Despite forcing all Prime Video subscribers in January to subscribe to ad inventory unless they pay an additional $3 per month, Amazon is still not taking full advantage of Prime Video’s advertising potential. It seems like they haven’t. Amazon CFO Brian Olsabsky told investors in August that Amazon’s advertising business still relies mostly on ads appearing on Amazon’s website. Throughout the first quarter in which ad-supported Prime Video was available, Amazon’s advertising business grew slower than expected in recent quarters, with ad sales coming in at $12.7 billion versus analysts’ expectations ($13 billion). ($70 million).
Still, advertising remains one of Amazon’s fastest-growing and most profitable businesses, and the conglomerate is keen to cultivate it. Amazon has reportedly already exceeded its 2025 ad spend commitment target for Prime Video.
Amazon is also competitive in ad pricing, reportedly offering lower prices than Netflix, while mandating ad inventory for all subscribers and already advertising in its e-commerce business. They are creating an early advantage primarily by appealing.
thin line
Amazon’s advertising business is growing, and the company has seen minimal backlash since launching ad-supported Prime Video, so it’s time to move forward and see how much subscribers pay. did.
On the other hand, people who have already watched Prime Video ads may be more than happy to accept what Amazon’s advertising department is trying to throw at them.
However, some may think that they are already paying for it with their current advertising settings. For subscribers tired of streaming strategies like price hikes, library changes, and password crackdowns, there’s a fine line between acceptable and disruptive advertising. Advertising fatigue can also reduce the effectiveness of commercials.
At least for now, ad tiers make business sense for streaming providers, most of whom are trying to increase or maintain profitability. Advertising subscriptions accounted for 38% of the streaming market and accounted for more than half of new subscriptions in Q4 2023 and Q1 2024 per antenna.
As long as people continue to pay ad subscriptions, streaming providers will look for more ways to use viewers to generate advertising dollars. Expect more streaming services to test how much advertising their customers will accept as Amazon increases its ad load next year.