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How Amazon is Setting New Standards in the Advertising Business

Ecommerce managementWhite Paper

Recently, it has become increasingly clear that Amazon's next target is the multi-billion dollar TV advertising market. Following in the footsteps of Netflix and Disney+, Amazon has now taken a similar approach. This shift spells the end of the ad-free streaming platform and raises new questions for your advertising strategy.

OMR spoke to Front Row about it. Tim Nedden, founder and managing director of agency group Front Row, explains the company's plans and how you should prepare for them.

About a year and a half ago, Finc3 Commerce and several US agencies joined forces under the Front Row brand to serve leading brands on Amazon and other global e-commerce platforms. Their services range from strategy development, content creation and distribution across multiple marketplaces to e-commerce management, performance marketing, Amazon advertising, retail media and business intelligence.

Traditionally, the lack of commercial interruptions has been seen as a major advantage for viewers of streaming platforms. This year, however, there has been a shift that has opened up new opportunities to target audiences more effectively. This shift allows for creative advertising strategies tailored to viewer interests, innovative message delivery, and cross-platform attention.

Tim Nedden sees the new ad formats as potentially revolutionary, explaining, "It's like going from a megaphone to Airpods in video advertising - for the first time it's individually tailored to each viewer." What he's alluding to is Amazon's announcement at the end of September that it will begin showing ads during Prime Video programming in January 2024. "Combined with the highly accurate data from the Amazon Marketing Cloud, you get maximum exposure with minimum waste. And that's even for brands that aren't even available to buy on Amazon."

Call it a waste of money with an S! Scatter loss!

Despite declining audiences, especially among younger demographics, TV advertising remains unmatched in terms of brand building and emotional resonance for marketers. Its biggest drawback, however, is high wastage. For example, an ad block on GZSZ today includes a wide range of brands, from pregnancy tests to stair lifts. The broadcasters would say: Sure, because all those people are watching our show. Imagine being able to reach each of those viewers individually, tailored to their specific interests. This is exactly what Amazon's new feature does.

The new product allows advertisers to book space through Amazon's Demand Side Platform (DSP), similar to how advertising is currently managed in Amazon search results and other formats. Amazon's standard audiences will be available at launch, with additional formats to be added over the next year. "With the Amazon Marketing Cloud, Amazon provides extremely detailed data about customers with a specific intent to purchase. We use our Catapult software tool to evaluate this data and link it to the internal product range and sales data of each advertiser. The result is targeting with the reliability of online advertising and the emotionality of TV. This gives you a comprehensive view of the data, allowing you to track trends across countries, complex product lines and individual brands. At the same time, you can monitor and optimize the impact of your advertising investments.

New requirements for advertising film production

According to Nedden, this new advertising opportunity places demands not only on targeting, but also on the production of advertising content. "Consider a lighting manufacturer; they could target viewers with specific offers, such as showing special offers to someone whose light bulb has just broken, or showing a range of living room lamps to someone who has recently moved into a larger home. But only if the right content is available in video form." To make this possible, Front Row helps you produce a wide variety of commercials.

Will Amazon be the new TV?

Amazon Prime Video seems to be increasingly positioning itself as an alternative to TV, not only in terms of advertising, but also in terms of what it offers viewers. For example, the streaming service offers the media libraries of ARD and ZDF and, more recently, content from Bild.TV. Prime Video has secured the broadcasting rights to the Champions League and also produces successful shows such as "LOL Last One Laughing" and the remake of "Takeshi's Castle" - content traditionally associated with classic free TV.

Industry expert Philipp Klöckner sees Amazon's ambitions in the TV business going even further. He recently wrote on LinkedIn: "With Project Kuiper, Amazon is launching thousands of satellites into space. Once a stable satellite communications system is established, they will enable internet, phone and TV streaming, making cable networks obsolete."

While the future is uncertain, it's important to be prepared. Tim Nedden advises, "When a platform like Amazon launches a new offering, it's advantageous to get involved early. Firstly, as with all projects, Amazon will drive this with a lot of energy and vigor. And second, other vendors will start thinking along similar lines.

Early adopters have a long-term advantage.

Learn how to turn your TV dollars into measurable marketing investments with Prime Video Streaming Ads in 5 steps in this guide from Front Row.