Amazon to Add More Ad Options to Video to Compete with YouTube

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Author: Doug McPherson     Source: ResponseMagazine

SEATTLE – Amazon plans to include more advertising opportunities on its video content in an effort to compete with YouTube, according to a report from CNBC.

Michelle Castillo, a reporter with CNBC, writes that Amazon has had “multiple meetings” about launching more advertiser-friendly initiatives and to give advertisers more data on what viewers are watching and what they are doing online.

Another program would pair companies with video producers to create sponsored content.

Amazon has not confirmed the report, but CNBC says it spoke to five sources with knowledge of the meetings, including people from large ad firms and media companies.

Digital video advertising in the U.S. continues to surge as spending is predicted to reach $13.2 billion this year, eMarketer reports. YouTube is getting 21.7 percent of that video ad revenue this year according to eMarketer's estimates.

CNBC reports that Amazon had 310 million monthly active customers when it last shared numbers during first-quarter 2016. YouTube has 1.5 billion monthly active users, but analysts say if Amazon could tell advertisers what its customers like to watch online and pair that with their shopping habits, it could shake up the industry.

Today, Amazon lets anyone upload videos through Amazon Video Direct (AVD) for purchase or rent. Amazon Prime members can watch for free with ads. It also owns Twitch, a video platform where users can livestream content and save previous sessions to be watched on-demand.

Castillo says that even though AVD's current ad-supported program is comparable to YouTube's offering, advertisers aren't bullish on it yet. She writes that media buyers say it doesn't offer as much information about ad performance (including return on investment) compared to YouTube. Plus, it doesn't allow third parties to audit how well the ads are doing, with one media buyer calling it a "black box." And it's pricier than YouTube.

“For these reasons, many companies still think of YouTube as the de facto video platform to advertise on,” Castillo writes. “But if Amazon could give advertisers more data about consumers and allow its information to paired with analytics from outside sources, it could make it a gigantic force.”