Amazon rolls out ads on Prime Video

Starting today, Amazon will begin airing ads on Prime Video in the US, making it the latest streamer to debut an ad-supported tier.

The company aims to have “meaningfully fewer ads” on the streamer than its peers, according to a press release, although it did not define what that means. Prime members in major markets will automatically become part of the ad tier, which Amazon previously told advertisers would, in the US, translate to about 115 million monthly active viewers. If US-based viewers want to watch without ads, they’ll need to pay an additional $2.99 a month.

Spoiled for choice

Advertisers have three buying options for the new ad tier, according to Adweek, which reviewed a pitch deck sent to advertisers:

• Preferred Deal: This is the least expensive option, priced at a$26 base CPM in the pitch deck, and accessible self-serve via Amazon’s DSP.
• Guaranteed Buy: Managed service advertisers can access this tier at a base price CPM of $34, according to the pitch deck seen by Adweek, and advertisers can pay more to target by demographic or by lifestyle attributes. For even more, advertisers can advertise against the top 200 TV and movies on the platform.
• Premium Sponsorships: This tier is also a managed service offering, with commitments costing between $600,000 and $8 million. At this level, advertisers can exclusively sponsor programs, so only their ads are featured.

Following the pack

Prime Video is the latest in a line of streaming services that have pursued ad-supported offerings after first debuting ad-free. Netflix began offering an ad-supported tier in late 2022, and Disney+ followed suit a month later.

Delia Marshall, president of the WPP agency Eicoff, said the new ad tier offers advertisers more ad inventory, an opportunity to target, and measurability—in other words, “music to the ears” of agencies and advertisers. By automatically moving existing Prime Video users to the ad-supported plan, Amazon won’t find itself slowly growing its ad-supported user base “like all of the other [streamers] are doing,” she said.

Dan Rayburn, conference chairman of the Streaming Summit, said he expects Prime Video to be able to, over time, apply the user data Amazon already has to ad targeting. Ultimately, he said, the move to add ads was somewhat inevitable: “They’re spending a lot of money! [Content] is not cheap,” he said.

Amazon’s move contrasts with some other streamers like Netflix, which left users on the ad-free plan when it first debuted its ad-tier. (Netflix co-CEO Greg Peters recently told investors that the company considered migrating users to its ad plan but ultimately decided against it.)

Cough it up

Prime Video’s move to upcharge for ad-free viewing is the latest example of the continued rising cost of ad-free viewing in the streaming world.

Netflix, Disney+, Hulu, Max, Paramount+, and Peacock all hiked their prices on various ad-free tiers last year, with the explicit goal in some cases to encourage viewers to switch to the less expensive ad-supported tiers. Some streamers, like Netflix and Disney+, have also doubled down on efforts to prevent password sharing— another way to potentially boost revenue.