Seamus Brennan: why Amazon’s AVOD launch could be the most important TV moment for years
The headline may be striking, there’s no doubt that the launch of Amazon’s ad-funded model in February has set tongues wagging.
Unlike its rivals, Amazon took the clever approach of shifting its 200 million subscribers, of which 9.7 million are in the UK, to ad-funded viewing with an opt-out as opposed to tiered approach, as we’ve seen with the likes of Netflix and Disney+.
Whilst it may be seen as a brave move by some, there’s no doubt that it marks a pivotal moment in marketing – not only in terms of the influence it will have on Amazon’s own services, but also on that of its competitors.
What effect will this have on TV advertising?
It certainly points towards a future where AVOD (ad-supported video on demand) combined with CTV could attract the largest share of overall TV advertising investment. In other words, the further demise of linear TV.
It may also push the other streaming giants to shift their business models from subscription to AVOD, or look to balance them in favour of AVOD, if audiences accept this way of viewing.
Will retail media become an essential component of streamed TV?
The idea of powering addressable TV with retail data is already evident in the US with Walmart Connect (below) teaming up with Roku, Google’s DV360, the Trade Desk and TikTok to build an AVOD proposition.
There’s also evidence of this in the UK market with ITV AdLabs Matchmaker retail media solution with Tesco, and Boots and Channel 4’s All4 union with Nectar360.
But where Amazon will stand head and shoulders above the rest is in the quality of its first party data for both activation and measurement. With an advanced tech ecosystem, and the benefit of accurate data, brands will be confident in who they are targeting based on their interests, shopping patterns, lifestyle and life stage.
It will also allow a route in for smaller and midsize brands who may not have had the capacity to invest strategically and efficiently in addressable TV before.
For endemic brands operating within Amazon Web Services, the appeal lies in being able to tie back conversion to a large audience TV campaign across big-ticket TV and film content that’s also brand safe. A proposition that has not been available to them previously.
Will we see a rebalance in terms of digital media investment?
There’s no denying that Amazon’s AVOD proposition has come at a critical moment which could, indeed, see a rebalance in digital media investment. This could result in the creation of alternative options to the dominant performance-led tech platforms.
With data partnerships becoming a core component of CTV, platforms will be keen to capitalise on the retail media boom.
What is evident is that Amazon will be viewed as a ‘must buy’ for media buyers with its combination of AVOD audience delivery, premium big-screen and mobile content, and proprietary addressable data with advanced measurement.
As TV steadily converges into the digital marketing realm, significant investment in dynamic creative applications coupled with the incorporation of AI, marks an exciting time. Moreover, this is all happening amidst the deprecation of the third-party cookie and the growth of retail media as a significant marketing force.
Whether we will see powerful digital advertising alternatives to Meta and Google emerge remains to be seen. But the fusion of retail data into addressable TV at scale certainly appears to be a winning formula.
Seamus Brennan is director of partnerships at Kepler.
