Dive Brief:

• Amazon is speaking with industry insiders about ramping up advertising on its video content, preventing inappropriate content from appearing next to ads and adding original sponsored content from video creators and companies with Amazon taking some of the revenue, according to a report by CNBC. All of these moves are in preparation for Amazon to more directly compete with YouTube in digital content.
• The CNBC report was based on five anonymous sources who knew about the talks, including representatives from major advertising and media companies.
• Amazon currently has a program in place called Amazon Video Direct that allows anyone to upload videos that are available to buy or rent, stream via Amazon Prime or watch for free with ads. Twitch is another Amazon video initiative that is largely about streamed video gaming.

Dive Insight:

Just last month Amazon signed a deal for advertising offices in New York City, the heart of the agency and media industries, making the CNBC report the latest sign that Amazon is ramping up efforts to become a major advertising platform. Still, the e-commerce giant has it works cut out if it wants to take on YouTube. Amazon had 310 million monthly active customers in Q1 2016, a much smaller number than YouTube’s 1.5 billion monthly active users, per the CNBC report. This discrepancy makes YouTube the more attractive platform for brands looking to reach a wide digital audience. 

However, Amazon offers advertisers a somewhat unique opportunity because of its core e-commerce business, which means it access to detailed shopper information to go along with data collected about customers' video viewing habits. And ads served within the Amazon ecosystem could potentially reach customers who are that much closer to making a purchase. It is advantages like these that prompted WPP CEO Martin Sorrell to single out Amazon as having the potential to take on Google, which owns YouTube, and Facebook. Forecasts also suggest Amazon's advertising revenue is likely to grow. 

Additionally, a stronger advertising push from Amazon, if successful, would line its pockets with money to invest in further building out its content offerings with the goal of luring more viewers. 

Amazon has moved far beyond just an e-commerce website with its Amazon Web Services cloud computing division driving a great deal of its revenue, a significant hardware group including its popular Echo personal digital assistants, a deal with the NFL to live stream 11 Thursday Night Football games, and it joined the brick-and-mortar grocery business with its purchase of Whole Foods.

Google likely is keeping a close watch on these developments and looking to make the most of its potential to reach a large audience. For example, YouTube is the presenting sponsor for the 2017 World Series and will run ads for YouTube TV during the Major League Baseball championship series, the first national advertising campaign for Google’s cable competition over-the-top (OTT) streaming service.