Amazon has the power to dominate Addressable TV

Back in the summer, TechCrunch ran an article about an Amazon job posting which was initially titled: “Head of Free to Air TV & Advertising.” After a bit of tweaking by Amazon, the job listing became: “Head of Prime Video Channels Free To Air TV & Advertising TV Partner Channels.” This job title clearly wasn’t going to fit on a business card so was changed to: “Head of Prime Video Partner Channels”.

Notice the omission of “free to air” in the final title? Is Amazon planning to launch a free ad-funded version of Prime Video?

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ADDRESSABLE TV, THE NEW AMAZON STORE FRONT?

Running TV ads on a free streaming version of Prime Video and knowing who is viewing the adverts. Plus having access to years of their most intimate buying habits could be Amazon’s winning hand.

Tailored ad breaks would work on mobiles where people generally watch alone. Things get a little more complicated when a family sits around their addressable TV together. This problem is easily solved using “Amazon household”. Each member of the family has their user profile added to the Fire TV Stick.

Amazon checks which products the family has been browsing. The Fire TV Stick pumps out a simple animated TV advert for just those products and bingo the sale is complete. The products will arrive tomorrow via Prime, or today via Prime Air drone!

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THE ADDRESSABLE TV COMPETITION

The subscription TV market is getting crowded, and competitors are already failing. The cash burn involved in delivering quality TV content is enormous. Netflix recently issued a fresh round of notes adding another $2 billion in debt to their balance sheet. The company reportedly has almost $12 billion in debt as of Sept 2018. For Netflix to make the sums work, they have to keep signing up new users and hang on until the cash-flow from user subscriptions pays down the debt pile. Update: Netflix started it's own ad supported plan in November 2022, a great opportunity for anyone looking to advertise their brand on Netflix.

Amazon is different, using addressable TV as a front-end to their search advertising business could reap huge benefits. Suppliers who want to trade more products are going to pay Amazon twice, once for the ad slot on Amazon’s network and secondly for a listing on Amazon’s shop.

TV broadcasters are slowly being chipped away at by ad-skipping technology available to those with video recorders. YouTube is also taking some of the younger markets with vlogger content. Stepping into the market with online video streams full of quality content paid for by eager advertisers and available free to the public could be Amazon’s winning strategy.

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HOW COULD THE ADS WORK?

Sky is already running a similar service which builds targeted ad breaks dependent on viewers demographic data. Sky’s AdSmart is based on credit rating and census data. Amazon can use the same strategy, producing ad breaks featuring products they know their viewers are already interested in.

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TESTING AND ITERATING

How would this new advertising differ from traditional ads? Because Amazon can attribute sales to adverts viewed, conversion tracking is easy. After a few weeks of running an advert, or better, split testing two versions of similar creative the sales data would show precisely which advert performs best. Iteration based on this data will allow advertisers to know a campaign is running at peak performance.

Once Amazon fills the role and the business cards are printed, I’m sure Amazon’s plans will become clear.

I for one salute our new shopping overlords.

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Sources:
Amazon Free to Air – Techcrunch

Netflix Cash burn – CNBC

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