Amazon Hopes to Dominate the World of Streaming Ads

 https://www.wsj.com/articles/amazon-hopes-to-dominate-the-world-of-streaming-ads-it-faces-some-challenges-along-the-way-7176a7a2?page=1


This article revolves around Amazon Prime Video's ambitious entry into the U.S. streaming television market. With ad revenue exceeding $12 billion in Q3, Amazon aims to generate $5.2 billion in additional annual revenue through Prime Video ad sales and a $2.99 monthly ad-free subscription. Challenges include competition from established streaming platforms, convincing no endemic brands to advertise, and addressing concerns about the dilution of brand value for advertisers in categories like fashion and beauty.

Utilizing Ad Revenue Dominance: Amazon leverages its position as the world's third-largest digital ad seller, with ad revenue exceeding $12 billion in Q3. This revenue is expected to increase by $5.2 billion annually through Prime Video ad sales and a $2.99 monthly ad-free subscription, highlighting the company's commitment to monetizing its streaming service.

Targeting Nonendemic Brands: To expand its advertising base, Amazon aims to attract nonendemic brands, those not already selling products on Amazon. The challenge is convincing brands like Mercedes, Chipotle, and Allstate to invest in Prime Video advertising, showcasing a focus on diversifying the advertiser portfolio.

Addressing Brand Image Concerns: Amazon recognizes concerns among advertisers, particularly in fashion and beauty, about potential dilution of their brand image on Prime Video. The introduction of "shoppable ads" redirects viewers to Amazon's platform, but concerns persist about competition with more affordable in-house alternatives, highlighting the need for strategic positioning and differentiation.

Shifting Focus to Brand-Focused Advertising: Amazon is transitioning from targeting performance marketers to attracting brand-focused advertisers. This shift emphasizes the importance of providing detailed data to prove return on investment, a crucial factor for advertisers looking to build brand awareness rather than solely focusing on clicks and downloads.

Investing in Premium Content: Amazon acknowledges the perception that Prime Video may not be as premium as competitors like Disney+ or Netflix. To overcome this, the company is heavily investing in high-quality content, live sports, and original programming to elevate Prime Video's image and attract a larger audience.

Departure from Traditional TV Sales Methods: Amazon's unconventional approach to ad sales, using spreadsheets instead of traditional TV sales methods, marks a departure in the industry. The company is adapting its strategy to meet the demands of the digital era and appeal to a wider range of advertisers.

Improving Relations with Advertisers: To address challenges and foster stronger relationships with advertisers, Amazon is actively hiring industry experts, attending industry events, and offering competitive ad rates. These efforts reflect a commitment to establishing Prime Video as a premium advertising platform in the competitive streaming landscape.

The success of this strategy hinges on effectively navigating challenges and positioning Prime Video as a top-tier streaming platform in the industry.

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