TBI Tech & Analysis: Amazon forecasted to earn $2bn in ad revenue this year

Gen V (Source: Amazon Prime Video)

Amazon is set to generate more than $2bn in incremental advertising revenue this year, following the launch of an ad-supported tier on its streamer Prime Video last week, according to research from analyst group Omdia.

This will be in addition to revenue already generated by the sale of advertising slots during live sports broadcasts on the Gen V and Reacher streamer.

The main difference between Prime Video’s advertising strategy compared to other major streamers such as Netflix is its subscription model. Amazon will place all current users into the ad-supported tier of its service, giving subscribers the option to pay extra to view without advertising.

Netflix users, meanwhile, all begin in the non-ad-supported tier and have the option to pay less for a service that incorporates advertising.

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The research from Omdia also considers the introduction of new services by Amazon’s ad-supported Prime Video, including shoppable TV. This feature allows viewers to directly purchase products they see in shows or movies, creating a new avenue for e-commerce within the streaming platform.

Matthew Bailey, Omdia principal analyst, commented: “The forecasted global revenue of over $2bn for Amazon’s ad-supported Prime Video tier in 2024 indicates considerable growth potential for the streaming platform and reflects Amazon’s efforts to diversify its revenue streams beyond subscription fees.

“A significant factor contributing to Amazon’s success will be their capability to provide closed-loop attribution and the inherent advantage of having all their users ad-addressable by default. Amazon has already experimented with directly shoppable ad formats, and this would enhance their ability to monetize their platform even more.”

Bailey added “Omdia expects more partnerships between prominent retailers, broadcasters, and online video platform owners as they look to compete with Amazon. These will range from data-sharing partnerships to enable commerce-led video advertising measurement and targeting through to direct retailer integration with video services.”

Omdia, like TBI, is part of Informa.