Amazon Prime Video Prepares to Introduce Ads with IPG Mediabrands Collab

Early next year, Amazon will introduce advertising across the content within its Prime Video platform, becoming one of the last major players in streaming to do so. The initiative will be supported by IPG Mediabrands after agreeing to a three-year partnership across the various countries in which the platform is rolled out. The news of the introduction of the new ad tier came after a reported slowdown in subscriber growth numbers for its Prime service offer, with 157.3 million subscribers in the U.S. alone, according to Insider Intelligence. Amazon itself claims to reach 115 million viewers each month in the country. Prime Video currently costs $14.99 per month (and is also included in the $139 yearly Prime subscription). An ad-free tier will be available for an additional $2.99 per month. Amazon has said that it does not plan to raise prices in 2024 for the current Prime membership plan. Amazon has previously said that the revenue raised would help it to “continue investing in compelling content and keep increasing that investment.” We can simultaneously offer brands unmatched reach and frequency to help them achieve their business goals. Alan Moss, vp of global sales for Amazon Ads Ahead of the launch, IPG Mediabrands will become the first media holding company to partner with Amazon Ads in supporting the new offering, which is set to initially roll out in the U.S., U.K., Germany and Canada, followed by France, Italy, Spain, Mexico and Australia later in the year. The partnership will aim to help brands reach the global audience of Prime Video through their media strategies. This will include first-look opportunities for new ad formats on the platform and content sponsorships in each region. Advertisers through IPG Mediabrands will also benefit from Amazon’s insights—generated through both its shopping and entertainment platforms—to help them create relevant ad experiences for Prime Video audiences. In a statement, Alan Moss, vice president of global sales for Amazon Ads, said: “When we begin introducing limited ads into Prime Video shows and movies, Prime Video will be one of the largest premium ad-supported services in most countries where we operate. This means we can simultaneously offer brands unmatched reach and frequency to help them achieve their business goals.” Amazon has said that it aims to “have meaningfully fewer ads” than linear TV and other streamers offering advertising. “Amazon’s latest offering brings a first-to-market opportunity for our clients to reach consumers at the category level in a comprehensive, scalable way—from culture and content to commerce and shoppable experiences,” said Eileen Kiernan, global CEO of IPG Mediabrands. Lessons to learn from Netflix According to research from marketing data analytics company Kantar, Netflix continued to dominate the streaming sector, being present in two-thirds of households that view streamed content, with almost one-half (49%) seeing it as their primary streaming subscription. Netflix introduced advertising to its platform in November 2022 and revealed in May that it already had around 5 million monthly users of its ad-tier subscriptions globally. The same research claimed that two-thirds of Prime members engaged with Prime Video, as it is seen as a key focus in driving Prime subscription growth. One challenge Kantar also highlighted facing Prime Video users was the service’s interface in comparison with Netflix, despite recent changes made in the past year. "Unlike Netflix, the Prime value offering extends beyond streaming, so from an advertising perspective, we're able to target both streaming and shopping audience behaviors, which is a huge win and increasingly becoming a critical intersection of the marketing mix," Carla Henderson, managing partner of Brainlabs, told Adweek. "This launch enables [media agencies] to target hard-to-reach light TV viewers combined with shopping audience insights, resulting in highly targeted campaigns that effectively maximize conversion," Henderson added. Netflix has approached ad testing cautiously, recognizing the significance of preserving content integrity and minimizing potential backlash from subscribers. Julia Pilkes, senior director of marketing, EMEA, HubSpot Meanwhile, YouGov data released in October finding that more than one-half (53%) of Amazon Prime Video’s current subscribers in the U.K. said they thought it “fair” that they watch ads in exchange for free content. Fewer than one-third (30%) said the opposite. Despite that, the majority of its subscribers (65%) said they felt “bombarded” by advertising generally. Julia Pilkes, senior director of marketing, Europe, Middle East and Africa for marketing software platform HubSpot, warned that there was a need to strike a balance in delivering targeted ads and maintaining a positive user experience. "Netflix has approached ad testing cautiously, recognizing the significance of preserving content integrity and minimizing potential backlash from subscribers. Prime Video could learn from this approach and ensure that its ads enhance the overall user experience rather than causing disruptions," explained Pilkes. She also advised Amazon to leverage the insights gained from other platforms to optimize targeting strategies through Prime Video, claiming that effective use of user data by Netflix, including their preferences and viewing habits, helped to serve relevant ads. By doing this, Amazon can develop a more effective advertising experience.