Ads on Prime Video: What You Need to Know

Introduction:

Amazon has started showing ads on Prime Video, a move announced in late 2022 that has now become a reality.

The feature will be launched in stages – starting from Prime video subscribers in the US, UK, and Germany, followed by other European regions and then the rest of the world.

The cost of prime membership has not changed. However, customers in the US, American Samoa, Puerto Rico, Isle of Man, the Netherlands, Mariana Islands, Belgium, Luxembourg, the US Virgin Islands, Guam, Portugal, the Republic of Ireland, or the Channel Islands who want to disable ads on Prime Video can upgrade to the ad-free version at an extra charge. For instance, US customers will have to pay an additional $2.99/month for their existing Prime Video subscription. The launch plan, pricing, and further details for other countries are not yet clear.

In this article, we’ll talk about ads on Prime Video, the challenges sellers or advertisers might face, and a few strategies to launch video ads successfully.

Why Is Amazon Launching Ads on Prime Video?

Amazon works hard to keep Prime a “no-brainer” subscription. Prime Video is one of the multiple offerings that Prime subscription provides. About 740 billion products are available on fast, free shipping, seamless checkout experience, 24/7 customer support, exclusive passes to all sale events, Prime Day events, and the like.

From exclusive rights to producing Amazon original series and films, Amazon invests heavily in quality and quantity of content. However, increasing content production and acquisition costs and Amazon’s focus on profitability make Prime Video a huge loss maker in this category.

One way out is to increase prices for Prime Video.

Keeping up with being a customer-centric offering for a long period of time, Amazon decided against it. Instead, it is introducing two pricing tiers: 

• One for people who can tolerate ads 

• Another is for people who do not want to watch ads

This is not a new concept. Most video streaming services like Netflix, Disney+, HBO have ad-supported plans. Customers can use these plans to watch content on these channels for a lower price in exchange for watching commercials.

The global AVOD market (i.e., Ad-supported Video On Demand) is valued at US$ 40.12 billion for 2024 and is growing at a CAGR of 14.2%. Can you imagine? This number is projected to increase to $150.80 billion by the end of 2034.

This shows that showing ads on Prime Video movies or original series might be a brilliant move by Amazon, especially among cord-cutters and Gen Z audiences who have no issues watching a few ads while streaming.

With additional Amazon Ads revenue, Amazon can earn more from its existing user base and add a revenue stream from existing sellers. Plus, Amazon can earn extra revenue from Prime Video ad-free customers. 

Though higher revenue is on the cards, will Amazon ads on Prime Video cause customer churn? 

Well, this is all conjecture at this time, but there’s a possibility that customers might churn, citing ‘too many ads on the platform’ as a reason. However, since the concept of ads within video is not new to customers, the overall watch hours should not go down.

How Will Prime Video Ads Be Different From Linear TV Ads?

There will be fewer ads on Prime Video than on Linear TV ads, which are around 4 minutes of ads per hour. However, there’s no specific information regarding ad duration or frequency. Also, Amazon will use tech to ensure that there are limited advertisements and that the ads are as less intrusive to customers as possible. As per our research, here are a few ways of showing ads to Prime Video customers:

Display ads on the video page

These are the most intrusive ad types. It may not disrupt the video-watching experience, but these ads appear elsewhere, such as the sidebar, below the video, or designated ad spaces while the video plays. These ads take the customer straight to the product detail page of the product advertised.

Video ads within a video

Video ads are identified within a video using Cue Points. You can locate cue points with a red pointer on the video scrubber, telling you an ad is coming up. 

In free video services, these scrubbers are automatically incorporated, which disrupts the watching experience. But, with Amazon’s high-quality Prime Video service, these cue points will most likely be incorporated to cause minimum disruption to video viewing, i.e., timed according to scene changes.

Placement ads

These are the least disruptive ad types. They are placed within the video on walls and objects used in the video, such as cups, standees, hoardings, etc.

Here’s an example:

Imagine if Game of Thrones still actually had a cup. Now, the cup is a dead space. Amazon can use this space to place an ad. Not only that, you can also put different ads for different customer segments.

Challenges for Sellers to Launch Prime Video Ads

Ads on Prime Video might be great for Amazon on the revenue front, but it comes with challenges for both sellers and Amazon. Here are a few of those:

Compliance with ad policies

For those who set up sponsored brand ads on Amazon PPC, compliance is crucial. Amazon has strict policies regarding what can be shown to customers, the language used in ads, and the products that can be advertised. Since there are several policies to comply with, sellers often face a high rejection rate of ads.

Tips to overcome this challenge:

• Review Amazon’s advertising guidelines, keep yourself updated, and ensure all ads meet the required standards before submission. 

High cost of ads

Sponsored tv ads are expensive to run, not only because of the higher cost of placements but also because they include a creative aspect. Prime video ads will demand the highest quality (4K), which increases the cost of advertising on Amazon.

Tips to overcome this challenge:

• Allocate a specific budget for your Amazon ads on Prime Video. Next, monitor your ad performance closely to ensure higher returns.

• Repurpose existing assets and invest in high-quality images only when necessary to reduce overall costs. 

Understanding user behavior

Sellers might struggle to understand how Amazon Prime users interact with video ads as opposed to traditional ads. It is challenging for sellers to identify high-engagement moments, viewer preferences and interests, and demographics.  

Tips to overcome this challenge:

• Leverage Amazon Marketing Cloud to analyze user behavior, track engagement data, and adjust your ad strategies accordingly.

• Perform A/B testing on ad creatives and placements to find out what works best for your brand.  

Now that you’re aware of the possible challenges in Amazon ads on Prime Video, let’s discuss the top strategies to help you earn higher revenue through Amazon video ads.

Top 3 Strategies for Increasing Revenue With Amazon Prime Video Ads

Targeting the right audience, building personas, and customizing ads as per demographics is a basic strategy sellers follow to achieve success in their ad campaigns. But there are a few more strategies that can help you boost your ad returns.

Optimize ad placement

Once you find the right ad placement, half the battle is won. You can select pre-roll (before content) placement, such as promotional trailers appearing before a TV show/movie starts, mid-roll (during natural breaks), post-roll (after the content), and display ads that appear alongside the video. Choosing a strategic placement based on your target audience’s viewing patterns ensures the ads are less disruptive and drive higher ad engagement and revenue.

Here’s how you can optimize ad placements:

• Experiment with different ad placements. Conduct A/B tests to see which ad version performs better. Also, note the ad timing and how it affects views.

• Use pause ads. Pause ads is the latest ad format where you air an ad when the viewer pauses the movie or Amazon original content they’re watching. This ad format has high visibility and is the least intrusive. So, it’s a win-win for both viewers and sellers.

• Leverage analytics. Monitor ad performances and track critical ad metrics to refine your strategy based on ad performance.  

Integrate Prime ads with other Amazon solutions

Combine Amazon ads on Prime Video with other solutions, including Amazon campaigns like Sponsored Products and Sponsored Brands. This will help you boost your reach and improve brand recognition.

Here’s how you can do it:

• Create bespoke Amazon ads. Design custom ads based on customer segments and demographics and create different customer journeys that lead to the same outcome—conversion.

• Build consistent brand experience. Make sure to maintain consistency across all ad formats—from USPs to brand color schemes, discounts, and deadlines.

• Create Freevee-supported ads. Amazon’s Freevee is a free, ad-supported streaming service. Ensure that your Prime Video ads run with Freevee so your ads can drive more traffic to your brand’s store during live events.

Run seasonal and event-based ad campaigns

Make the most of major events like Prime Day and seasonal peak trends like Black Friday and Cyber Monday. This helps you increase your brand’s visibility and drive more sales. We have a detailed article written on how you can use the Amazon marketing cloud to improve Amazon sales on Black Friday. 

Here are a few tactics:

• Offer exclusive discounts. Prioritize your Prime members during events and seasonal peak times like Christmas or Black Friday to attract more customers and boost sales.

• Limit discount periods. Offer limited-time discounts and free delivery, or highlight seasonal products in your video ads to boost engagement.

Conclusion

Amazon has so far not disclosed any guidelines for Prime Video ads. We will learn as we go. However, the potential in terms of reach and impact is immense. It will help brands reach targeted and engaged audiences.

We will talk more about Prime Video ads in the future as we get more clarity from Amazon. Meanwhile, if you want to learn more about Amazon ads and how to automate them, you can contact us here.

About atom11

atom11 is a retail-aware Amazon PPC software that helps you get the best ROI for your ad spends on Amazon. It uses real-time retail signals like inventory levels, PPC cannibalization, and competition to provide actionable insights into your advertising strategies.

FAQs

Why has Amazon decided to introduce ads on Prime Video?

Amazon has introduced ads on Prime Video to offer a more diversified business model, allowing for additional revenue streams. This move can support the creation of more high-quality content and potentially keep subscription costs competitive.

Will all Prime Video content have ads?

Not necessarily. The introduction of ads may vary by content type, with some shows or movies remaining ad-free, especially those under the Prime exclusive or original categories. Details on which content will have ads should be outlined in Amazon's official communication.

How do I get rid of ads on Amazon Prime Video?

Select Prime under the settings tab and choose ‘Go Ad Free.’ This subscription lets you stream your favorite shows without ads. However, this is a paid subscription you must opt for to get rid of ads.

Is Amazon launching ads on its Prime Video service?

Yes, Amazon introduced ads to Prime Video in January 2024, offering sellers a marketing opportunity to advertise their products across Amazon’s premium content. This will help sellers increase their brand recognition and sales.

Does Amazon Prime Video play ads?

Amazon Prime has limited ads during streaming. However, if you want to go ad-free, you must opt for an ad-free subscription.