Evidently, Amazon is ready to become a major player in the online video advertising market. eMarketer estimated Amazon’s ad revenue to be just a meager 1% of their annual revenue, so about $800M in 2013. With that in mind, it’s easy to see why it has seemingly not been a priority, until now. Well, it seems the gears have started turning because they have hooked up with FreeWheel who will be the technology partner for what will apparently be an Amazon Video Ad Network.

It’s surprising to me that it has taken Amazon this long to really get with video advertising. All the research that’s been shown for eCommerce sites and places like Zappos, should have been enough for them to see the real value in it. After all, they are a massive marketplace of products, so it only makes sense that they use video to push those products, especially in any streaming video products, TV episodes especially.

Data + Traffic = Targeted Video Ads

Plus, think of the amount of data they have on shoppers. Every time you search, view or buy, it is tabulated somewhere. They might not be totally ready for pre-buy shipping with drone delivery, but they have a good amount of information on anyone who has used the service more than once. That means they can probably target video ads very specifically.

I’ve got both a wish list and a baby registry on Amazon. They could easily start showing me ads about any of those products which range from Celestron telescope accessories to portable LED lighting rigs to pack N plays. Don’t worry, I didn’t know what that last one was until just a couple months ago myself.

Not only that, but they could also use social network engagement to target ads to people that know me. For example, I was just looking at the Kindle Fire HDX 8.9 and right on the product page it tells me that some friends have liked this product on Facebook. So they could turn that around and start showing ads for things on my baby registry to my friends, or, as my birthday draws near, start showing ads about things on my wish list along with something like “Christophor’s Birthday is just X days away and this product is on his wish list, so BUY NOW!”

FreeWheel has also been working on putting ads into TV episodes on the Kindle Fire. Since it was recently announced that Prime might get a price increase because it wasn’t making a lot of money, this might be them trying to turn it over to a combination subscription and ad-supported model a la Hulu Plus (Don’t do it Amazon!!!). Honestly, I don’t see that going over very well. After all, much of the content on Amazon Prime is also on Netflix, sans ads. Maybe they’re looking at doing a free version of Prime with a high ad load.

They are already working out deals where they can show the first episode to Kindle users for free. What a, pardon the pun, Prime Place to put ads for future episodes, which will be PPV of course, as well as products related to the show, available on Amazon. Could also be a good way for them to get some exclusive merchandise for some shows as well.

So like I said, I’m amazed it’s taken them this long to get this up and running. We can expect to see them show up in some comScore Video Metrix or Nielsen numbers later this year I suspect.