2025 Predictions for Ad-Supported Streaming
The start of a new year is nothing without everyone making predictions, so here are a few that apply to the advertising industry. Advertising in streaming is doing pretty well when we compare it to following ad dollars that have left linear.
Lean-Back is Back
Consumers have figured out that part of what we consider fun after a day full of emails and meetings is not making too many choices. Not making too many choices means settling for ad-supported viewing. This means more FAST. The top contender here is the Roku Channel, which reported 83.4 million viewers in the US in 2024, according to data from Statista. Tubi had 74.6 million, followed by Pluto TV at 61.7, Amazon Freevee at 57.1 million, Crackle at 36.8 million, and Samsung TV Plus at 23 million.
2024 US FAST viewers by platform provided by Statista.com
With every major streaming service having started an ad-supported subscription in the past few years. MNTN Research shows Peacock is expecting 2025 to have 84% of its viewers watching with an ad-supported subscription, followed by Hulu at 65%, Paramount+ at 58%, Disney+ at 36%, Max at 28%, and Netflix at 15%.
Almost all of these services offer self-serve buying for small- and medium-sized advertisers. The streaming services are opting for a no-advertiser-left-behind approach and making sure they are not leaving any money on the table.
So, if you’re a local car dealer or restaurant chain, you have two choices. One, you go and use these self-serve tools yourself. Your ad buyer needs to identify things like who you want to reach, what your CPM is, how long a campaign should run, or if you have any customer data or guidelines for lookalike cohorts.
Then, even if you can actually buy this advertising yourself and take care of all the targeting—because these self-serve platforms have made that easy enough to do—you need an ad campaign which could include multiple ads. Depending on the size of your company, there are AI tools that can build an ad for you, unless you want something a bit more sophisticated, which means you need an agency to create one. Hold that thought for a moment.
Follow the Money
Social media previously was no match for streaming with how easy they made it to buy advertising. In a research study by Premion, CTV/OTT was ranked as the most important place to advertise at 69%. Surprisingly, social came next at 43%, and then came linear TV at 35%. This study reached out to advertisers whose mean annual advertising spend was $118 million. The top two categories here were advertisers spending $5–50 million (39%) and >$50 million (41%). This would include all of those large brands that are household names.
Three in five CTV/OTT advertisers are planning to increase their spend this year with an increase averaging 21%. Almost three quarters are moving their budget from existing budgets and the other quarter will be using new budgets. The biggest shift is that 45% of advertising dollars will be moving from linear TV to CTV/OTT.
Another stat that confirms this retroactively in a report published in April 2024, looking at 2023 numbers: an IAB PwC report says video, including CTV, now accounts for 23.2% of all advertising revenue, bringing in $52.1 billion in 2023, with a 10.6% year-over-year growth.
Make a Big Jump
What this tells us is the streaming has truly won the streaming war with linear (streaming’s war from within is another topic for another day). In order to keep this momentum going, there is one thing we need to get better at: reach and frequency. While this sounds like the same old story, companies say they are slowly getting better at this. Look to Generative AI and big tech in the next year to help us correctly fix this ongoing problem.
This has been a problem looking for a solution for years. Throughout that time, I’ve been listening to people moan about three things:
- This will only change ever so slowly because there’s no incentive.
- The Interactive Advertising Bureau (IAB) can help in this area.
- Brands will drive change.
What strikes me in this telephone tag logic is we are missing the real story. Do you know who will drive change? It’s the same box-of-smiles retail behemoth that disrupted the publishing industry and so many more sectors after that.
As one analyst said to me awhile ago, the $5 and $10 subscription price increases that streaming services implement semi-regularly are not going to do enough for them (particularly because they can’t count on maintaining their subscription numbers as prices inch up the way Amazon can with Prime). They have to go hard on advertising.
What we need now is some really smart tech to come along and solve this problem. If I were running advertising for any media company out there, I would start selling my inventory through Amazon and let them figure out how to address this problem. This so-called hyper-scaler already stepped into the market this year and made a big splash, driving down CPMs. It’s time to do something better than continuing to create more demand-side platforms (more than 80 at last count).
Amazon has the deep pockets, tech expertise, data management, and overall know-how to do to advertising what they have done to everything else. Then, finally, we could move onto another topic of conversation than reach and frequency, and media companies might actually find a way to make more money than what they have been doing for years taking their own baby steps.
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