As YouTube hits a snag, advertisers 'ought to keep an eye' on Amazon's AVOD service

IMDb TV could push Amazon into the ad revenue stratosphere

Consumers and marketers alike are surely familiar with Amazon's ad-free Prime Video service, but the internet giant is armed with another streaming service that's poised to make major inroads.

Amazon bought IMDb in 1998. In January, the company launched IMDb Freedive, an ad-supported video on demand (AVOD) service, which was renamed to IMDb TV on 17 July.

According to Amazon, IMDb TV runs about half of the number of ads as a typical network TV broadcast does, and brands such as AT&T, Proctor & Gamble, Verizon and PepsiCo have already run 15- and 30-second spots on the platform.

So while Amazon Prime Video houses more noteworthy content, eMarketer suggests that Amazon – which recently armed itself with Sizmek's ad server – could emerge as a major competitor in the AVOD space with its IMDb TV property.

“Amazon’s growth into the No. 3 digital advertising platform means it now has a seat at the table with major brands, which will become increasingly significant as Amazon steers its ad business in the direction of video,” said Andrew Lipsman, eMarketer principal analyst. “While the rebranding of IMDb TV isn’t earth-shattering news on its own, it’s another incremental step along Amazon’s path to becoming a power-player in ad-supported video.”

One source at a supply-side platform (SSP) said A9 – Amazon's ad tech unit – could face initial hurdles ingesting programmaticly transacted inventory.

"A9 does a great job monetizing high volume transactional campaigns, but programmatic video strategy for a platform with an AVOD model can be a very different game. There are so many moving parts to consider, [and] the programming aspects are the real factors to attract the brands, eyeballs and dollars," said the source.

Amazon's wide content offering and data, whether at point-of-purchase or in the home, should help IMDb TV mitigate some problems other OTT services face.

"Content discovery and ingestion is their lifeblood and that is not an easy task. [IMDb TV] needs to accept external HLS streams, commercial breaks and metadata, while Amazon will have those things internally and ready to roll. This is where it could get interesting with additional revenue streams for Amazon in which they could act as a DMP in some instances, similar to Roku and their practices," said the source.

Amazon comes in third in digital ad revenue behind Google and Facebook, with the former being a major player in OTT. However, reports are hinting at Google-owned YouTube possibly plateauing in growth.

A recent Comscore study on the state of OTT shows that over the last two years, Amazon is penetrating households at a more rapid rate that YouTube is.

YouTube still reels in ad dollars, even though the rate of click growth rate is decelerating, as reported by CNBC.

Ad spend on YouTube is also fluctuating. Between January-May of 2019, MediaRadar found that media and entertainment companies increased their ad spend on YouTube by 3% compared to the same timeframe in 2018, accounting for a quarter of the platform's ad revenue.

However, tech companies – YouTube's top revenue sector at 26% – spent roughly the same amount on the platform year-over-year. And most notably, retailers spent 20% less on YouTube in the beginning of 2019 compared to the same time last year.

Todd Krizelman, chief executive officer of MediaRadar, said this is likely more of a retail problem than a YouTube problem.

Still, Google’s vice-president of agency and brand solutions Tara Walpert Levy went to Cannes pushing the platform's new Discovery Ads as Google prioritizes shoppable experiences while focusing on a wider industry narrative beyond YouTube.

The SSP source said direct brands are likely to jump all over IMDb TV, while retailers may force themselves to advertise on the newly-named platform.

"The retailers will have no choice not to use such a valuable, data-driven channel to market themselves," said the source.

Lipsman said there's still space for a handful of players in OTT, but Amazon's trove of consumer data – one of the reasons retailers are losing sleep – may give it a leg up.

“There’s still growth in the digital video and OTT advertising space that there’s plenty of room for everyone to continue on their strong growth trajectories in the near term,” Lipsman said. “At the same time, the competition ought to keep an eye on what Amazon is doing because they enter the ad-supported video space with key advantages given their valuable first-party consumer purchase data.”

By 2021, eMarketer predicts Amazon's US ad revenue will total over $19bn.

“While Amazon’s digital ad business has been the talk of the industry over the past year or two, the real market to watch is what happens to TV advertising as Amazon opens up more ad-supported video inventory,” Lipsman said.

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