Amazon wants to partner with networks on a pilot program to sell ads for top Fire TV apps

NBC

• Amazon is 
  working on a pilot
  program to sell ads for top Fire TV apps. And it wants to
  partner with the biggest broadcast and cable networks.
• The program could be transformative for the TV ad
  industry, given Amazon’s powerful targeting data.
• But TV networks may prove resistant, given their
  reluctance to give up advertising control to
  outsiders.

Amazon wants a bigger piece of the TV advertising business.

The question is, will TV’s giants let the ruthlessly efficient
e-commerce behemoth into their
highly lucrative, highly exclusive world?

As Business Insider has reported, Amazon has been working
building out an ad network for TV apps within its Fire TV system
—
very much like Roku. In fact, Amazon has been asking
small and mid-sized video apps to supply 30% of their ad
inventory on Fire TV devices in exchange for distribution.

Now, Amazon is putting together a pilot program with select video
apps along the lines of Crackle, Tubi and Pluto to sell ad space
using Amazon’s powerful data sets, said people familiar with the
matter. And Amazon would like big TV companies like Fox,
NBCUniversal and Hulu to be part of the pilot.

That would be a marked change for the TV business, where TV
networks do not traditionally allow third parties to sell their
valuable ad inventory. In fact, the biggest TV players typically
sell the vast majority of their linear ad space in an annual
upfront sales bonanza to a few hundred national advertisers.

But OTT is changing things. Devices manufacturers like
Roku, Xbox and Amazon control the new TV delivery systems
ecosystems much like cable companies have in the past. 

In Amazon’s case, the company can offer TV networks a compelling
two-pronged argument:

• With our data, we can target customer-specific customers,
  since we know who our customers are and what they like to buy.
• Our data will also let you know if your ads work — that is,
  if people end up buying things on Amazon after seeing ads.

It’s bound to be an intriguing pitch. Amazon could claim that it
can help TV companies more money from OTT advertising than they
can on their own — theoretically. 

“This would almost certainly be big if they can get it going,”
said one ad buyer.

“It could really change TV,” said another.

But they’d have to be open to partnering — not something
the TV business is famous for.

Amazon

“I believe that a fully built out and ad-supported Fire TV
product could have an enormous disruptive impact on the TV and
video ad ecosystem,” said Dave Morgan, CEO of the TV ad targeting
firm Simulmedia.

That also means relinquishing control in an industry known for
its small cadre of high powered sellers and buyers.

Some say, not a chance. After all, the TV business, despite
ratings plummeting,
just enjoyed an outstanding upfront. It’s only getting harder
to reach people in mass media. Why mess with things?

“It will be scary for them,” said Torrential
CEO Matt Wasserlauf, a veteran digital media exec who
also logged time at CBS.

Or as one consultant put it, “my guess is [NBCU sales chief
Linda]
Yaccarino says, ‘yeah right. Drop dead, unless you want to
write me a massive check.'”

On the other hand, TV is undoubtedly going through
massive changes, and advertisers are pining for more
data-driven, automated buying. Amazon could build a self-serve
platform with this new offering, and let loads of brands plug in
and buy ads without making a phone call, paying for a lunch or
taking an ad buyer to a Knicks game.

As one former TV exec said, ‘how long can you justify having
these high priced ad sales groups? If you can make more money
from partnering with Amazon, even if you have to share revenue,
you could automatically do it cheaper by cutting back on sales
executives, dinners, lunches and splashy upfront presentations.'”

TV networks are unlikely to get rid of all their sales executives
overnight. And if they partner with Amazon, it may initially be
focused on smaller networks and/or limited to unsold inventory.

Some have wondered whether top TV networks may look to rent
Amazon’s data rather then let Amazon get its hands on their ad
space. Yet even as Amazon’s ad business has soared, the company
has not shown much inclination to share any of its precious data.

Regardless, big TV companies have a big decision to make.