How streaming TV pricing and transparency issues are impacting advertisers

Streaming ad revenues aren’t growing fast enough to make up for linear declines, putting TV’s biggest players in a time crunch to find ways to deliver on ad goals. In 2024, total TV ad revenue in the U.S. is expected to decline 1.7%, excluding special events such as the presidential election and the Olympics, according to Magna’s September ad forecast. Within TV, streaming ad revenue is projected to grow 19.3% this year against linear’s 6.8% decline. Streaming ads would then make up nearly 25% of the total TV market in 2024, according to Magna, while less than half of U.S. households are predicted to subscribe to a cable provider by the end of the year, according to GroupM’s June forecast. Check out the latest Ad Age events and award programs “There’s a general feeling that everybody’s hurting on the sales side right now, and that’s not exclusive to linear networks, to CTV or any digital platforms. Everybody feels like they are under-delivering goals,” said a media buyer. “It’s not that [marketing] budgets are down in any big way—it’s that they’re spread out so thin now” across so many platforms and sellers. And within each of those deals, according to the buyer, inventory is getting more expensive and complex as more advertisers are buying advanced audiences and testing new tools and capabilities created by media companies. Also read: Branded content in streaming is growing Alongside pricing struggles, the amount of streaming inventory available to advertisers continues to grow, most notably with the addition of ads on Amazon’s Prime Video earlier this year, as well as Netflix’s growing ad tier. The increase in inventory has only fueled fragmentation in the streaming marketplace and amplified common issues—such as pricing consistency and metric standardization—that platforms must address to fully capitalize on potential ad dollars, according to six media buyers and agency executives who spoke on the condition of anonymity. Ad inventory is still being left on the table, according to recent research from streaming data company Wurl. While streaming supply has increased, the growth of supply is outpacing demand. Streaming ad fill rates were 18% lower in the first quarter and nearly 20% lower in the second quarter compared to the same periods in 2023, according to Wurl. “Streaming has been growing by the day, so I don’t know that the media companies can keep up with what they’re actually able to sell,” said a second buyer. “[Streaming ads] need to mature. Maybe we’re at a point where there’s more streaming than there are ad dollars coming that way.” To bring in more ad dollars, media buyers said price and measurement are top of mind. The price gap The theme of this year’s upfront was pricing reductions in streaming, with rollbacks on CPMs—or the cost per 1,000 viewers reached—for the premium streamers as much as 40%, Ad Age previously reported. Now, streaming CPMs have evened out in the low- to mid-$20 range for the top platforms, according to two buyers. As there has been a steady introduction of new ad tiers since the streaming boom in 2020, streaming CPMs have been disparate—newly launched platforms often come to market at sky-high rates and then slowly decrease as they grow users and repeat ad customers. A third buyer said finding consistency across pricing in streaming has been an important change this year in allowing clients to prioritize spend with platforms most aligned with their goals rather than which one is cheapest to buy. But the large gap between what advertisers pay in streaming versus what they historically paid in linear TV could risk brands resisting the shift to streaming, said a fourth buyer. “A lot of the money that’s moving to premium CTV is still coming from linear and there’s so many benefits to streaming,” said the buyer, listing better targeting and business attribution as top pulls. “But knowing where the money is coming from, you can’t just ask clients to abandon the tried-and-true things that they got from the linear marketplace. A lot of that is price, and CTV can be completely cost prohibitive.” Compared to streaming CPMs, cable CPMs start in the high single-digit range and increase based on daypart and content (sports go for much higher rates), according to two buyers. The third buyer said the goal is not necessarily to bring streaming prices down to cable levels, because streaming offers more capabilities than cable. Instead, the buyer said, the hope is that streaming prices will now rise and fall at equitable levels from platform to platform for advertisers to take advantage of its capabilities more consistently. “The innovation [in streaming] is fantastic and all the bells and whistles and the in-the-weeds media stuff is fantastic,” agreed the fourth buyer, saying that most clients aren’t tapping into many of media companies’ touted innovations because they “care more about their efficiency, their savings and their flexibility.” On top of that, fees associated with advanced targeting increase the price to advertise in streaming based on how specific the audience an advertiser wants to reach is, said the first buyer. Data fees can vary greatly, said the buyer, saying that they can add 10% to the base CPM or 100% if the target is extremely granular. Media measurement blog Tracking TV, social and digital updates Click here The metrics mess Transparency and standardization of measurement across streaming platforms has been a primary push for advertisers since the beginning of the streaming boom. And as more platforms build larger audiences and capabilities, it has never been more important. One agency head of research said that traditional media companies are still in a tug-of-war between selling inventory based on traditional gross rating points and more digital-friendly impressions. And beyond that decision, different media companies have different definitions for what constitutes an impression—for instance, one seller might consider one second of exposure an impression while another might define it as six seconds, said the agency executive. And agencies aren’t able to do their part in parsing information to form their own standards because streaming platforms haven’t agreed to provide granular information such as how much individual programs are being viewed on the platform or a breakdown of demographics, according to the agency executive. Some of that information comes with time, said the executive. For example, they said Hulu provides slightly more data on show-level viewership and demographics than some of its competitors given its time in the market. Streamers new to the ad game, including Netflix, promise more transparency will come in the future. “If I can’t compare what we’ve done on Paramount+ versus Netflix versus Disney+, how do I know I’m not reaching the same person 100 times,” said the agency executive, adding that as streaming grows and more traditional TV content, such as sports and live events, transfers to streamers, “we need to push for transparency now because as we keep continuing down this road, it’ll be harder and harder to get that from publishers.” Another recent example was the Summer Olympics, according to a fifth buyer. Streamers on Peacock watched 23.5 billion minutes of the 2024 Paris Olympics on the platform, according to NBCUniversal. But when the buyer asked how many people that equated to, NBCU declined to share the information with them. “I can get the number of people who watch Peacock, but I can’t separate who watched ‘Poker Face’ from the Olympics,” said the buyer. “I don’t know if that means they’re incapable or they just don’t want to. But if I wanted to know how many people watched on NBC, I can pull it myself.” An NBCUniversal spokesperson said the company often specified Peacock viewership for the Olympics in its daily ratings press releases, and that campaign performance data is shared with clients including show impressions. The fifth buyer said that the escalating transition of spend from linear to streaming over the past few years was previously as simple as shifting spend from one to the other based on the broad insight that viewers were moving to streaming. And that transition could often happen within the walls of one media company, where the balance of spend with Disney might lean more heavily into Disney+ or spend with NBCUniversal favor Peacock. What’s changed is that streamers aren’t keeping pace with the continued evolutions of the market. In recent years, streaming may have been a broad box to check in marketing budgets, according to the fifth buyer, but now clients are asking more granularly about which platforms are delivering specific metrics and how spend might be shifted between them to meet certain goals. But streaming platforms across the board aren’t supplying buyers with the transparency needed to answer those questions, said the buyer, much less effectively evaluate where to reallocate spend. “I can work with Disney to shift money from ABC to Hulu, but if I think it’s better based on a client’s targeting objectives to shift from Hulu to Max, I don’t have any insight into how that affected my overall reach,” said the buyer. The problem, more broadly, is that despite the dire straits some media companies find themselves in, these aren’t problems that can be solved overnight, said the second buyer. “The problem with streaming is it needs time,” said the buyer. While media investment in linear TV has been planned and transacted on decades of historical Nielsen data, “we don’t have that yet for streaming, so it’s hard … it takes a lot of time and it’s more challenging,” said the buyer.

How streaming TV pricing and transparency issues are impacting advertisers

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