Amazon announced on September 22 that starting in early 2024, Prime Video will feature a limited number of advertisements.
Highlights
- Amazon aims to generate revenue through Prime Video ads by investing in content creation and enhancing its streaming service over time.
- According to Statista, the global AVoD market will reach approximately US$48.32 billion by 2024.
- Prime Video ads offer significant exposure to a vast and engaged audience despite potential viewer annoyance.
- Sellers can leverage Amazon's existing advertising tools, including display ads, video ads, and DSP, to reach Prime Video viewers.
- Sellers must navigate competition, ensure ad quality, and comply with Amazon's strict advertising rules.
- You can stop Prime video ads by paying an extra $2.99 monthly on top of the standard Prime membership fee.
Why We Wrote This?
By highlighting market trends, benefits, challenges, and cost structures associated with Prime Video ads, we want to help sellers evaluate the opportunity presented by Prime Video advertising. Ultimately, we aimed to provide valuable insights into Amazon's strategic move and its implications for both stakeholders.
So, in this guide, we’ve discussed why Amazon is displaying Prime video ads, whether they are beneficial for sellers, what challenges it brings, how much it costs, and how to stop it.
Why is Amazon Displaying Prime Video Ads?
Amazon incorporates ads into Prime Video ads as a revenue source, aiding the company in "continuing to invest in captivating content and progressively increasing that investment over a prolonged period." Prime Video allows advertisers to connect with customers as they explore and come across new content using the Prime Video app.
Amazon isn't the pioneer in streaming services displaying advertisements. Netflix, Hulu, Disney+, and HBO Max all offer ad-supported tiers or plans that grant access to more content or lower prices in exchange for watching commercials.
According to Statista, the global AVoD (Advertising Video on Demand) market is predicted to make around US$48.32 billion by 2024. After that, it will grow steadily at about 9.53% each year from 2024 to 2027. By 2027, it could reach a total market size of about US$63.50 billion. Additionally, the number of people using AVoD services worldwide is expected to reach 3.4 billion by 2027.
This demonstrates substantial demand for Amazon Prime video ads, especially among cord-cutters and Gen-Z audiences, who are more tolerant of ads. However, it faces escalating competition from other streaming platforms, increasing costs and licensing fees.
Are Amazon Prime Video Ads Beneficial for Sellers?
Even though it might annoy viewers, it's great news for Amazon sellers.
Amazon boasts over 200 million Prime members worldwide, and they spend about 17.11 hours each month watching shows and movies on Prime Video.
By putting ads on Prime Video ads, Amazon can showcase your products and brand to a huge audience who already love using the platform and trust its suggestions.
Amazon hasn't explained how the ads will work on Prime Video yet. Still, it'll probably use its existing advertising tools like display ads, video ads, and Amazon DSP to display ads on Prime Video.
What Challenges will Sellers Face?
Advertising on Prime Video has many perks, but some tricky parts often go unnoticed.
Competition: The main challenge is competition. You not only compete with other sellers but also with Amazon itself. They're known for copying successful products and selling them under their brand.
Ad Quality: Viewers on Prime Video expect top-notch movies and shows. So, ads on this platform should be well-made to keep viewers interested. This might increase your advertising costs.
Compliance: Lastly, there's compliance. Amazon already has strict rules for Amazon-sponsored products, brands, and display ads. They'll likely have similar or even stricter rules for Prime Video advertising. Sellers need to follow these rules to avoid having their ads rejected.
Wondering how to achieve insane growth on Amazon? Read our article on 9 killer Amazon advertising strategies that will help you optimize your advertising strategies.
How Much Will Prime Video Ads Cost?
The price for Prime Video with ads will be the same as what Amazon Prime members pay now: $14.99 per month or $139 per year.
This price includes all the other Prime perks, like free shipping on Amazon purchases, free Amazon Fresh grocery deliveries, Amazon Music, unlimited Amazon Photo storage, Prime Gaming, Prime Reading, and more.
How Much Does It Cost To Turn Off Ads Amazon Prime Video?
If you want to keep Prime Video ad-free, it'll cost you an extra $2.99 per month, on top of the standard $14.99/month price for a Prime membership.
Summary
Amazon's introduction of Prime Video ads marks a significant strategic shift aimed at capitalizing on the booming AVoD market and leveraging its vast Prime membership base. While offering sellers a lucrative platform to showcase their products to a large audience, it also presents challenges. However, sellers can harness the potential of Prime Video ads to reach their target audience. Meanwhile, viewers can anticipate a blend of familiar content and relevant ads within their streaming experience.
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FAQ
Does Prime Video Have Ads?
Yes, Amazon Prime Video shows ads to its subscribers. However, it also offers an ad-free streaming experience after paying extra charges.