Amazon Prime Video ad plan: New opportunities for CTV advertising?

Amazon Prime Video’s recent announcement to introduce ads between movies and shows is being seen as a new arena for connected TV advertising. Industry observers said Amazon’s data-driven targeting capabilities will enable advertisers to deliver precise, relevant messages. The decision, revealed during Amazon’s unBoxed 2024 event, outlines plans to bring limited advertisements to markets like India, Brazil, Japan, and New Zealand.

However, in the light of rising subscription fees, additional rental charges, and the increasing presence of ads across premium services, consumers are expressing concerns about what this move could mean for their viewing experience.

Known for its exclusive content, including popular original series such as The Lord of the Rings: The Rings of Power, The Summer I Turned Pretty, and Reacher, Amazon Prime Video has long positioned itself as a premium entertainment destination. However, Amazon’s rationale for introducing ads is tied to the increasing costs of producing high-quality content. The company stated that the ad-supported model will help balance competitive subscription rates with the growing demands of maintaining its original programming slate across key markets like India.

Addressing this decision, Alan Moss, Vice President of Global Ad Sales at Amazon Ads, expressed optimism about the new opportunity for advertisers. "We’re excited to offer more brands, in more countries, the opportunity to engage with Prime Video audiences alongside award-winning series, fan-favorite titles, and live sports in 2025," Moss stated in an official blog post. He highlighted how the ad-supported model has already helped brands achieve full-funnel business results in other markets, leveraging Amazon’s vast reach, premium content, and innovative ad technology.

exchange4media reached out to Amazon about how this will inform its larger ecosystem and was directed to the blog mentioned above, which is the company's official statement and response at the time of publishing.

From an advertiser’s perspective, the introduction of ads on Prime Video represents a significant opportunity. Prakhar Srivastava, Financial Controller at White Rivers Media, views this move as a fresh avenue for brands to connect with audiences. "Amazon Prime Video’s decision to introduce ads unlocks fresh opportunities for brands to engage with audiences," he said. He emphasized that Amazon’s data-driven targeting capabilities would enable advertisers to deliver precise, relevant messages that align with viewers' preferences, ultimately increasing engagement and impact. Moreover, the seamless integration with Amazon’s e-commerce ecosystem presents a unique advantage, turning ads into direct drivers of product sales and measurable outcomes.

Srivastava also highlighted that Amazon’s lighter ad load compared to traditional TV could be crucial in balancing commercial impact with viewer satisfaction. "The option for an ad-free tier ensures consumers have flexibility, while advertisers gain access to premium content and highly engaged audiences," he added. This approach, according to him, signals a new era of connected advertising, where brands can create meaningful experiences without disrupting the entertainment flow.

Sajal Gupta, Chief Executive at Kiaos Marketing Pvt Ltd, echoed these sentiments, noting that the ad-supported model has the potential to reshape consumer behaviour and the advertising landscape. "From an Amazon perspective, until today, Amazon has been leading retail media globally. This change will open up more inventory for Amazon to control and monetize," Gupta explained. By creating additional ad inventory akin to YouTube’s model, brands will be able to strategically place their ads, targeting audiences in a way that is both efficient and data-driven.

Gupta also touched on the introduction of an ad-supported subscription tier, allowing consumers to choose between a lower-cost option with ad interruptions or an ad-free premium service. "The user now has the control to decide whether they prefer a lesser experience with ads or a premium experience without interruptions," he noted. This flexibility could prove particularly beneficial for advertisers, especially as Connected TV (CTV) and retail media gain more prominence.

One of the key advantages Amazon brings to the table, Gupta highlighted, is its access to deterministic data through its e-commerce platform. "Retail media is growing because you have deterministic data from platforms like Amazon," he explained, emphasizing that this data can help advertisers better target and engage audiences through high-quality online video content.

The Indian advertising market has been growing steadily, and digital ad spending, particularly on video platforms, has increased significantly in the recent years. Brands are constantly seeking new avenues to reach consumers, and streaming platforms have become a key part of that strategy. According to an industry report, digital video advertising in India is expected to grow at a compound annual growth rate (CAGR) of 26% over the next five years. Prime Video’s entry into this space further strengthens the case for video advertising as an essential component of the marketing mix.

Despite the advantages for advertisers, there are concerns about how Indian viewers will respond to the introduction of ads. Gupta mentioned that in markets like the U.S., where ad-supported tiers have already been implemented, some viewers expressed frustration, even showing nostalgia for cable TV. However, he argued that the convenience and flexibility of OTT platforms still outshine traditional linear television. "Linear TV requires appointment viewing, while OTT allows for flexibility. The quality of streaming and user experience on OTT far surpasses that of traditional TV," Gupta pointed out.

That said, there is a delicate balance to strike between providing ads and maintaining a positive viewer experience. "If the ad breaks are too frequent, it will negatively impact the consumer experience," Gupta cautioned, citing the backlash platforms like Hotstar have faced for overloading users with ads. "The key will be finding a balance that maintains viewer engagement without overwhelming them with interruptions."

Ultimately, Amazon’s decision to introduce ads in India is part of a broader shift in how streaming platforms operate, moving towards a dual-tier system that allows for both ad-supported and ad-free experiences. While some viewers may initially resist the change, Gupta believes the friction of switching between platforms and the overall convenience of OTT will keep audiences engaged.

As the streaming landscape continues to evolve, Prime Video’s move into ad-supported content is likely to have far-reaching implications for both consumers and advertisers. The coming years will reveal whether this new model successfully balances the needs of both parties, or whether the backlash will force further adjustments to Amazon’s strategy.

India's over-the-top (OTT) and video streaming market has experienced exponential growth in recent years, with revenue reaching over $1.8 billion in 2022. Projections indicate this figure could nearly double by 2027, rising to $3.52 billion. As of 2023, the revenue from subscriptions for OTT platforms in India stood at approximately 73 billion Indian rupees, with the overall number of paid online video subscriptions reaching 97 million. This figure is expected to surpass 100 billion rupees by 2026, highlighting the rapid expansion of the OTT sector in the country.

OTT platforms have become a crucial avenue for brands, offering enhanced targeting tools and marketing opportunities. "The addition of another advertising avenue for brands is certainly a good thing. The way in which they provide us with the targeting tools and options will determine how effective they are. We are looking forward to its launch and to pitching and promoting this new platform to our clients in the coming months," said Siddharth Devnani, Co-Founder & Director of SoCheers.

The global over the top (OTT) services market size was valued at USD 59.90 billion in 2023 and is projected to grow from USD 70.08 billion in 2024 to USD 229.97 billion by 2032, exhibiting a CAGR of 16.0% during the forecast period (2024-2032), according to Fortune Business Insights.

Users Upset

Social media users spent no time in venting out over the streaming platform's new ad plans. Many have voiced their displeasure, accusing the platform of prioritising profit over customer experience.

I know I complained many times but Amazon Prime video having ads even tho you pay for it is crazy!!! pic.twitter.com/TEmmvvS6MV

— LaDarrion Williams (@ItsLaDarrion) October 17, 2024

AMAZON PRIME ARE CHARGING TO GO AD FREE FUCK OFF pic.twitter.com/UtY87PdmeA

— b (@LON3LYISTHEMUSE) October 13, 2024