This blog was updated on July 24, 2024 to include an important Amazon update to Sponsored TV.
There’s a reason everyone is talking about Amazon Prime Video ads. Until now, there was no way for brands to directly target Amazon’s massive customer base while streaming Prime Video content on desktop, mobile, and connected TV environments.
Last September, Amazon announced that movies and shows on Prime Video would begin including limited advertisements in 2024. The news sent shockwaves across the country as media outlets rushed to analyze what this means for advertisers.
Now that Prime Video ads are prevalent, there are still questions about how they work. This article discusses exactly what Prime Video ads are, why they matter to brands, and how you can get started with them.
What are Amazon Prime Video Ads?
Prime Video ads are advertisements (including shoppable ads) that appear before and during shows and movies on Prime Video.
For a quick refresher, shoppable TV ads enable customers to make a transaction directly on their TV or phone. Amazon’s shoppable ads feature a QR code that customers can scan, directing them to a website or product detail page on Amazon.
Shoppable ads are effective because they reach customers with relevant messages while they are engaged and having fun. Since shoppable ads are interactive, they shorten the customer’s path to purchase.
Amazon already offers shoppable video ads via solutions like Sponsored Brands Video and Sponsored TV, but these ad types don’t reach audiences streaming Prime Video content.
Amazon tested this concept last November when it hosted the first Black Friday NFL football game. It was the biggest and most high-profile test of shoppable TV to date.
Below is a screenshot of a shoppable ad promoting a Nerf product during Amazon’s Black Friday NFL broadcast. Note the QR code in the corner that directs viewers to the company’s Amazon Store.
What are the Benefits of Prime Video Ads?
It’s easy to sell the benefits of Prime Video advertising. Amazon Prime is the second largest streaming platform in the world, with an estimated 115 million monthly viewers (behind Netflix with 260 million subscribers).
This presents a massive opportunity for brands to connect with audiences at the intersection of entertainment and commerce. Consider these stats:
- Prime Video households spend 22% more per month on Amazon than non–Prime Video households
- On average, 84% of Prime Video households have shopped on Amazon
- Prime Video households are 25% more likely to have an annual household income of $150K+
Considering Amazon’s aggressive focus on producing original content, Prime Video’s audience will likely continue growing even with the ad-supported content change. Below are a few highlights that underscore the relevance of Prime Video content:
- In 2023, Amazon MGM Studios earned 68 Primetime Emmy Award nominations, including Best Comedy Series for Jury Duty
- Amazon MGM Studios earned 16 Golden Globe nominations in 2023, marking the studio’s biggest year ever
- The Lord of the Rings: The Rings of Power smashed Prime Video viewership records with 25 million viewers on the day of its release
While there is no data yet for Prime Video ads, other forms of Amazon streaming ads have already proven successful. For example, Streaming TV campaigns that used Amazon’s first-party lifestyle audiences saw an average 10% lift in detail-page-view rate and a 6% lift in add-to-cart rate when compared to standard demographic audiences.
How Do Prime Video Ads Differ from Sponsored TV?
One of the most common questions we’ve been asked lately is: what’s the difference between Prime Video ads and Sponsored TV?
As you might remember, Amazon Ads announced Sponsored TV at the annual 2023 unBoxed event last October. Sponsored TV is a self-service ad solution for U.S. brands of all sizes to reach audiences on streaming TV services.
This might sound similar to Prime Video ads, but there is one key difference: Prime Video ads are only accessible via Amazon DSP. Sponsored TV, on the other hand, is a self-service advertising solution designed for brands of any size.
When launched last fall, Sponsored TV was only offered to brands that sell on Amazon (unlike Prime Video ads). In July 2024, Amazon expanded Sponsored TV to non-endemic brands as well.
Sponsored TV has no minimum spend requirements or fees, so you can set a budget that works for you and update as your needs evolve. Sponsored TV campaigns are billed on a CPM (cost per thousand impression) basis, which refers to the total ad spend for every 1,000 impressions an ad receives. This means you only pay when your ad is viewed by a customer (for every 1,000 impressions).
How Do You Set Up Prime Video Ads?
As mentioned, Prime Video ads are available through Amazon’s Demand-Side Platform (DSP), which enables advertisers to programmatically buy display, video, and audio ads both on and off Amazon.
Amazon DSP is available in two options: managed service and self-service. With the managed service option, Amazon provides you with an account manager and a team to set up and run your campaigns. Managed service DSP is convenient but cost-prohibitive for many brands.
With self-service DSP, brands manage their own programmatic ad buys. This gives brands total control and transparency over their campaigns, but it also requires the expertise and resources to manage them. Most brands simply don’t have the capabilities to run DSP campaigns. Instead, they partner with a trusted agency.
Channel Key has its own Amazon DSP “seat,” which means we have direct access to the tool and offer comprehensive Amazon DSP services for brands in any industry. Only agencies that demonstrate proficiency in Amazon’s programmatic advertising platform are granted a DSP seat.
To learn more about Channel Key’s full-service DSP offerings including Prime Video ads, visit the Amazon DSP section of our website or contact us at info@channnelkey.com.
Channel Key Takeaway
The most exciting thing about Prime Video ads is that they provide smaller brands with an opportunity to advertise on popular shows and movies. Traditionally, this was reserved for brands with massive advertising budgets.
“Prime Video ads will reach customers in the upper funnel,” said Zack Gibson, Strategic Brand Manager for Channel Key. “They will allow smaller brands to get exposure, tell their brand story, and ideally increase brand search volume. Because of this, Amazon expects Prime Video ads to be big.”
Many others agree. Based on calculations from Bloomberg Intelligence, Prime Video ads could generate $3 billion in Amazon advertising revenue this year. A separate report by eMarketer forecasts Amazon’s OTT ad revenues to nearly double in 2024 – largely due to Prime Video ads.
It will take several months before any concrete data comes in about Prime Video ads. For now, they have all the earmarks of changing the game for shoppable TV.
