Big brands like Verizon and Toyota are backing Amazon's Freedive as the e-commerce giant pushes deeper into OTT advertising

Verizon

Verizon is running Freedive ads featuring actor Thomas Middleditch

• Amazon recently launched its first foray into ad-supported video streaming with its IMDB Freedive service.
• Business Insider tracked 57 commercials on Freedive and found that 41 of them promote Amazon's products like Echo or Amazon Music.
• The remaining 16 ads come from a handful of big TV advertisers including Verizon, Geico and Toyota.
• Marketers said that they're interested in seeing how Freedive plays into Amazon's bigger play for OTT advertising.

Amazon is moving into ad-supported streaming, and marketers see the shift as evidence of a larger push into TV and over-the-top advertising.

Last week, Amazon's IMDB unveiled its ad-supported streaming service, Freedive, that lets consumers watch TV shows and movies from Amazon's website, apps and Fire TV devices. Experts see Freedive as Amazon's entry into OTT advertising as it builds out an ad network that will allow third parties to sell ads in connected TV apps, similar to the way Crackle and Pluto allow ad-tech vendors like SpotX and The Trade Desk to sell ads within their connected TV apps.

While IMBD only represents a portion of Amazon's ad inventory, the company is beginning to rival Facebook and Google in digital advertising, and marketers expect video to be a big part of Amazon's ad pitch this year. Amazon says that IMDB drives 250 million people to its properties every month while an estimated 48.6 million consumers own an Amazon Fire TV, according to eMarketer.

Several observers were skeptical of Amazon's plans to compete for video budgets from streaming, which is dominated by big names like Roku and Hulu. Plus, the number of direct-to-consumer streaming services continues to grow. NBCUniversal, AT&T, and Disney plan to roll out streaming services over the next two years. Sony-owned Crackle has run a similar model to Freedive for years but never gained significant traction with consumers.

Amazon

"They haven't pushed it particularly hard," said Noah Mallin, head of experience, content and sponsorship at Wavemaker. "The fact that it's tied to Amazon IMDB and within Amazon's Prime app, I think it's more about them experimenting with the kinds of ads that they can place."

Brands are running their TV ads on Freedive

The ads on Freedive are mostly house ads, showing Amazon is just starting to ramp up ad sales there. Business Insider looked at ad loads for more than six hours worth of Freedive programming and tracked 57 commercials. Forty-one of the ads were for Amazon services like its voice-activated Echo devices, Amazon Storefronts, Amazon Music, and men's clothing line Goodthreads. The other 16 ads were bought by a handful of big TV advertisers including Toyota, Verizon, Geico, Progressive Insurance and Hyundai.

"True Romance" is one of the movies Amazon is promoting within Freedive. The movie is two hours long and includes 12 commercial pods that each last 45 or 60 seconds. To compare, a 45-minute episode of NBC's "This is Us" streamed on Hulu contains six commercial pods, suggesting that Amazon's ad load is competitive to other services.

Many of the ads are the same length and creative that marketers run on TV. For example, Geico repurposed a campaign dubbed "Nature Sounds" that began running on TV and digital platforms in August, and Verizon is running a spot from its long-running campaign with actor Thomas Middleditch.

Read more: Amazon's timid move into ad-supported video has little chance of shaking up the market -- at least for now

John Nitti, Verizon's chief media officer, said Verizon bought 20% of the ad slots that Amazon pitched to a small group of beta advertisers. The Freedive ad buy is part of Verizon's larger investment in OTT through Amazon's demand-side-platform (or DSP).

While Google and Facebook dwarf Amazon's ad business, opening up video inventory is the latest sign that Amazon wants to aggresively grow its advertising, he said.

"Facebook and Google have had video inventory at scale that's ad-supported for some time now," he said. "While Amazon's ad business had been relegated to display and other ad formats, now they're starting to scale into video. Amazon becomes more viable across more advertising touch points with more inventory across the ecosystem."

Amazon wants to control a larger chunk of OTT ads

Advertisers buy Freedive programmatically from Amazon's demand-side platform (or DSP), meaning that advertisers cannot specifically purchase Freedive ad inventory. Instead, ad buys are a mix of Freedive and OTT inventory within Amazon Fire, said Brittany Rollheiser, director of digital investment at Mindshare.

"It's still in the early days so it seems to be a bit of a slow roll," she said. "[Freedive] is not necessarily a stand-alone product - it's more something that's bundled up into other OTT inventory."

According to Wavemaker's Mallin, it's not clear how Amazon will present its ad-supported and subscription-based videos to consumers, which could muddle Amazon's long-term video ambitions.

Within Amazon's Prime video apps, Freedive content is promoted next to Amazon's original content - including shows like "The Marvelous Mrs. Maisel" and "Jack Ryan" - that require a Prime subscription to watch.

"There's a disconnect between 'I'm paying for Prime' and then, 'Here's this thing that's free with ads,'" he said.