Amazon Ad Revenue Grows; Snap Tests Unskippable Ads

Here’s today’s AdExchanger.com news round-up… Want it by email? Sign up here.

Amazon Ad Revenue Accelerates

Revenue in Amazon’s “Other” category grew 132% YoY to $2 billion this quarter, with advertising services making up a “majority” of that segment, CFO Brian Olsavsky said during the company’s earnings call Thursday. So it’s safe to say Amazon’s ad business is flourishing. Olsavsky said Amazon wants to deploy advertising mindfully, rather than disruptively. Video advertising is also a big opportunity for Amazon, as the company renewed its relationship with the NFL to stream 11 Thursday Night Football games this year and in 2019. Although Amazon shied away from an investor question on its launch of an ad-supported version of Prime Video, the company has tested live ads in NFL streams and now has more NFL inventory to play with. Read AdExchanger’s guide to Amazon’s ad stack. And check out the Q1 earnings here.

No Skips For You

Snap is trying out unskippable ads in some of its broadcaster programming. The six-second units, which Snap will begin testing with publishers in a few weeks, will not run in Discover or between Stories but within three-to-five minute professionally produced shows, Digiday reports. In a retro twist, Snap is simply calling them “commercials.” Snap has always talked a big game about not letting its ads intrude on user experience, but after a tough first year on the public market, the company is eager to add new revenue streams. “They’re aware people will have to get used to it,” says a source with knowledge of the unskippable ads test. “That said, so much of the Snapchat generation has gotten accustomed to watching ads to get content.” More.

Paywall Powerball

The business press is retreating behind paywalls. Bloomberg Media is the latest publisher with plans to restrict access to nonsubscribers, Mike Shields reports for Business Insider. Major newspapers such as The New York Times, The Washington Post and The Wall Street Journal have done well with subscriptions, and some digital pure plays – including Business Insider itself, late last year – are experimenting. Among the risks are saturation and a weakening of advertiser interest from luxury and premium brands, if wealthier readers opt out of ads. More.

Indirect To Consumer

We are witnessing an explosion of direct-to-consumer (DTC) startups. Many produce Instagram-friendly products and rely on digital media’s reach to find their customers. But the environment is tougher now than it was for early standouts like Warby Parker and Dollar Shave Club. “Those channels are increasingly getting more saturated and more expensive,” says David Bell, a marketing professor at the Wharton Business School and advisor to Warby Parker and other DTC startups. The cost a DTC startup must allot to Google and Facebook is so high and such a reliable fixture that it’s comparable to brick-and-mortar retail distribution, Tom Foster writes at Inc. That belies the notion supporting many DTC brands that they’re “cutting out the middleman.” More.

Video Tsunami

The IAB released a digital video report Thursday in advance of next week’s NewFronts. Read it. The US digital video audience has grown 60% since 2013, from 45 million viewers to 72 million, according to the IAB. More than a third of that audience ditched or never had cable subscriptions, and 60% are 34 or younger. The report says the number of viewers of ad-supported, professionally produced digital video almost matches that of ad-free streaming like Netflix or Amazon Prime. But while eMarketer predicts upfront digital ad spend will increase 25% this year to $3.64 billion, many brands still don’t think they need to buy digital video in an upfront manner, The Wall Street Journal’s Ben Mullin reports. More.

But Wait, There’s More!