Amazon's recent advancements in artificial intelligence are significantly transforming the streaming advertising market, particularly benefiting small and medium-sized businesses (SMBs). As major players like Netflix and Disney+ adjust their pricing strategies to compete with Amazon, the cost of advertising on streaming platforms has decreased, making it more accessible for smaller advertisers.
Key Takeaways
- Amazon's aggressive pricing has led to a drop in CPM rates across major streaming platforms.
- Small businesses are increasingly shifting their advertising budgets from traditional TV to connected TV (CTV).
- Enhanced targeting capabilities and lower costs are making streaming ads a viable option for SMBs.
The Changing Landscape of Streaming Ads
In the past year, the cost-per-thousand viewers (CPM) for advertising on platforms like Amazon Prime Video, Netflix, and Disney+ has fallen to between $38 and $40. This is a significant reduction from Netflix's 2022 price of $60, allowing SMBs to consider streaming ads as a viable alternative to local cable or regional linear TV.
For instance, Naturepedic, a premium mattress brand, successfully ran a campaign targeting consumers in major cities like Los Angeles and New York. The campaign, which had a media budget of just under $500,000, performed exceptionally well, prompting the brand to plan further campaigns on platforms like Amazon Prime Video.
SMBs Embrace Streaming Advertising
The shift towards CTV is evident as SMBs are drawn to the lower costs and precise audience targeting that streaming platforms offer. Many businesses are trying TV advertising for the first time through CTV, with agencies reporting a notable increase in clients reallocating budgets from linear TV to streaming.
- Budget Shifts: Agencies like Collective Measures have seen clients move funds from traditional TV to CTV, with some using the lower costs to experiment with TV ads for the first time.
- Increased Spending: SMBs are now allocating 15-20% of their overall advertising budgets to CTV, according to industry experts.
Amazon's Competitive Edge
Amazon's advertising revenue reached $17.3 billion in 2024, marking a 17% year-on-year increase. The company's Demand-Side Platform (DSP) has become a crucial tool for advertisers, allowing them to purchase ads on Prime Video effectively. This platform's integration with Amazon's e-commerce capabilities provides SMBs with a unique advantage, enabling them to leverage audience targeting data for their advertising campaigns.
- Performance Metrics: Media agencies have reported significant increases in client investments in Prime Video ads, with some seeing an eightfold rise in spending.
- Local Market Opportunities: Partnerships, such as the one between Madhive and Polk Automotive Solutions, are creating local CTV marketplaces, further encouraging SMBs in sectors like automotive to increase their advertising spend.
Conclusion
Amazon's advancements in AI and its strategic pricing have opened new doors for small businesses in the streaming ad market. As traditional advertising costs rise, the shift towards CTV presents an opportunity for SMBs to compete more effectively against larger brands. With enhanced targeting capabilities and lower costs, streaming ads are becoming an essential part of the advertising landscape for small and medium-sized businesses.