Amazon’s Upfront Haul Vs. TV’s Ad Contraction

Advertising

Sep 27

Amazon made a massive and risky bet this year - that consumers would be ok with turning on advertising as the default for Amazon Prime Video.

While that bet’s outcome is still to be determined from a viewer perspective (so far, there are no signs that viewers have revolted), financially it’s already a home run. The Information reported that Amazon pulled in $1.8 billion during this year’s upfront, and various reports have indicated that Amazon’s move to turn up the inventory knobs has shaken up the streaming ad market.

But, there’s a potential counterpoint to all this. Madison and Wall analyst Brian Wieser recently wrote that as more consumption moves to streaming, the total amount of TV ad inventory is declining. That’s because more people are watching ad free, or ad light streaming. So there’s a risk that the overall consumption trends are not in Amazon’s favor — and that they could be foisting too much advertising too fast on consumers who are still resistant. There’s still the chance that the more ads Prime carries, the less people will decide to watch it over other services. A few more big hits would certainly help Amazon — and so will the NBA deal when it kicks in.

One big caveat, Wieser doesn’t count YouTube in his analysis. Over time, advertisers will be facing a smaller TV ad pool on what they deem “traditional TV.” I wouldn’t be surprised if we see more of the Peacocks and Paramount+es of the world start to gradually ramp up their ad loads, which carries its own risks.