The streaming wars—everything marketers should know

Editor's note: An updated FAQ about streaming TV and advertising was published in March 2023. You can find that version here. The meteoric rise of streaming services is disrupting the $70 billion TV advertising market—a trend guaranteed to accelerate as coveted TV viewers continue to stray from linear TV, fragment across digital platforms and become increasingly difficult for advertisers to reach. Coupled with a flood of new and revamped platforms crowding the marketplace, navigating the space is a challenge for brands. While some new entrants are ad-supported, many platforms don't run commercials, forcing advertisers to be creative about getting their marketing messaging into that content. As the ad marketplace evolves, important trends are emerging, including 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: Who is winning the ‘streaming wars?’ At this point, it’s looking like an unwinnable war. Even determining who’s in the lead depends on what metrics are used. In terms of subscribers, Netflix continues to dominate the field, having surpassed the 200 million subscriber milestone this year. Like most of its competitors, Netflix got a significant boost during the early months of COVID-19, adding more subscribers in the first six months of 2020 than in all of 2019. In terms of growth momentum, Disney+ —which added 95 million subscribers after one year in the marketplace—and HBO Max lead the pack. In terms of content, Peacock can't be discounted since parent company NBCUniversal holds a litany of exclusive rights for upcoming events, including the Beijing Winter Olympics and Super Bowl LVI. Read: Netflix blows past 200 million subscriptions WTF is OTT? Most streaming platforms are classified as OTT, or over-the-top, which describes content watched over the internet rather than cable or satellite. OTT platforms are subdivided into two groups—those that are ad-supported (AVOD), such as the Roku Channel and Tubi, and so-called FAST channels, which stands for free ad-supported streaming TV. There's a slight nuance between the two: AVOD platforms are typically those where users can watch content on demand; FAST channels usually more closely resemble live linear TV. Then there are platforms that are subscriber-supported (SVOD) such as Netflix and Disney+. How much ad dollars are shifting to streaming from linear TV? During this year's upfront negotiations—when media companies look to secure the bulk of their ad commitments for the next season—there was a sizeable shift in the amount of money being allocated to streaming platforms. Disney saw more than 40% of its ad commitments go to its streaming platforms, which include Hulu, while NBCUniversal said Peacock received $500 million in upfront commitments. Join us on Nov. 9-10 for Ad Age Next: Streaming Our second annual conference featuring the event's largest-ever lineup of industry leaders who will discuss the present and future of the rapidly evolving business. Get tickets and register here. Outside of the more traditional media players, TV manufacturer Vizio—which also sells ads for its connected TVs—brought in more than $100 million in advertising commitments during this year's annual ad haggle, a fourfold increase from last year. It's worth noting that $100 million pales in comparison to the nearly $10 billion in ad commitments made to the Big Four broadcasters and The CW in the upfronts. And Roku closed its upfront dealmaking much earlier than usual, striking deals with all seven major holding companies and bringing in twice as many total advertiser commitments versus last year. Read:• Disney sees more than 40% of upfront ads in streaming • Vizio snags $100 million in upfront ad commitments How do you create ads for streaming platforms? For the most part, many advertisers experimenting in the streaming landscape are repurposing their 30-second or 60-second TV commercials. But streaming environments offer more opportunities to better target consumers with ad formats that move beyond the traditional commercial break. To this end, brands such as Maker's Mark are going a step further. The spirits company is sponsoring a bourbon-infused talk show on Roku, working with Roku Brand Studio, which the streaming giant launched in March as a way to help marketers shift beyond traditional TV spots, offering everything from sponsor-commissioned TV shows to branded content. Similarly, WarnerMedia created a content studio this summer to help brands connect with its intellectual property across platforms, specifically its streamer, HBO Max. There is little consensus regarding the quality of streaming ads, according to a June report from data intelligence firm Conviva. Read:• Roku, Maker’s Mark join forces for bourbon-backed talk show • WarnerMedia's content studio to help brands connect with IP What types of ad formats are available? At this point, there are certain types of ad units that have become synonymous with streaming. These include pause ads—delivered when a viewer hits pause—and binge ads, which deliver more tailored messages to viewers watching multiple episodes of a show in succession. Peacock, Hulu and Discovery+, among others, are selling these formats. NBCU introduced a new ad format this spring, Spotlight Ads, which allows advertisers to mimic the scale and reach of linear primetime TV within the streaming world. Spotlight Ads allow a marketer to choose a specific time slot within which every Peacock viewer watching any program will see that ad first. Amazon introduced some new ad units in the spring, introducing new places where ads appear on Fire TV—the device that streams to the connected TVs of more than 50 million viewers. One new ad unit is called “sponsored content rows.” The ads are mostly for media and publishers to promote shows and movies. Brands such as a TV network with a streaming app or a movie subscription service could show up to 10 titles in a row to attract viewers, Amazon said. Read:• NBCU streaming looks to deliver scale of traditional TV• Amazon creates new ad opportunities in Fire TV Does ad fraud exist in streaming? Multiple connected TV ad fraud cases have been uncovered over the past year. 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. Depending on whom one asks, there is either an infestation of fraud in CTV or much of it is hype to scare advertisers into upgrading fraud protection packages. The reality is that connected TVs are susceptible to fraud, but there are ways for brands to protect themselves. Read: Brands shouldn’t be stymied by connected TV ad fraud How are streaming platforms breaking through the clutter? Streaming platforms, while on the hunt for their own ad dollars, are also massive marketers in their own right, as newer players try to break through the clutter and mainstays look to retain their foothold. It doesn't help that nearly 10 of them appended a plus symbol to their names—the latest being CNN+, announced six weeks ago. Discovery+, which debuted in March, promoted its vast content library with its marketing campaign. Others are using high-profile TV events, including the Super Bowl, to reach mass audiences. Over the past several years, Amazon Prime Video has used the Big Game to promote its original series, while now-defunct Quibi ran an ad in the game before it ever even launched. ViacomCBS' Paramount+ aired its celebrity-filled saga during this year's game, which aired on sibling network CBS. NBCU is looking to boost Hispanic interest in Peacock by creating a dedicated Hispanic streaming business arm tasked with creating content for this audience. In an effort to simplify the streaming chaos for both consumers and advertisers, Hulu embarked on a rebrand in April, introducing a new look and sound. Read: • Hulu rebrands with a new look and sound, striving for clarity • Inside Discovery's first global campaign for its streaming platform 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. Amazon will begin streaming NFL's "Thursday Night Football" games, which air on Fox, in 2022. The league said in March that Amazon would have exclusive rights to carry the Thursday games on its Prime streaming service in a 10-year deal scheduled to start with the 2023 season. And more football games will be accessible via streaming platforms in the years to come, with broadcasters striking deals with NFL to air games via platforms. “Sunday Night Football” will air on both NBC and its streaming service Peacock, and all games broadcast on CBS will also be streamed on Paramount+, both on the premium tier and ad-supported tier that debuted in June. The deal included the ability to implement interactive features for consumers on Paramount+. Outside of sports, the Academy of Country Music Awards will move to Amazon Prime Video in 2022, making it the largest awards show to shift to a streaming platform. Read: • Academy of Country Music Awards’ an issue for TV advertisers • What NFL’s streaming future could mean for brands To get the inside scoop on what’s going on in the streaming industry today, join us in November for our two-day Ad Age Next: Streaming virtual event featuring streaming leaders, creative pros and top executives. More information can be found here.

The streaming wars—everything marketers should know

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