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The launch of Amazon’s ad-funded model in February has sparked considerable discussion in the industry.
Unlike its competitors, Amazon adopted a unique approach by transitioning its 200 million global subscribers, including 9.7 million in the UK, to ad-supported viewing with an opt-out option, rather than using a tiered subscription model like Netflix and Disney+.
While some may view this as a bold strategy, it undeniably marks a turning point in the marketing landscape—not only for Amazon’s services but also for its competitors.
Impact on TV Advertising
This move suggests a future where ad-supported video on demand (AVOD) combined with connected TV (CTV) could claim the largest share of TV advertising revenue, further signaling the decline of traditional linear TV.
It may also compel other streaming giants to reconsider their business models, possibly shifting from subscription-based models to AVOD, or at least finding a balance that favors ad-supported viewing if audiences are receptive.
The Role of Retail Media in Streamed TV
In the United States, the integration of retail data with addressable TV is already evident, as seen with Walmart Connect partnering with Roku, Google’s DV360, The Trade Desk, and TikTok to build an AVOD proposition.
In the UK, there are similar trends, such as ITV AdLabs’ Matchmaker retail media solution with Tesco and Boots, and Channel 4’s All4 collaboration with Nectar360.
Amazon, however, stands out due to the superior quality of its first-party data for both ad activation and measurement. With its advanced tech ecosystem and precise data, brands can confidently target audiences based on their interests, shopping behaviors, and lifestyle.
This also opens up opportunities for smaller and midsize brands that previously lacked the resources to invest effectively in addressable TV.
For brands operating within Amazon Web Services, the appeal lies in the ability to link conversions to large-scale TV campaigns across premium TV and film content, all within a brand-safe environment—a capability not previously available to them.
Shift in Digital Media Investment
Amazon’s AVOD initiative comes at a crucial time, potentially leading to a shift in digital media investment and offering alternatives to the dominant performance-driven tech platforms.
With data partnerships becoming integral to CTV, platforms are eager to capitalize on the retail media surge. Amazon’s combination of AVOD audience delivery, premium content across large screens and mobile devices, and proprietary addressable data with advanced measurement, makes it a must-have for media buyers.
As TV continues to converge with digital marketing, significant investments in dynamic creative applications, along with the integration of AI, signal an exciting era—especially as the third-party cookie fades and retail media emerges as a powerful marketing force.
Whether powerful digital advertising alternatives to Meta and Google will emerge remains uncertain. However, the integration of retail data into addressable TV at scale certainly appears to be a winning strategy.