Streaming TV advertising in 2023—everything marketers should know

The streaming wars was once a phrase used to describe the bloodshed between TV's growing list of streaming services, duking it out for the highest user counts as a seemingly endless scourge of network-branded services bombarded viewers. Now, streaming has left the battlefield, littered with short-lived platforms such as CNN+ and Quibi, to take on bigger foes in force—consumer fragmentation, subscription fatigue, big tech video platforms and the TV measurement mess. Caught in the crosshairs is the $67 billion TV advertising market. At this point, most streamers have launched ad-supported subscriptions. Despite new ad inventory from Disney+ and Netflix, commitments to low ad loads keep inventory for marketers scarce (not to mention, at industry-high pricing despite growing economic headwinds). As the TV industry evolves, marketers are forced to continually evaluate how brands are making content for streaming platforms and expanding their efforts to better understand audiences. Ad Age has gathered answers to some of the most commonly asked questions about the rapidly evolving (and crowded) streaming industry: How competitive is streaming? In a sense, very. Competition between streaming platforms has never been higher as market saturation seems to have reached a breaking point. Platforms have pivoted away from ranking their showdown by subscriber numbers after many saw audience declines in 2022 for the first time since the initial pandemic boom. The average number of streaming apps per household is about seven, according to research firm TVision, which is only a fraction of the number available. Rather, advertising has become increasingly important to streaming as media companies seek to maximize their average revenue per user to offset higher production costs (although how economic headwinds will challenge this year’s upfront negotiations remains to be seen). Late last year, Disney+ and Netflix each debuted lower-priced ad tiers, and the trend will continue as Apple TV+ recently hired a head of sales, indicating its entry into ad-supported streaming as well.Read: Apple TV+ hires head of ad sales Who is winning the streaming wars? At this point, it’s looking like an unwinnable war. By subscriber numbers, Netflix still holds the crown at 230.8 million global subscribers. Of the VOD streamers owned by the Big Five networks, Disney has 161.8 million international subscriptions to Disney+ (plus 48 million to Hulu and 24.9 to ESPN+), Paramount reports 56 million to its titular service (bumped to 77 million when adding Showtime’s and BET’s services) and NBCUniversal’s Peacock has 20 million, according to each company’s most recent earnings reports. Warner Bros. Discovery reported 96.1 million subscribers across its direct-to-consumer platforms HBO Max and Discovery+, which will debut a combined platform this spring. But that’s not to say all subscribers are created equal, as NBCU CEO Jeff Shell told audiences at an investor conference in December that Peacock was “approaching 10 bucks” per subscriber while Disney’s most recent earnings reported an average revenue of $5.95 per user in the U.S. and Canada (albeit the service’s advertising tier will surely have already boosted that figure considerably).Read more: Linda Yaccarino's plans for NBCU and the industry And yet, share of viewership among all of these services is another matter altogether. While transparency in the performance of programming on each streamer is a persistent problem, Nielsen’s monthly report of top streaming services by volume of playtime in the U.S., The Gauge, has become another metric by which to rank them. The most recent edition shows Netflix surpassing the network streamers yet again with 7.3% share of streaming eyeballs; Hulu and Amazon’s Prime Video rank next (at 3.3% and 3% respectively). However, The Gauge also reveals the modern evolution of the streaming wars: YouTube outranks Netflix at 7.9%. Digital and social video platforms, such as YouTube and TikTok, have become juggernauts in reach and engagement, posing a threat to the streaming crowd as their divides become blurry. While the networks have already begun implementing methods to prove their superiority to advertisers, such as new measurement metrics, this year’s upfront may tip the scales if, for example, high pricing from streamers sends marketers running to other platforms.Also see: Streaming TV surpasses cable for the first time FAST, OTT, AVOD, CTV—WTF are all these acronyms? Most streaming platforms are classified as OTT, or over-the-top, which describes content delivered directly over the internet rather than cable or satellite. OTT is the classification that includes Netflix, Disney+, Paramount+, HBO Max—think content. While many use the acronym CTV and OTT synonymously, CTV stands for connected TV and describes the device that carries these apps, such as a Roku TV, Amazon Fire Stick or even video game consoles. OTT platforms themselves have multiple subdivisions. There are video-on-demand services (VOD) where viewers select what they would like to watch. Those can be ad-supported (AVOD), which most of the major streamers now offer, with the launch of Netflix and Disney+’s ad tiers, or they can be fully subscriber-supported (SVOD)—which mostly just includes Apple TV+ at this point (although that may soon change). And then there are the apps that look a lot like linear TV with continuous streams of curated content and channels. FAST, or free ad-supported TV, are free-to-use services such as Tubi and Pluto TV, that offer channels themed around genres including action, true crime or news, as well as content from third-party programmers. Warner Bros. Discovery recently moved some of its original series including “Westworld” and “Fboy Island” from its HBO Max service to Tubi and Roku’s FAST platform in an effort to extend the streamer’s reach and potentially convert new audiences to HBO Max. Opposite FAST are vMVPD services, which stands for virtual multichannel video programming distributor. These are most similar to cable—paid subscriptions for live programming and bundled premium channels. Popular apps include FuboTV, Sling TV and Philo, but the acronym also applies to add-on services such as YouTube TV and Hulu + Live TV. Read: What are FAST channels and why should advertisers care? How do streaming bundles work? Bundling has become a popular option for streamers looking to boost their subscriber numbers while consumers are dealing with both high content and platform saturation as well as tight budgets. These bundles take a few different forms, the simplest of which is an alliance between a streamer and another service that consumers interact with more organically. For example, those signing up for a Verizon phone or internet plan can elect to receive a free Disney+ membership and enrolling in Walmart’s loyalty membership program comes with Paramount+. Some partnerships are less expected, such as JetBlue’s exclusive deal with Peacock to show its content in flight. Some streaming services bundle themselves together. Rather than subscribing to Hulu to watch a popular series like “Only Murders in the Building” and then canceling to free up some of the monthly budget for Disney+ to binge “The Mandalorian,” one might choose the Disney bundle that costs less than paying for each separately and keeps consumers within the Disney ecosystem. (Disney is the majority owner of Hulu and owns Disney+.) And some streamers offer aggregate channel options. On Apple TV, Prime Video and YouTube TV, consumers tired of hopping between apps can subscribe to other streamers and host programming from each on a single platform, although this doesn’t necessarily equate to savings. Read more: Walmart partners with Paramount+ Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here How do you create ads for streaming platforms? Many marketers advertising in the streaming landscape place the same 30-second or 60-second commercials on both linear and streaming, especially as media companies have made efforts to eliminate the barriers between buying ad time for their various assets. But streaming environments offer more opportunities to better target consumers with ad formats that move beyond the traditional commercial break. Advancements in tech have brought many of the capabilities advertisers had previously used in search and social media advertising to streaming advertising, such as customizing messaging per audience or even emerging shoppable capabilities. Streaming has enabled marketers to get more creative to harness the power of being in a fan-favorite show as well as reach premium, ad-averse viewers. Some brands have placed themselves directly in content beyond just product placement, such as Simply Spiked incorporating itself into a storyline in Peacock’s “Bel-Air” or Coca-Cola creating its own holiday miniseries on Amazon Prime. That’s not to say classic product placement doesn’t still work, and it doesn’t have to be cheesy—Molson Coors going big on its deal with Paramount’s “Yellowstone” is an example of recent success. Read more: “Bel-Air” features Simply Spiked storyline Also see: Coors Banquet stars in ‘Yellowstone’ and ‘Cobra Kai’ What types of ad formats are available? Certain types of ad units have become synonymous with streaming. These include pause ads—delivered when a viewer hits pause—and binge ads, which allow viewers to skip mid-roll ad breaks if they choose to watch a longer ad at the beginning of an episode. These types of ads represent the standard set for streaming; however, new-to-market ad tiers such as Netflix and Disney+ launched with just pre- and mid-roll products available, choosing to launch sooner and build more options in real time with advertisers. Shoppable advertising is of growing interest in streaming as platforms launch capabilities for interactive commerce beyond QR codes. Peacock will be taking in-app shopping to the 2023 upfront, and in 2022 AMC launched product integration for its FAST programming. But the future of streaming ads will be all about immersion and custom creative. In February, NBCU announced “Watch With” programming, which allows brands to sponsor Q&A and live commentary with a show’s talent. At Cannes Lions in 2022, Netflix co-CEO Ted Sarandos shared his vision for advertising tailored to each program that is better than TV in itself. Read more: Shoppable comes to Peacock Also see: Netflix pitched minimal ad offering to advertisers Does ad fraud exist in streaming? Over the past years, multiple cases of fraudulent CTV impressions have been reported. These cases all involve schemes that spoof CTV ad impressions, including infecting devices with malware to turn them into ad-viewing bots. Fraudsters can also set up servers that create fake ads, spoofing millions of ad orders from connected TVs to snare unsuspecting brands. The reality is that connected TVs are susceptible to fraud, but there are ways for brands to protect themselves. Verification companies such as DoubleVerify have popped up to combat these trends, but overall, measurement in streaming has been a headache all on its own. The industry hasn’t yet cracked the solution to sharing metrics from campaigns that span linear and streaming TV, although new standardization efforts have come about. But measurement has become the buzzword across the entire TV industry after longtime provider Nielsen was outed for undercounting audiences during the pandemic, and failed to have its Media Rating Council accreditation restored last year. As TV networks and advertisers continue to juggle new media formats, measurement will continue to be a pressing issue until solutions are agreed upon across the industry. Read: The continuously changing TV measurement conversation How many ad dollars are shifting to streaming from linear TV? The declines in linear TV viewership have continued to accelerate over the past few years. GroupM predicted in its 2022 end-of-year forecast that pay TV providers would fall below 50% U.S. household penetration in 2025. And while advertisers still invest in the medium, ad dollars have continued to shift to digital platforms. During 2022 upfront negotiations, Disney reported 40% of its $9 billion in commitments was for its streaming platforms. NBCU also showed growth in streaming, with its streaming sales up 20% from the previous year. However, media companies often tie deals to assets across their portfolios, including locking access to desirable streaming inventory behind buys on linear assets as well. Buyers hope this year’s dealmaking will be more flexible. Read more: Disney nets $9 billion in 2022 upfrontAlso read: Advertisers boosted Peacock investment in 2022 How are streaming platforms breaking through the clutter? Streaming platforms are massive marketers in their own right, as newer players try to break through the clutter and mainstays look to retain their foothold. Streamers have taken to marketing themselves during tentpole events—this year’s Super Bowl featured work from Peacock, Paramount+ and Tubi. The latter became a viral hit with audiences between its trippy visuals and a clever channel-changing prank. Many have activated immersive fan events around their programming, such as Netflix’s campaign for “Wednesday,” HBO’s for “The Last of Us” or NBCU’s BravoCon (although Bravo’s reality content is not exclusive to streaming). While it may seem platforms like Netflix don’t need to market themselves, marketing can make a difference for business. Multiple agency buyers told Ad Age at the time of Netflix’s ad-tier launch that the company hindered consumer awareness of its ad tier by delaying marketing for it until after launch, while Disney began marketing Disney+’s ad tier at least a month prior to going live. After three months of being active, signups for Disney+’s ad tier represented 29% of all signups to the service versus 19% for Netflix’s ad tier after the same time period, according to a study from research firm Antenna. Read more: How Netflix made “Wednesday” its next hit Also see: How HBO used fandom to market “The Last of Us” What is the difference between linear TV and streaming at this point? The lines are increasingly blurring. One of the biggest differentiators for linear TV has been live news, spots and tentpole events such as awards. But even this type of programming is making its way onto streaming platforms. Outside of streaming/linear simulcasts, “Thursday Night Football” streamed exclusively on Amazon for the first time in 2022 and the NFL’s “Sunday Ticket” will stream on YouTube TV this year. Other sports rights, such as the MLB and MLS on Apple TV, are quickly being acquired by streaming services. Additionally, awards broadcasts may begin crossing over as Netflix acquired rights for the Screen Actors’ Guild Awards, which will stream live on the platform starting in 2024, and live news has become a staple of FAST programming. Read: How advertisers felt about “Thursday Night Football” What's next for streaming? With platform fatigue and subscription hopping growing, many predict consolidation will hit the streaming landscape majorly over the next few years. Already, platforms are beginning to merge, such as Discovery+ and HBO Max as well as Paramount+ and Showtime. Some smaller programmers such as A+E Networks are taking a conservative approach to streaming until the waters settle, choosing instead to license content to other platforms for digital distribution. Similarly, Hallmark struck a deal with NBCU last year to host its content on Peacock rather than launch its own streamer. The streaming wars may look very different not too long from now. 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Streaming TV advertising in 2023—everything marketers should know

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