Amazon’s decision to start running ads within Prime Video in early 2024 could drive up to $7 billion in ad revenue, according to three new Wall Street notes.
UBS analysts expect Prime Video ads to drive $6.2 billion in incremental revenue to Amazon’s US ad business, and $1 billion to its ad business outside the US, according to a new note. UBS used Nielsen data to estimate that Prime Video is watched 14.3 billion hours per day in the US.
UBS increased its estimates for Amazon’s advertising revenue this year to $55.8 billion, up from $52.7 billion.
UBS isn’t the only Wall Street firm betting that Amazon’s Prime Video ads will drive billions.
Last week, Wedbush said in a note it expects Amazon to net $7.2 billion in additional ad revenue if all Prime Video users opt-in to watching ads.
Evercore analysts said in a note last week that they expect Prime Video ads to drive $7 billion in annual ad revenue, based on Prime Video having three minutes of ads per hour — slightly less than Disney+, Netflix, and Warner Bros. Discovery’s Max, which have four to five minute ad loads.
Amazon’s ad load could go up to about six minutes per hour, according to UBS.
UBS expects Prime Video ads will likely have a $30-$42 CPM — the cost to reach 1,000 people. UBS noted that the $42 CPM is in line with what Netflix and other premium streaming services charge. Wedbush analysts expect Amazon to charge $50 CPMs for Prime Video ads.
Insider previously reported that Amazon estimates that Prime Video ads will initially reach more than 115 million US monthly users.
Amazon is also pitching Prime Video’s premium content with stats about its shopping-heavy audience. More than 25% of Prime Video households are likely to have an annual household income of more than $150,000, according to a recent briefing document sent to advertisers.
Ads will be added to Prime Video shows and movies in the US, UK, Canada, and Germany in early 2024, then rolled out in France, Spain, Italy, Mexico, and Australia later that year. Prime Video users can opt out of advertising by paying $2.99 more per month.
Read the full article here