Technology
Wednesday, May 15th, 2024 2:54 pm EDT
Key Points
- Amazon as a Growing Threat in Digital Advertising: Amazon is increasingly challenging digital advertising leaders Meta and Google by attracting billions of dollars quarterly from brands targeting its vast consumer base. Its presence at the Upfronts highlights its intention to compete in traditional media advertising as well.
- Expansion into Ad-Supported Streaming: Amazon announced it will start showing ads on its Prime Video streaming service in January, adding to its existing ad-supported platforms like Freevee and Twitch. This move is expected to generate significant revenue, with estimates reaching up to $3 billion from 58 million U.S. households.
- Continued Growth and Innovation in Advertising: Amazon’s advertising business is thriving, with a 24% increase in revenue in the first quarter, reaching $11.8 billion. The company continues to invest in live sports programming and new original content, leveraging its extensive customer data to offer targeted advertising solutions.
Amazon has emerged as a formidable competitor to digital advertising giants Meta and Google, drawing billions of dollars quarterly from brands aiming to reach the vast number of consumers who flock to Amazon’s platform daily. However, Amazon’s ambitions extend beyond digital advertising, as evidenced by its debut at the Upfronts, a significant advertising sales event traditionally dominated by media conglomerates like Disney and Comcast’s NBCUniversal. Historically, Amazon’s Prime Video and other streaming services have been featured at the Newfronts, which cater to digital media. The participation of platforms like Netflix and YouTube at the Upfronts in recent years has blurred the lines between digital and traditional media.
Amazon’s entry into the Upfronts underscores a pivotal moment for the company as it makes a compelling case to advertisers. As spending on digital advertising surpasses linear TV, the industry is projected to allocate around $18.8 billion on traditional TV ads during the Upfronts this year, a slight increase from the previous year. In contrast, digital advertising during the Upfronts and Newfronts is expected to surge by 32% to approximately $16.5 billion.
The landscape has further evolved with the rise of ad-supported streaming platforms, offering advertisers alternatives to traditional TV, which has seen declining viewership. Amazon announced plans to introduce ads on its Prime Video streaming service starting in January, adding to its existing ad-supported offerings like Freevee and Twitch. Analysts from TD Cowen predict that Amazon could generate up to $3 billion in U.S. ad revenue this year from an estimated 58 million households viewing ads on Prime Video. The firm maintains a positive outlook on Amazon’s stock.
Alan Moss, Amazon’s vice president of global ad sales, highlighted the company’s responsiveness to customer demands, noting that introducing ads on Prime Video has created the largest ad-supported premium streaming service globally. Amazon’s ad-supported streaming content now reaches 175 million U.S. viewers monthly, up from over 120 million in 2021, with Prime Video boasting 200 million global customers, including 115 million in the U.S.
Despite the diversification of its advertising business, Amazon’s primary revenue from ads comes from promoting brands across its various properties, including sponsored listings on its website and ad spots on Fire TV devices. The ad business saw a 24% revenue increase in the first quarter, reaching $11.8 billion.
Amazon has also invested heavily in live sports programming to draw more streaming viewers and ad revenue. The company’s recent acquisition of exclusive rights to a National Football League playoff game next season exemplifies this commitment. During its presentation, Amazon showcased a robust programming lineup and featured celebrities like Reese Witherspoon and Jake Gyllenhaal to promote new original content. The company emphasized its ability to leverage “billions of customer signals” to help brands target ads effectively.
Paul Kotas, head of Amazon’s ad business, reflected on the company’s long-term vision, which began 18 years ago with the introduction of ads on its website. He highlighted the evolution of Amazon’s advertising capabilities, now encompassing digital video ads on Prime Video, and stressed that Amazon remains committed to continuous innovation in this space.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/15/amazon-goes-head-to-head-with-media-giants-in-upfronts-ads-debut-.html
