Amazon Plans New Video App, Latest Step Into TV Ad Market

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Author: Jessica Toonkel & Tom Dotan.  Source: TheInformation

Amazon.com is planning to launch a free, advertising-supported video service for the estimated 48 million people who use its Fire TV streaming video devices, say people familiar with the situation. The new service, which is being developed by Amazon’s IMDB subsidiary, will join a growing collection of efforts by Amazon to tap into the $70 billion TV ad market.

The company has already introduced ad-supported shows on IMDB, expanded video ads on its gaming site Twitch and run ads on NFL games on Prime Video, its primary streaming service. It is also expected to run ads on Prime Video in Europe for some sports events, said one of the people.

The Takeaway
• Amazon’s IMDB is discussing licensing shows for Fire TV app
• New app is latest in series of moves to sell TV ads
• Amazon’s ad revenue is expected to be $8 bn this year

Amazon’s ad business—mostly search ads and product sponsorships sold on its site and across the web—is growing faster than much of the rest of the company. It makes up most of the “other” segment in Amazon’s earnings statements, growing 132% to $2.2 billion in the second quarter. Wall Street firm Cowen estimates it will generate $8 billion in revenue from the category this year. That’s still a tiny fraction of Amazon’s expected $200 billion-plus revenue this year. And it is well behind what Facebook and Google make from digital advertising—Facebook had $13 billion in advertising in the second quarter alone. But Amazon’s access to shopping data gives it the chance to become a formidable rival.

“Amazon has very good data and if I could track back sales activity to the actual Amazon account and target those people, it would be very powerful,” said Andrew Sandoval, a media buyer with New York-based The Media Kitchen.

Fire TV Offering

The new Fire TV offering is separate from Amazon’s ad-free subscription Prime Video service, which has become a major rival to Netflix with original shows as well as recently-released series from TV networks. The Fire TV service is tentatively called Free Dive. Amazon is in talks with major studios to license older TV shows, which have already aired on TV networks, for Free Dive, the people said.

That suggests Free Dive will be similar to what Roku offers with its Roku Channel, a free, ad-supported app on Roku-powered devices and smart TVs, the people said. Roku has publicly championed the ad revenue from the Roku Channel as a key driver of its growing platform business, which brought in $90 million last quarter.

Roku recently announced it was going to be distributing the channel on the web and other devices that are not powered by Roku software. Roku is Fire TV’s biggest rival in the streaming-device market. This year it is expected to have 59 million users, ahead of Fire TV, eMarketer estimates.

The parallel to the Roku Channel suggests the new Free Dive app is targeting only a tiny portion of the TV ad market. Both Google’s YouTube and Facebook have been trying to lure away big advertisers from TV networks for a while, with limited success.

“Amazon has very good data and if I could track back sales activity to the actual Amazon account and target those people, it would be very powerful.”

Surprising Success

Still, for Amazon, expanding into video ads could fuel what is already one of the company’s fastest growing businesses. The profit margin of the ad business is likely to be higher than the Amazon’s overall profit margin, which was 5.6% in the second quarter. Retail has razor-thin profit margins.

Amazon sees an opportunity to grab ad dollars from the likes of Facebook and Google by providing more video inventory to advertisers that are eager to use the company’s targeting capabilities, the people said.

Advertisers who bought spots on NFL games on Amazon last year—paying $2.8 million for 30-second spots—were able to run ads across Amazon.com throughout the football season. Amazon and the NFL renewed the streaming deal for the 2018 and 2019 football season.

In Europe, Prime has licensed rights for sports events such as the U.S. Open tennis tournament in Britain and some Premier League soccer matches. Amazon is discussing showing ads during some sporting events, one of the people said, but declined to say which ones.

Amazon is also expanding video ads on its popular live-streaming platform, Twitch, which is widely used in the gaming community. And the company recently announced it was going to be including ads in the previously ad-free paid version of Twitch.

How brands are using Instagram’s new long-form video feature, IGTV

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Author: Ilyse Liffering.  Source: Digiday

The launch of Instagram’s IGTV has brought out the early adopter marketers. Companies like Chipotle, Nike, Netflix, Warby Parker, Trader Joe’s, Everlane and Gucci are testing IGTV with content ranging from silly one-offs to interviews with influencers.

IGTV, a long-form video section within Instagram as well as its own stand-alone app, is Instagram’s jab at YouTube and comes five years after the launch of Instagram video. It allows any user to set up their own IGTV channel and post video content as long as an hour. While most brands are repurposing content they might otherwise use for Instagram Stories, some companies are creating entirely new content for the channel.

Chipotle, for instance, was one of the first companies to create an IGTV channel and develop a completely new video for IGTV. The company worked with Day One Agency, which began refining concepts to leverage the new channel immediately after watching Instagram’s live announcement. It landed on a “Mary Poppins”-esque video of a man removing a seemingly endless assortment of Chipotle burritos, chips and other menu items from a Chipotle bag to play off the idea that customers can create limitless combinations at Chipotle. The concept did not take advantage of the new 60-minute video length, but it did pass Instagram’s original 1-minute limit. So far, the video has amassed nearly 10,000 views and 30 comments, pretty good numbers considering that Chipotle’s Instagram videos get, on average, between 15,000 to 50,000 views and around 30 to 50 comments.

“Social is definitely not one-size-fits-all,” said Tressie Lieberman, executive director of customer engagement marketing at Chipotle. “It’s a different format, so we want to make sure we are designing specifically for long-form and vertical content.”

Netflix used Instagram’s new 60-minute video feature to play a full hour of actor Cole Sprouse eating a burger. The video has brought in 676,000 views and nearly 5,000 comments. Nike posted to its new IGTV channel on Monday, sharing an animation featuring Cristiano Ronaldo as part of its World Cup campaign, and Everlane took its #DamnGoodDemin Day photo series and created a video that works for IGTV.

Other companies are testing the new channel with repurposed content. Louis Vuitton and Gucci, for instance, shared videos from their recent fashion shows. Warby Parker posted an Instagram Stories interview with a graphic designer who uses the company’s glasses to create her designs and most publishers. Most publishers, like BuzzFeed, NBC, Attn, Cosmopolitan, Betches and National Geographic, and shows such as “Saturday Night Live” and “The Tonight Show” already post multiple videos a day, but with content originally created for Instagram Stories that is already natively vertical and therefore easily adaptable to IGTV.

“One area that the Instagram team needs to focus on is ensuring that IGTV doesn’t simply become a place for Stories to live,” said Neil Waller, co-founder of influencer marketing agency Whalar. “It should not be a place where users simply post their Stories, unless Instagam’s end goal is for IGTV to become a replacement for Stories.”

So far, posting to IGTV is a relatively easy way to gain views in the new IGTV content hub since the IGTV feed is not yet flooded with content. Marketers are also praising the channel’s integration with the original Instagram app, the focus on vertical video and the ability to create longer-form content. And with YouTube creators increasingly becoming disillusioned with YouTube, IGTV might end up being a new home for influencers fed up with YouTube, marketers said.

Limited search capabilities are also a concern for some marketers. Videos are divided on IGTV by a section curated based on a user’s interests, followed accounts and most popular videos. Users can search for individual creators, but there is no option to search for content based on genre or topic.

For now, the platform is not showing ads, but an Instagram spokesperson said that might change in the future, and the platform is exploring and testing news ways to help creators monetize through the platform. When it does, expect it to be at a premium, said Maryam Hosseini, senior strategist at digital agency The Community.

“Full-screen mobile real estate appears to consistently be more pricey,” she said.

Regardless, advertisers are already anticipating a way to create paid content for brands on IGTV, said Kinzi Sparks, lead for paid social at iProspect.

“IGTV presents a unique opportunity to engage with users at a deeper level,” said Sparks. “When your customers are thoughtfully seeking and opting into a more in-depth viewing experience, there’s a stronger chance that your brand’s message will be received with welcome captivation.”