Amazon quadruples digital ad spending to overtake Netflix, study finds

Dive Brief:

Amazon overtook Netflix as the top advertiser for video streaming services after quadrupling its digital media spending in the first half of 2019 from a year earlier. The e-commerce giant also boosted TV spending 28% for Amazon Prime Video, while rivals Netflix and Hulu cut back by more than 40%, per a study that researcher MediaRadar shared with Marketing Dive.
Amazon Prime Video launched 13 new campaigns for its original shows in the first half of the year, spending the most to support action series "Hanna" with ads that included a 60-second spot during the Super Bowl. Amazon's native advertising rose fivefold, and its major digital campaigns featured high-CPM buys for "Good Omens," "The Boys" and "Hanna."
While Netflix launched 67 new campaigns for original programming, the streaming pioneer reduced spending on TV, digital and print. The company was more experimental with promotions, such as a "Stranger Things" video game for mobile and consoles, and tie-ins with Coca-Cola, Nike, Burger King, Baskin-Robbins and "Fortnite," the study found. Hulu launched six new campaigns for its original content in the year's first half, spending the most to promote true-crime series "The Act."

Dive Insight:

Amazon's increased media spend to promote Amazon Prime Video comes as the market for over-the-top (OTT) services grows crowded, making it significantly harder to capture viewers' attention. Disney, which already controls Hulu, and Apple plan to launch separate streaming platforms with original content in the fall, while NBCUniversal and AT&T are preparing for 2020 rollouts. Meanwhile, social media companies like Facebook, Snap and Twitter are also investing in original programming to keep users engaged on their mobile apps.

MediaRadar's analysis of Netflix's reduced media spending confirms the streaming company's quarterly report, which showed a 6% annual decline in U.S. marketing expenditures to $471.7 million in the first half of 2019. Netflix shifted its promotional strategy to collaborate with major brands on multichannel campaigns, as seen in the lead-up for the third season of hit show "Stranger Things." More than 100 products appeared in the show, reportedly none of which were paid placements. Instead, Netflix benefited from the marketing muscle of brands like Adidas, Baskin-Robbins, Burger King, Coca-Cola and Reebok that ran campaigns to showcase product tie-ins with "Stranger Things." Netflix announced in a tweet that 40.7 million accounts, a record for the company, had watched the show's third season in the first few days of its release, pointing to the large audience exposed to product tie-ins.

Amazon's key advantage in the streaming marketplace is the popularity of its Prime membership, which includes Prime Video for no additional cost. The company has more than 100 million Amazon Prime members in the U.S., per an estimate by Consumer Intelligence Research Partners. Amazon doesn't disclose usage data for Amazon Prime Video, although internal documents leaked to Reuters last year showed 26 million viewers.

The company needs a heftier marketing push to keep up with Netflix, whose U.S. membership declined for the first time this year. Netflix last month said domestic subscriptions fell to 60.1 million in Q2 from 60.2 million in the prior quarter.

To compete with Amazon, streaming providers may need to focus their efforts on exclusive programming that gives people a reason to subscribe. Netflix has invested heavily in original shows like "Stranger Things" and "Orange Is the New Black" and features like "Bird Box," but reruns of classic shows also generate significant viewership. The company faces an immediate challenge in replacing "Friends" and "The Office," the two most-viewed series on its platform, Nielsen found. As NBCUniversal and AT&T's WarnerMedia ready their own streaming services next year, they're more likely to hold onto hit shows instead of licensing them to third parties like Netflix.