The State of OTT and CTV Monetization 2025
There’s an old saying about advertising: “Half the money spent on advertising is working; we just don’t know which half.” The same could be said about the comments you hear regarding the state of advertising. Or maybe it’s our expectations more than our perceptions that don’t match reality.
Conversation about monetization is so nuanced that after a decade of writing on this topic, I am still looking for meaning where there may be little to find. Essentially, what I’ve come to understand is that advertising is like the stock market: Certain aspects of advertising deals are not transparent now and may never become fully transparent. What is clear, according to research from Statista, is that 64% of revenue growth in the U.S. in OTT is coming from advertising. More details on that in a moment.
GREAT EXPECTATIONS
The expectation that buying advertising should be the same in streaming as it is in linear TV is unrealistic. “When buyers traditionally bought TV, they were able to see exactly where their campaigns were running—show and time—and theoretically, they knew exactly how many people watched,” says Tameka Kee, SVP of programming and operations at the Coalition for Innovative Media Measurement (CIMM). “When it comes to streaming, none of that is true. Buyers do deserve to know where and how their campaigns run, but I think that they’re holding streaming to a higher standard than they held TV to.”
Regardless of what ad buyers expect, the more philosophical question is, “Why should TV and streaming be the same?” “In the past 12–18 months, as an industry, we’ve been far more open to things we were never open to before,” says Karen Babcock, VP of advertising strategy and partnerships at Comcast. “Looking back 10 years, advertisers, for all intents and purposes, bought [gross rating points], and they bought spots. And when they did that, they were buying it based off of the content it was running in.” They were really buying audiences, she contends, but preferred to think of them as content.
“With the growth of streaming,” Babcock explains, “this whole idea of ‘What content am I landing in’ and ‘I bought this show for this reason’ is almost transformed into, ‘I need to reach Nadine somewhere where is she watching,’ and ‘How can I find a way to reach her at the right amount of times?’”
For better or worse, there’s a lot more information floating out there today about me and every other consumer, so answers to those questions are more readily available now than they were a decade ago. Everyone, of course, speaks about targeting viewers in a privacy-compliant way, although the accuracy of that phrase seems open to debate.
ADVERTISING 101
As a refresher, advertising, in the best circumstances, is bought based on content channel, ratings, genre, and audience. “It’s trying to make sure you’re sending the right identifiers, so the advertiser can choose how they want to match their audience,” says Reed Barker, head of advertising at Philo. These identifiers can include Unified ID 2.0 (UID2), Google’s PAIR, Yahoo ConnectID, Epsilon’s COREid, LiveRamp’s RampId, etc.
The advertiser is bidding on a block of known data, which in the U.S. includes identifiers created by various groups. The Trade Desk describes its UID2 as “an identity fabric for the open internet.” In this and other identifiers, data is hashed so it remains specific about a consumer’s interests, but not specific to a person, with direct identifiers removed. However, anonymous details like age, income, and education remain, plus other data that enhances advertisers’ ability to target viewers. Then, device ID and IP address are thrown into a Venn diagram-like graph, with the resulting intersection of a cohort who likes a certain thing, lives in a particular place, makes a certain amount of money, and has specific beliefs. For a subscription service, this will also be matched to subscriber’s information if they’re authenticated.
The nature of modern streaming is that the services were started by many different companies, and ad buyers need to work within this realm. Psychologists say the dynamic of doing the same thing (in this case, buying advertising in streaming) and expecting a different result is not going to get you very far. You really need to change, whether you want to or not.
The question is, “Will this advertising market actually adapt to the new normal of streaming?” Expecting digital to be bought the same way as linear is not realistic, no matter how much people want it to be. However, the business of advertising seems to be ticking along fairly well if you look at overall stats.
BY THE NUMBERS
Statista reports on the revenue of what it classifies as OTT. This includes digital media distribution by SVOD, digital purchases via download or permanent cloud storage (electronic sell-through, or EST), OTT video advertising, and FAST services, such as Pluto TV or Tubi.
In the U.S., Statista notes, revenue is expected to reach $146.30 billion in 2025. The largest revenue share in OTT belongs to video advertising, with an expected 2025 U.S. revenue of $93.88 billion. U.S. annual growth rate is pegged at 7.25%, and OTT has captured 71.7% of U.S. consumers. However, YouTube has 16% of this market. The average revenue per user (ARPU) Statista reports for OTT is $593.30. I think it’s safe to say we’re in the late stage of consumer adoption.
Other regions’ general adoption is as follows:
- Asia Pacific: $116.40 billion in 2025, 52.4% penetration, $51.53 ARPUEurope, the Middle East, and Africa: $62.04 billion in 2025, 47.4% penetration, $52.91 ARPU
- Latin America: $11.60 billion in 2025,
64.6% penetration, $28.04 ARPU
Statista also predicts a compound annual growth rate of 5.8% for Latin America for 2025–2029, resulting in a projected market volume of $14.56 billion.
ADS VS. SUBSCRIPTIONS
There has been a business model ping-pong match of subscriptions, ad-supported content (later to include FAST), subscriptions with ads, transactional content, and even outright content purchases. In 2024–2025, advertising came out on top.
“If you’re depending on a single revenue model, then you’re sort of stuck at the whims of the marketplace,” says Philo’s Barker. “You want to have at least a baseline of guaranteed dollars, which comes from subscriptions. I’d like to have the same margin on the subscription, and if I’m not going to get it, if it has ads, then I’m going to have extra margin from ads so I can charge less for the subscription. Where is the profit coming from?”
One wonders if that means the ad-supported model has a larger potential for growth. “It does, but you can only show so many ads to people based on how engaged they are with your platform,” Barker says. “There’s still a finite number of hours that people watch TV and a finite number of ads you can show in an ad-supported environment. I’ve seen multiple people talk about how inventory has grown about 20%, and demand is growing around 13%. I think that’s across the industry, and everybody is seeing it.”
One reason for this trend could be fragmentation. Another could simply be how easy it is to buy advertising elsewhere.
SEEKING THE EASY BUTTON
“Search and social have done a tremendous job making the buy flow for an advertiser so simple, anybody could log on,” says Comcast’s Babcock. “Digital premium video has been 10 times harder to buy than it ever should have been. It’s so different and so much more complex than so many other businesses because it’s 20,000 line items every single month that want $1,000 targeted to three ZIP codes in the U.S. over these 7 days. Trying to do forecasting and optimizations is complex because of just sheer volume.”
Babcock says that one of the biggest challenges organizations like Comcast face in 2025 is, “If an advertiser has a million dollars to spend today, how do they get it into the system and running tomorrow? Because right now, that level of automation is not there. Do they have video creative that is transcoded to the right specs? Is it approved? What publishers can it run on? What pace do they need? Those are the things that we’re working on automating this year,” she says.
One way Comcast is addressing this issue is through partnerships like the ad tech platform deal the company’s FreeWheel expanded with Roku in December 2024. “That wouldn’t have existed 5 years ago because everybody looked at each other as competition,” Babcock says. “Now we’re realizing the competition isn’t so much ourselves—it’s search and social that have made the buying so easy.”
In addition to the ease of buying on search and social, finding the target audience has become much harder, since consumers have a bounty of choice. “It’s such a fragmented landscape,” says Sarah Monahan, co-head of enterprise ad sales at Roku. “Sports is just one example where it used to be a very straightforward path to find my NBA game, and now there are so many passive entries and also so many different platforms, apps, OSs, and ways to access my content. I’m unclear what my consumer is doing. We spent a lot of time educating our advertising community on this household shift [where viewers] cut the cord. Believe it or not, 88% of their time was spent watching completely free ad-supported content.”
PROGRAMMATIC
Another trend that continued to ramp up in 2024 was programmatic buying, in which automated buying, based on data, budgets, and opportunity, can be handled much more efficiently for many advertising buys. Nearly all large and many smaller companies have a self-serve programmatic offering. Disney announced in 2024 that 50% of its inventory is bought this way, and the company is targeting it to reach 75% by 2027.
NBCUniversal had programmatic sales available for the 2024 Paris Olympics. In addition, the company claims to use generative AI to analyze content across its portfolio, paired with its first-party datasets, to produce emotion-based, AI-powered audience segments.
As previously mentioned, in December 2024, Roku announced that it expanded its programmatic partnership with FreeWheel to make Roku content, including The Roku Channel, available to FreeWheel partners via the Roku Exchange. This will enable real-time bidding among programmatic platforms, with the intent to offer advertisers more of the audiences they are looking for.
THE OS HAVES
Location, location, location. CTV operating system companies that are lucky enough to have a home screen environment to sell are continuing to optimize their real estate. Home screen ads “are the bulk of our inventory,” says Chris Hock, Whale TV’s VP of monetization. “When you turn on the TV and you get to the home screen, there’s a big, beautiful masthead that takes over the upper portion of the screen, with some kind of navigation overlay under it. That’s a great placement opportunity.”
Home screen display ads in LG webOS
While this inventory has been around for a while, the type of companies buying it has changed. “The home screen is an entry point that 120 million people a day see in the U.S.,” says Roku’s Monahan. “For the first time in 2024, we started to allow advertisers to integrate into our home screen in a way that we had not before. It had been historically really limited to M&E. In Q4, a lot of our streamers saw really interesting brand experiences funded by Macy’s for Cyber Monday.”
“What we’ve been doing for a long time for interactive program guides,” says Craig Chinn, TiVo’s SVP of advertising sales for the Americas, is to “have banners within linear channels. As people are looking through their channels, they can actually click on those interactive program guide banners and find things that they’re going to do on our homepage hero ad.”
The one thing all of these companies have in common is that this inventory is exclusive and a direct buy. “IAB Tech Lab has started to do some work around CTV formats where this masthead ad will stick out and get some specifications around it so it’s easier to buy across different connected TV OSs,” says Hock.
These companies and others hold the major properties on the OTT Monopoly board, but let’s turn our attention to a few disrupters. These may seem like fringe use cases, but they are an important step in moving the conversation away from “We need change” to “Here’s what change looks like.”
NEW ENTRANTS: CONTEXTUAL
A number of companies spoke to me about contextual advertising, including Gracenote and Bitmovin. (See more on Bitmovin in The State of Generative AI 2025.)
“A lot of the techniques that people have used in browsers to do audience-based advertising are not as effective in CTV,” says Trent Wheeler, Gracenote’s chief product officer. “Contextual can serve both as a way to help to identify the type of content and also to allow more interesting use cases and brand connection.” Gracenote launched contextual last year along with Magnite. Customers include Cineverse, DIRECTV Advertising, Philo, Tastemade, and Xumo.
“Gracenote Contextual builds on the company’s metadata used for recommendation, but helps publishers position their content to the demand side, to the advertiser market overall,” says Wheeler. “The most straightforward example is live sports content. It is actually very hard to tell in a live sporting event how important or exciting a particular event is. For advertisers, it’s a complex data flow. We will very clearly mark the content, ‘Here’s live sports.’ We can even do things like tell you the score of the game or tell you how close it is. So, if you want to advertise in particularly exciting segments or close segments, those are datasets we could provide.”
With the extent of fragmentation in CTV, Wheeler continues, “Audience information is harder to get. There are a lot of different, smaller pockets of inventory across CTV. The market is huge. I’ve seen estimates between 30 and 40 billion in regard to CTV advertising, and obviously the promise is, ‘Take what you like about TV advertising and the digital ecosystem, and combine them together.’”
NEW ENTRANTS: THE URL
If you look at TV advertising revenue over the last year, it has been pretty flat. “The best example I have for this is our main customer in Europe called TF1, the biggest channel in Europe,” says Mathias Guille, VP of cloud platform at Broadpeak. “They earn around 1.5 billion euros [annually], and that has been pretty flat for the past 20 years. Business growth is 1%–2% every year. If you compare that to Facebook or Meta in France, every year, they have double-digit growth. How do you explain that difference? TF1 is working with 500 advertisers on TV. Facebook and Meta in France have 500,000 advertisers.”
Many companies have thought this same thing and have set up self-serve platforms where SMB buyers can purchase advertising in streaming as easily as you can on social. “If you can bring more advertisers every day to your platform, this is where you get more revenue. They may have smaller budgets, but they bring more growth across the platform,” says Guille.
Broadpeak was looking at creating a different type of ad product. “If you have a small budget, you want to pay per click (otherwise called performance marketing),” Guille says. “You don’t want to pay per impression because impressions don’t bring in new conversions. TV needs to bring what we call performance metrics—it needs actually to tell advertisers the number of clicks, the interest, and what you generate with the ad.”
The key challenge, Guille notes, “is to make ads on TV clickable. In the last year, you’ve seen a lot of initiatives with people putting QR codes on ads, and that’s the first step, because if people can scan the QR code, then you can know how many times they scan the QR code. But that’s not enough.”
Guille goes on to say that the QR code is too complicated for people to use and that the target should be the click itself. “With a click, especially on the remote, you don’t think about it. You send a notification to your phone; you can look at that later on,” he explains. Within the SDK used for measurement, viewers can pass the URL for a click. “So, typically, when we request the ad from the ad server, we get the creative, but we also get the URL of the product. The reason that no one is using that on TV today is because there’s nowhere to put that URL. We put that URL into our SSAI.”
Amazon is using a similar approach, but instead of targeting SMBs, it targets its own retail platform. When you watch Amazon Prime, there are clickable ads. Instead of sending you a push notification, clicking on that ad means you can put the advertised product directly into your Amazon cart.
Amazon Prime’s clickable/shoppable ads
NEW ENTRANTS: EXPANDING THE PIE
Edge226 is the developer of Peak, an AI-powered ad tech platform. Boaz Cohen, Edge226’s chief revenue officer, describes the company’s strategy as “bringing new advertisers to the TV space. Traditionally, he says, the TV space is all about “brands. In the past 2, 3 years, apps and games have started advertising in the streaming services.” All of a sudden, advertising has another new revenue source.
“We are bringing new advertisers—apps and games—to the space,” Cohen notes. “That happened because the measurement companies in our industry—Adjust, AppsFlyer, Singular, and Branch—added the ability to measure the impact of app downloads on CTV. Once that had happened, advertisers who are very much performance-driven started adding CTV or streaming to their advertising mix.” They either provide a link on mobile or have a call to action to search the app store to download their customer’s app. “We are definitely not buying the $40 Disney or Netflix” ad, Cohen says. “We’re looking at the $6–$10 CPM, sometimes higher, primarily running on FAST channels.”
NEW ENTRANTS: NEW AD FORMATS
New ad formats have also been creeping onto the screen for a while now, e.g., the L-Wrap, which takes two sides of the screen. There is also a two-box shrinkable ad, where the content will continue to play in one screen, and then the ad will be next to it. “I think those are starting to get a lot of buzz and excitement,” says one publisher.
L-Wrap advertising in live sports streams
“Those do pretty well for sporting events, where they still keep viewers engaged to the screen. Viewers can see some activity in a timeout for example, but also see the ad. They’re probably less effective for binge-watching or episodic entertainment programming,” says Whale TV’s Hock.
Two gotchas now: How do you sell these, and how do you measure them? “There’s usually not even an ad format on a lot of these interfaces, so you obviously can’t scale if there’s no nice, automated way to do this,” Hock contends. “It’s still early to see if these formats catch on.” Whale TV is currently offering these new formats to the 300–400 TV manufacturers that use its OS.
Two-box shrinkable ads
THE BUY EQUATION
“I’m most excited to lean into optimization, which is in the middle of a flight with a 3-week campaign that’s running,” says Comcast’s Babcock. “The advertiser should get an email that says, ‘These appear to be the three most important performance segments that we’re running against. Do you want to double down?’” That option should be available through the click of a button, she notes. “Right now, it’s somebody calling and doing a lot of work.”
This seems like an ad tech problem. But realistically, it’s also how business has been done since time immemorial, so addressing this particular issue seems like a big ask.
“We’ve all seen pressure from Amazon coming into the marketplace with Prime Video,” says Philo’s Barker. “I think we’ve seen multiple reports talking about how even the big guys like Netflix, Max, and Amazon Prime have dropped their CPMs. I think what is interesting about where CPMs are going from a publisher perspective is that there are a lot of people who take a tax along the way. Someone may be buying an ad for a high CPM—let’s say $50—and by the time it gets to us, we may see only half of that because the agency took a cut, the DSP took a cut, the SSP took a cut, the targeting methodology took a cut. By the time we get it, we’re seeing less.”
One way Philo is working on this is by having varying pricing levels available within a programmatic buy. “We’ve just started a programmatic direct deal,” Barker says. “But we probably have 2,000 private marketplace deals through our vendors running it at any one time. A lot of them will be priced differently depending on things like transparency. We have multiple tiers that we’re all constantly adjusting for different types of advertisers.”
THE FUTURE IS AD-SUPPORTED
“There’s just a finite amount of growth that can come from subscriptions,” states CIMM’s Kee. “On the one hand, we’ll see ad-supported services continue to roll out because people want free stuff.” Regarding a lot of these new formats or approaches, she says, they need to be standardized and scalable. “If a media agency can’t put this in a media plan as a line item and run it through Mediaocean in the same way that they can run something else, then it’s not going to scale.”
“2024 was the first time we saw over 50% of 18-to-49-year-olds primarily view their sports—regardless of the league—on streaming versus linear,” says Roku’s Monahan. Adding live sports to streaming in the past few years has made the transition to streaming complete.
“I think the dirty secret in buying is everybody’s offering all these amazing ways to target, whether it’s contextual or all these IDs. You can send sentiment, all these things that they’re selling,” says Philo’s Reed. “But while it looks great, if you use the Baskin-Robbins analogy, the top sellers are still going to be chocolate, vanilla, and strawberry, because people are used to that, and that’s how they do it.”
Will advertising face major disruption anytime soon? I have my doubts. This is a long game. I want to cheer each and every small step that disrupts the status quo, and maybe one day, we will see a new flavor that everyone loves. But remember: It’s not enough to want to change.
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