Amazon Threats are growing for established digital advertising companies Meta and Googleraking in billions of dollars a quarter from brands looking to reach the massive numbers of consumers who flock to the site every day.
But it’s no longer just about digital ad spend, and Amazon’s first appearance at this year’s Upfront event is the clearest indication that the e-commerce giant is ready to take on traditional media. There is.
On Tuesday, Amazon gave its first presentation at Upfront, an annual ad sales event featuring media heavyweights including: disney and comcastNBCUniversal. Amazon’s Prime Video and other streamers will be featured in Newfronts, which historically is digital media’s take on Upfronts. However, internet video platforms are having a bigger presence on the main stage. Netflix And in recent years, Google’s YouTube has gotten on board.
Amazon is making a new pitch to the advertising industry, which is nearing a critical tipping point. Advertisers continue to spend more on digital TV than on terrestrial TV. According to eMarketer, consumers are expected to spend about $18.8 billion on traditional TV advertising during upfronts this year, an increase of 1% from last year. In contrast, digital advertising during the Upfront and New Front periods is expected to increase by 32% this year to approximately $16.5 billion.
Ad-supported streaming platforms are also increasingly entering the market, offering advertisers another alternative to traditional television, which is seeing declining viewership. Amazon has announced that it will begin displaying ads on its Prime Video streaming service in January, adding to its stable of advertising services such as free streaming TV service Freevee and live streaming site Twitch, which is popular among gamers.
The company is on track to generate up to $3 billion in advertising revenue in the U.S. this year from an estimated 58 million households that watch commercials on Prime Video content, TD Cowen analysts said in a note to clients on Wednesday. wrote. The company rates Amazon stock as a “buy.”
“When I joined Amazon about four years ago, the number one question people asked me was, ‘When will my ads appear on Prime Video?'” said Amazon’s vice president of global advertising sales. President Alan Moss said on stage. “Well, at Amazon, we want to deliver to our customers. By introducing advertising to Prime Video, we’ve built the world’s largest ad-supported premium streaming service.”
The company announced that its ad-supported streaming content now reaches 175 million monthly viewers in the U.S., up from more than 120 million viewers in 2021. It also revealed that Prime Video has 200 million customers worldwide, 115 million of whom are in the United States.
Amazon’s advertising business remains primarily a matter of charging brands to promote their products across its properties in a variety of ways, from sponsored listings on its website to ad spots on its Fire TV streaming devices. is making a profit.Advertising business revenue climbed In the first quarter, sales rose 24% to $11.8 billion.
Amazon has also spent billions of dollars on live sports programming to capture more streaming viewers and advertising dollars. The company recently reaffirmed its commitment to live sports, acquiring exclusive rights to next season’s National Football League playoff games.
Amazon executives on Tuesday tried to woo advertisers with a jam-packed programming slate and a parade of celebrities, including Reese Witherspoon and Jake Gyllenhaal, to promote new original content. The company also highlighted its “billions of customer signals” that enable targeted advertising for brands.
Paul Kotas, who runs Amazon’s advertising business, said the company “made a big bet” when it first placed ads on its website 18 years ago. He showed how the business has evolved to include digital video advertising on Prime Video.
“We’ve been working toward this moment for years, which is why it means so much to be on this stage today,” Kotas said. “And of course, innovation isn’t over at Amazon.”
—CNBC’s Lillian Rizzo and Alex Sherman contributed to this report.
Disclosure: NBCUniversal is the parent company of CNBC.
clock: The amount of advertising doesn’t decrease, it just changes.