Amazon's ad tier: a step further towards a sprawling ad monetization system

Symbolically, until 2021, there was no line reporting advertising revenues in Amazon's financial publications; by 2022, the $38 billion captured by Amazon Ad services nevertheless represented over 4% of total brand advertising spend worldwide, and this weight could rise above the 5% threshold by 2024. After riding the waves of retail media and streaming, Amazon is now looking to supplement its Prime Video revenues with advertising. Beyond Amazon, the shift of all SVOD pioneers to ad-supported hybrid video on demand progresses rapidly.The Amazon group has been discreet for years about its performance in the advertising field although this revenue stream already accounted for a significant part of the group's resources. Today, Amazon’s advertising revenues see their weight growing within the e-commerce group’s total income, reaching almost 8% of total revenues at Q2 2023 and between 10 and 12 billion dollars per quarter in the last year. Streaming positioned to foster the growth of advertising revenues Two sources in streaming will already contribute to the growth of advertising revenues, until Prime Video's ad-tier is put in place:The first one is revenues from free streaming platforms Freevee and Fire TV Channels. Beyond the rebranding in spring 2022, Freevee (ex-IMDB TV) changed its positioning in the three markets where it is currently deployed: USA, UK and Germany. From being a publisher focused on rights held by Amazon, it established itself in the aggregation of third-party AVOD and FAST services: over 300 channels in the US, nearly a hundred in the UK, around 50 in Germany. In the spring, Amazon reorganized the range of free streaming services available in the Fire TV environment, creating a unified platform, Fire TV Channels, which now includes over 400 channels. It is currently only available in the US.The second source of advertising revenues comes from the Fire TV platform, with an installed base of devices that crossed the 200 million mark worldwide in spring 2023. Following the example of other TVOS such as Tizen or webOS, this installed base enables the marketing of advertising space, that can include home screen banners, application launcher thumbnails, privileged locations in the application store or in electronic program guides, in addition to the fee collected from subscriptions to paid services in the Fire TV environment. As noted by NPA Conseil, the extension of the contractual conditions that already governed US Amazon's relations will open up a new monetization lever: since September 1, publishers exceeding an average of 30,000 streamed hours per month (50,000 in the US) must provide Amazon with 30% of their advertising inventory. Amazon retains 100% of the sales generated by this space. Ultimately, whether fully integrated into an Amazon aggregation platform (Freevee, Fire TV Channels) or simply distributed within...