Amazon plans to diversify its ad services with video spots on its smartphone shopping app, according to Bloomberg. The retail giant has been beta testing the service on the iOS platform and plans to launch a similar product for Android phones later this year, according to people familiar with the matter.
The Amazon app will feature brief video spots in response to search results, with a $35,000 ad budget requirement for running the spots at 5 cents per view for 60 days, according to the sources. However, prices may vary by category.
While there may be some concerns regarding friction, more than 50% of shoppers said they have used online video while shopping in store, according to Google. Additionally, more than 90% of consumers say they’ve discovered new products on YouTube, and more than 60% say an online video has given them ideas or inspiration for a purchase.
The service also could be a potent alternate revenue stream for Amazon: retailers accounted for nearly 50% of total mobile ad spending in the second half of 2018, up 14 share points from the first half of the year, according to a study by Smaato. Retail marketplaces alone accounted for 28% of all mobile ad spending, while CPG retailers made up 9%, electronics retailers 6% and fashion retailers 5%.
Mobile video ad spending in the U.S. is expected to rise 22.6% to $16 billion in 2019, and continue growing every year until it hits nearly $25 billion in 2022, according to eMarketer. The number of smartphone video viewers will reach 187.7 million this year, with their number growing to almost 205 million by 2022.
Even brick-and-mortar retailers are seeing benefits from playing the part of both seller and advertiser: Kroger’s revenue from sources such as media is growing faster than 20% annually. The company is harnessing the retail side of the business, including loyalty program data, to drive sales for brand partners.