be a recommended buy from us.”
Several media buyers spoke with Ad Age on condition of anonymity because they were in the middle of negotiations with Amazon to incorporate Prime Video ads into their buys next year.
Pricing has not been set, but according to Amazon’s pitch deck, the e-commerce giant is offering “guaranteed buys,” which is TV advertising-speak for consistent pricing and predictable audience sizes. Amazon can likely guarantee more ad inventory because it will automatically enroll all Prime subscribers into its ad tier unless the customers pay more. For now, Amazon Prime costs $139 a year; for those who want to avoid ads, the annual cost will increase to $175.
Priced to sell
Amazon’s move into Prime Video ads is another salvo in the streaming wars, as major TV networks, including Disney, NBCUniversal, Warner Bros. Discovery and Paramount have all launched connected TV apps with ad-supported models. YouTube, with YouTube TV, has been garnering a larger share of TV viewing too, in living rooms, and last year Netflix launched its first ad-supported service.
Netflix’s entry into ads generated excitement among brands who are eager to appear in prestige programming, such as “Stranger Things.” Netflix has 238 million subscribers worldwide, and bragged at its May upfront presentation that its ad tier drew 5 million global monthly active users. Ad Age reported in August the number of Netflix’s U.S. ad-supported subscribers was just shy of 2 million.
Negotiations between top advertisers and streaming services have been fraught at times, with the high price of inventory when a new platform introduces advertising to the market. But early talks with agencies have left buyers feeling optimistic that Prime Video may price its ads more sensibly, at least by their standards.
Read about Amazon’s Newfront presentation
“[Amazon] told us they will not make the same mistakes that others before them have made,” said the media buyer who has held discussions with Amazon sales reps. “They've been watching,” meaning they won’t come to market with a CPM—cost per 1,000 views—comparable to Netflix or Max (owned by Warner Bros. Discovery), which the buyer placed at $50-plus. “We think [Amazon is] going to come in, practically speaking, mid- to high-$30s,” said the buyer.
The media buyer said Amazon’s launch strategy for Prime Video ads—automatically opting users into ad-supported viewing unless they pay an additional fee—is a differentiator among the crowded streaming and digital video market. “[Amazon’s] offering is going to have significant reach because they’re forcing people to opt out of ads and pay an additional $2.99,” said the buyer. “It’s going to take at least a couple months for people to even realize that they’re seeing ads and then to figure out how to opt out.”
Shopping for shoppers
Amazon’s pitch deck emphasizes how video and e-commerce will mingle on the platform. Prime Video ads are forecasted to reach 115 million viewers a month in the U.S., according to the pitch. Meanwhile, Prime Video has a total audience of 157.3 million viewers in the U.S., according to Insider Intelligence. In public filings, Amazon has said that Prime membership has topped 200 million worldwide. That suggests Amazon expects most viewers will run with the ad tier.
It’s unclear from the pitch deck if Amazon is counting “co-viewing” in its forecast of monthly ad viewers. “Co-viewing” is when multiple people in a household watch at the same time. Also, 84% of “Prime Video households shopped on Amazon in the last month,” Amazon’s pitch said. Amazon’s online shopping base is highly coveted by brands looking to make sales.