Amazon executive Albert Cheng says the era of “T-commerce” — the sale of goods directly through TV screens — is finally dawning.
In a panel hosted by the Interactive Advertising Bureau, the Amazon Studios COO and co-head of television said the company has long sought to “leverage the reach of Prime Video and marry that with commerce.” He offered a rare glimpse inside those efforts during the IAB’s online Annual Leadership Meeting. The week-long conference has featured execs from YouTube, Facebook and others, along with TV and ad industry speakers and political figures.
Now worth more than $1.5 trillion and upending sector after sector across the economy, Amazon has long posed a threat to both tech rivals and traditional media companies. But only in the past couple of years has the potential started to become more clear. The Amazon video ecosystem, linked through the Prime subscription program, spans original films and TV shows, voice technology and connected devices, and free, ad-supported offerings IMDb TV and Amazon Fire.
T-commerce is in its “early days,” Cheng cautioned, but one encouraging example has been the company’s partnership with pop star Rihanna’s fashion brand Savage x Fenty. Starting in 2019, Amazon has streamed its star-studded fall shows and embedded those streams with buying opportunities.
The dream of using technology to unlock commerce through TV is decades old, as affirmed by Cheng, who had a lengthy run at ABC before joining Amazon. In his Disney days, he recalled, “the hardest part was fulfillment,” he said of T-commerce testing. “Like, OK, you can create these apps and figure out how to tie the content with the opportunity to purchase, but then you had to figure out how to deliver it. In order to scale that across the industry, it’s extraordinarily difficult.”
The core challenge, he said, has always been that “you’re asking customers to do two things — focus on story and then figure out what you want to buy. Oftentimes, we didn’t see a whole lot of engagement because people at the end of the day really want to watch their soapy shows.” Using an ABC example, he said, viewers might be struck by Kerry Washington’s outfit on Scandal, “but they’re not going to buy it while they watch the show. They’re going to go online and try to find it.”
At Amazon, by contrast, “We have this massive, global infrastructure and delivery systems and the ability to tie television and buying all in the same platform.”
Progress in video advertising is coming amid a broader surge in overall advertising revenue at Amazon. Once a distant third-place platform behind the “duopoly” of Facebook and Google, the company has posted year-over-year gains of more than 50% in some recent quarters. A forecast by Cowen & Co. in January estimated total ad revenue will rise to $26.1 billion this year and reach $85.2 billion by 2026.
The first season of Making the Cut, the reality series co-hosted by Tim Gunn and Heidi Klum, gave streaming viewers the opportunity to buy designs by the winning contestants. Cheng called the effort an “incredible success,” though he did not elaborate. The show has just been renewed for a second season, which will premiere this summer.
Before rolling out the T-commerce capability more broadly, Cheng said, “we wanted to test it with specific shows with specific types of formats.” On a global basis, there are a host of regulatory and logistical issues to contend with, so for now the effort is most active in the U.S. Another active example is the availability of NFL merchandise through TVs during Amazon streams of NFL Thursday Night Football games.
Moderator Brad Berens, editor in chief at the IAB, asked Cheng a question many people have pondered: Which companies do Amazon video executives consider to be their main competition? “When it comes to competitiveness,” Cheng replied, “it’s hard to put us in any specific category. In the end we play in so many different fields and products and services that at the end of the day we’re very much in a relationship business with our customers. … We can be an SVOD product, we can be a delivery service, we can be music.”
Asked for takeaways from the coronavirus pandemic, Cheng identified the “remarkable” surge in interest in ad-supported streaming. During a previous IAB session, Amazon VP of global sales Alan Moss said the total number of viewers of ad-supported content across Amazon has hit 55 million, up from 20 million a year ago.
IMDBtv, the two-year-old service that streams top-shelf library shows like Mad Men as well as a burgeoning line of originals, had a “huge fourth quarter,” Cheng said. Through the course of 2020, “you could see the latent demand.”
Once the pandemic subsides, Cheng said, he expects there to be “a very large percentage of people who will go back and are yearning for the physical aspects of how we get along with our lives. I do think digital has proven its worth and value. So I think we can expect that more and more digital services will be adopted.”
Berens didn’t mention movie theaters, but exhibition is a relevant topic for Amazon as it straddles the pre- and post-pandemic marketplace with major film releases. Cheng volunteered, “I’ll still be going to theaters and I hope other people will too.”