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Amazon Has become a growing threat to digital advertising companies Yuan and Googleattracting billions of dollars in revenue every season from brands trying to reach the vast number of consumers who flock to the site every day.
But it’s not just about digital ad dollars anymore, and Amazon’s participation in this year’s Upfronts event for the first time is the clearest sign yet that the e-commerce giant is ready to challenge traditional media.
On Tuesday, Amazon made its debut at Upfronts, an annual ad sales event that features media heavyweights such as disney and ComcastNBCUniversal. Amazon’s Prime Video and other streaming media have historically featured on Newfronts, the digital media’s interpretation of Upfronts.But online video platforms are becoming more and more influential on the main stage Netflix Google’s YouTube has also joined the ranks in recent years.
Amazon is making a new pitch to the advertising industry as it approaches a critical turning point. Advertiser spending continues to be higher on digital TV than on linear TV. This year, they expect to spend about $18.8 billion on traditional TV advertising during Upfronts, up 1% from the same time last year, according to eMarketer. By comparison, digital advertising during this year’s Upfronts and Newfronts is expected to grow 32%, to approximately $16.5 billion.
More ad-supported streaming platforms are also getting on board, giving advertisers an alternative to traditional TV, which has seen its ratings decline. Amazon announced it will begin showing ads on its Prime Video streaming service in January, adding to its stable of advertising offerings such as free streaming TV service Freevee and live-streaming site Twitch, which is popular with gamers.
TD Cowen analysts wrote in a note to clients on Wednesday that 58 million households are expected to see ads on Prime Video content this year, and the company expects to generate up to $3 billion in U.S. ad revenue. The firm has a buy rating on Amazon stock.
“When I joined Amazon about four years ago, the first question everyone asked was, ‘When are you going to show ads on Prime Video?'” Alan Moss, Amazon’s vice president of worldwide ad sales Said on the stage. “Well, at Amazon, we love delivering for our customers. By introducing ads on Prime Video, we’ve created the world’s largest ad-supported premium streaming service.”
The company said its ad-supported streaming content now reaches 175 million monthly U.S. viewers, up from more than 120 million in 2021.
Amazon’s advertising business still makes money primarily by charging brands to promote their products in a variety of ways, from sponsored listings on its website to advertising spots on its Fire TV streaming device.Advertising revenue Climb Growth in the first quarter was 24% to $11.8 billion.
Amazon has also spent billions on live sports programming to attract more streaming viewers and advertising revenue. The company recently reaffirmed its commitment to live sports, securing exclusive rights to next season’s National Football League playoffs.
Amazon executives on Tuesday tried to win over advertisers by promoting new original content with a slew of shows and celebrities like Reese Witherspoon and Jake Gyllenhaal. The company also emphasized that its “billions of customer signals” enable brands to target ads.
Paul Kotas, Amazon’s head of advertising, said the company “made a big bet” when it first launched ads on its site 18 years ago. He showed how the business has grown 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 stage today,” Cotas said. “Of course, at Amazon, we never stop innovating.”
—CNBC’s Lillian Rizzo and Alex Sherman contributed to this report.
Revealed: NBCUniversal is the parent company of CNBC.
watch: Ad volume won’t go down, it’ll just change
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