16 JUN 2021

ADVERTISING ON STREAMING: A $30 BILLION OPPORTUNITY

While viewers spend 47% of their viewing time on streaming, even by 2024 advertisers in the US market will spend a mere 8% of ad dollars on this segment. This is just US$5.6 billion of the $71.6 billion television spend market, according to Conviva.

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Streaming continues to grow rapidly, up 266% over the last three years. With a massive 91% of the population actively streaming and 18% not watching any linear television, having cut the cord completely, streaming will soon be the predominant viewing format. However, although viewers have made the shift to streaming, advertisers have lagged, Conviva assured in its “State of Streaming Advertising Report”.

While viewers spend 47% of their viewing time on streaming, PwC estimates that even by 2024 advertisers in the US market will spend a mere 8% of ad dollars on streaming. This is just US$5.6 billion of the $71.6 billion television spend market. With streaming consumption set to overtake linear television consumption in 2021, this delta between eyeballs and dollars represents at least a $30 billion opportunity if streaming monetization can grow to the equivalent of linear television, the report confirms.

“With streaming, there is an opportunity to provide high-quality creative to consumers, but we need to evaluate how and when we reach them. It’s time to move on from 1:1 targeting, with growing concerns over privacy and the challenge of scaling those campaigns, and think about how we can align ads with the content that viewers enjoy and trust,”  said Scott McDonald, President and CEO of the Advertising Research Foundation (ARF).

According to Conviva’s report, viewers are most satisfied when entertaining, quality content, including the ads themselves, are free. An imbalance in content quality and ad quality can be jarring and not only impacts streaming ad satisfaction, but can also impact engagement. Consumers who agreed they were happy to watch some ads in return for free streaming services were 255% more likely to be satisfied with advertising on streaming services than those who disagreed. Similarly, if viewers agreed they liked the streaming ads they saw or liked to watch ads on streaming, they were much more likely to be satisfied with streaming advertising overall.

Conversely, negative sentiments about the ad experience on streaming services, such as feeling that there are too many ads in the break, were negative drivers of satisfaction. Viewers were 25% less likely to be satisfied with advertising on streaming services overall if they agreed that streaming has too many ads in each commercial break or pod. “Managing reach and frequency is vital to a satisfying viewer experience for streaming advertising,”  the report assures.