YouTube has been making waves recently with its dominance in the TV market, but Amazon is quietly positioning itself as a strong contender. According to a report from Morgan Stanley, Amazon’s Prime Video is on track to become a leader in advertising on U.S. smart TVs, potentially surpassing YouTube by 2027.
Currently, YouTube enjoys a significant lead in viewer engagement, boasting more than three times the TV viewership compared to Prime Video, especially as more consumers transition from traditional TV to streaming. However, Morgan Stanley predicts that the CTV advertising market in the U.S. will grow 13% annually, reaching $55.2 billion by 2030, while the pay-TV ad market is expected to decline by about 2% each year due to ongoing cord-cutting.
A key factor in Amazon’s rising ad business was last year’s decision to enable default ads for Prime Video users unless they opted to pay an additional fee. This change sparked significant growth in its advertising revenue. Tim Lathrop, a VP at Mediassociates, noted that advertisers often allocate more budget to Amazon than to YouTube, even when Prime Video’s ad rates are higher. Advertisers appreciate the TV-like setting in Prime Video, while some view YouTube’s platform as risky for brand safety.
Although YouTube commands much more viewership, experts believe it may struggle to convert that attention into ad revenue as effectively as Amazon. The two services approach advertising differently—Amazon has concentrated efforts on CTV while YouTube’s ad offerings are less focused in that realm.
Despite its momentum, Amazon still faces challenges. Prime Video must ensure it offers appealing original content to attract advertisers. While it has made strides with major sports rights, its live sports programming isn’t yet at par with traditional networks.
Amazon’s strategic focus on CTV might give it the edge needed to gain ground on YouTube as it continues to grow its advertising capabilities in the evolving media landscape.