The number of OTT users across Netflix, Disney+, HBO Max, Hulu, and other platforms is expected to reach 4.2b by 2027.

Connected TVs (CTV) are seemingly more commonplace than toasters. As of February 2022, there were around 117mm CTV households in the U.S.

This leaves advertisers and media brands asking: Where are programmatic ads headed?

Programmatic advertising is certainly in the cards for brands, both large and small. And programmatic TV advertising continues to make headlines and big promises. 

But one thing is certain: The popularity of ads across streaming services is growing as the industry figures out measurement, inventory and growth.

By 2026, ad revenue is projected to surpass $32b.

How OTT Is Shaping Programmatic Ad Tech 

With the streaming giants’ rapid expansion — fueled by Silicon Valley’s mantra of ‘move fast and break things’ — ad tech had difficulty keeping up with the shift from traditional TV to OTT. 

Programmatic advertising fits individual web properties and Internet-native video platforms. A native ad on a publisher’s site feels natural. So do ads across major social media platforms, including Facebook, Instagram and Snapchat.

But applying the same ad tech to OTT (particularly with live programming) proved difficult. 

“Early adopters are finding that pairing digital data with connected TV and OTT ads isn’t a simple plug-and-play exercise,” wrote eMarketer’s editorial board. “Those hoping to benchmark connected TV and OTT performance against standard digital video advertising metrics are also finding this a complex task.” 

Programmatic advertisers in OTT have faced the unique challenge of translating the metrics of traditional TV and data-driving digital ads. 

According to a 2022 survey, 48% of respondents said measuring incremental reach across streaming platforms and publishers was challenging for CTV advertising. Meanwhile, 43% pointed to managing ad frequency across platforms and publishers as a hurdle.

But the challenges don’t end there.

Another survey found that 85% of respondents said they were “very” or “somewhat concerned” over ad fraud.

Buying digital ad space for OTT and CTV is still difficult, but more laser-focused DSPs have popped up to support the demand. 

“Comcast-owned FreeWheel is introducing a one-stop shop for buying commercials in these emerging forms of TV,” writes Jeanine Poggi at AdAge. “The suite of new ad products will allow buyers to access inventory from FreeWheel’s clients, which include more than 60 of some of the top TV networks and publishers that are being served on platforms like Roku, Amazon Fire, Google Chromecast and Apple TV, among others.”

Similarly, Adobe acquired TubeMogul, a DSP aimed directly at programmatic video. 

The Trade Desk, one of the world’s most popular DSPs, has also invested in CTV advertising.

TTD’s solution not only helps advertisers “maximize reach to increasingly digital audiences, wherever they’re watching,” but the company’s relationships with top networks and content providers give it an edge.

TTD also positions itself as an “all-in-one” DSP, which gives advertisers a more streamlined way to scale their CTV ads across inventory, including video, audio, native, and OOH.

It’s DSPs like these that will allow programmatic video ads built for CTV and OTT to scale in a meaningful way.

Specialized DSPs Are Expanding Opportunities for Programmatic 

But that doesn’t mean it’s suddenly a straightforward affair. 

Tal Mor is the CTO of Tremor Video, a DSP purportedly meeting these new demands. “Just because programmatic video is everywhere doesn’t mean it’s easy,” writes Mor. He says that programmatic video — and especially Connected TV or OTT — requires the right balance of ad tech to prove effective: “It requires access to the right audiences, unique targeting abilities, channel-specific inventory, reporting/optimization abilities, and fraud detection/prevention methods.” To drive this home, Mor writes that the lack of industry standards makes it particularly difficult to navigate the nuanced space. 

That said, movement in OTT services is driving growth in programmatic video ad spend.

Automation and measurement are improving.

For example, DoubleVerify launched a solution that can verify a CTV ad’s viewability, allowing advertisers to determine if an ad was actually seen. The launch marks the first viewability measurement solution to hit the market.

“As CTV impressions continue to be sold at a premium, brands need insight into which platforms and environments offer the best viewability rates,” said DoubleVerify CEO Mark Zagorski. “To that end, we’re excited to launch this first-of-its-kind solution and continue to lead in measurement and innovation for CTV buyers.”

Targeting is getting more precise.

Ad formats are innovating.

Case and point: Samsung Ads is tapping into Clinch’s ad tech platform to “deliver personalized and dynamic programmatic campaigns across FAST service Samsung TV Plus.”

Clinch CEO Oz Etzioni said, “Samsung has established an incredible global footprint, fueled in part by their commitment to providing innovative consumer experiences. Through this partnership, we are able to bring a new level of real-time personalization to millions of Samsung connected devices with superior automation and efficiency.”

Metrics and benchmarks are also catching up—and consumer demand only continues to rise, aided by increased mobile consumption.

All of this translates into scalability and a better advertising ROI. 

Mor, the DSP tech leader, writes that video-specialized DSPs have the best hope of capturing this value. Within their specialization, they can focus on ad formats and creative, inventory and execution, and (maybe most importantly) measurement. 

The benefit is clear: Reach a more engaged audience for less than it costs on traditional TV.

“OTT program producers focus on developing video programs for targeted, highly enthusiastic audiences instead of broad-based fare,” writes Barry Levine at Marketing Dive. 

Programmatic video is a natural way to take full advantage of this benefit — and DSPs are starting to meet demand. 

For more insights, sign up for MediaRadar’s blog here.

Meanwhile, the shares of broadcast television stood at just 22.4%.

As the global over-the-top (OTT) market continues to enter the living rooms of millions—OTT had a user penetration rate of approximately 42.9% in 2022—significant players like Netflix, Amazon, Apple, HBO Max, and Disney+ have built their media offerings. As a result, advertisers have had to figure programmatic TV out on the fly. 

But what, exactly, is programmatic TV advertising? 

Is it addressable? 

What are its benefits? 

The tech is in its early stages, so we’re naturally confused.

What Is Programmatic TV Advertising? 

Programmatic TV advertising is a technology-driven way to buy ads across the web, mobile devices, and connected TVs. Programmatic TV advertising extends to linear TV ads and OTT technology like Disney+, Netflix, and HBO Max. 

Programmatic Advertising for OTT: Opportunity vs. Capability

OTT distribution channels (or streaming platforms) may have a while before they completely take over traditional television. While user penetration is promising, rising prices could push people back to old-school cable. 

Entertainment analyst Paul Erickson says, “Services really see content as their weapon to ensure people subscribe — and they stay subscribed — in this dog-eat-dog environment.” He said the price increases will end when consumers “start leaving the service or stop subscribing.” 

Still, there’s enough meat on the bone to warrant a “What’s next for advertising?” type of conversation. Revenue in the OTT video segment is enough to warrant it on its own, which is expected to reach $316b in 2023.

So, why are advertisers flocking to OTT? 

Because linear and broadcast TV ads just don’t cut it anymore. 

In fact, 94% of TV ads reached just 55% of linear TV audiences in Q1 2022. While impressions rise at times—linear TV impressions were up by 19% in Q4 2021 in tandem with the football season—they’re worthless if no one sees the ads. 

Reach is a problem, but so is efficiency, which is why advertisers are eager to go programmatic. 

Despite the opportunity, there are several holdups to implementing addressable TV ads. 

To start, it’s a complex undertaking.

When you start mixing direct TV ads, popups on mobile video, banner ads on web platforms and more, figuring out pricing, opportunity and targeting can quickly get confusing. 

Cross-channel advertising has always been challenging; adding OTT to the equation makes it exponentially harder, given the siloed ecosystems in which these platforms live.  

Add to that the intricacy of the marketplace itself, and things may take a while to untangle. 

The Wall Street Journal reported that “Silicon Valley heavyweights” with a direct-to-consumer laser focus and “traditional media companies” looking to figuratively keep up with the Kardashians are competing in at least five distinct categories.

These companies are vying for consumer attention in increasingly complicated combinations, replete with subscription entertainment, TV streaming, ad-supported online video, cable/TV bundling, and sports.

The intricacies are hard to handle, and the platforms need help to meet the demand. 

Said another way, advertisers follow audiences from traditional TV to streaming, but when they get there, they find there aren’t enough ad slots to go around.

Netflix’s ad-supported under-delivery issue has been notable. 

According to an agency executive, “The past few weeks [following the ad-support tier’s launch], it has been okay.” 

According to the Digiday article, “the company [Netflix] could have avoided that initial situation altogether if it had had supplementary inventory to offer advertisers to make up for the viewership shortfalls immediately rather than needing to allow advertisers to take their money back in order to achieve their year-end reach goals.”

Disney is navigating that potential hiccup by unifying its ad tech stack behind Disney+ and Hulu to give it more flexibility in juggling advertiser demand.

For example, if Disney can’t deliver an ad on Disney+, it can move those ads to Hulu or ESPN+.
As one agency executive said, “What they are relying on is their ability, as a portfolio media company, to have their own safety net.” Other OTT platforms need to figure out a backup plan as well.

On the Horizon for Programmatic TV Advertising

The multiplex holds promise for both media platforms and media buyers.

For media platforms, programmatic TV allows for better integration across distribution channels, translating into a better experience for the consumer. 

For media buyers, the benefit is summarized by Google’s Rany Ng and Anish Kattukaran: It is data-driven and addressable. Media buyers can pinpoint ads based on not only demographics but keywords and potentially browsing history as well.

The opportunity for addressable TV advertising through OTT tech is hard to ignore. We see multiple media and telecommunication companies making moves toward the capability as a core part of their offerings.

In a time reserved for major broadcast and cable networks, data-driven TV advertising may become central to the conversation.

For more insights, sign up for MediaRadar’s blog here.

In 1989, Sony Corp. bought Columbia Pictures Entertainment Inc. for $3.4 billion.

Ten years later, Viacom Inc. announced a deal to buy CBS Corp.

In 2022, WarnerMedia and Discovery come together to form Warner Bros. Discovery.

The headlines always catch consumers’ attention, given that most acquisitions have entertainment implications.

The merger between WarnerMedia and Discovery is the perfect example.

With the swift stroke of a pen, two tremendous content catalogs joined forces, including household names like Harry Potter, CNN, HBO, and Cartoon Network.

But mergers and acquisitions have advertising implications, too, and brands need to remain aware of them.

The Shape of TV Mergers and Acquisitions in the 2020s

WarnerMedia and Discovery aren’t the only two household names that have made noise lately.

Let’s take a look at a few more of the mergers and acquisitions that have made headlines:

• Disney bought the rest of Hulu after taking a controlling stake in 2019
• AT&T and Discovery closed the WarnerMedia transaction
• Fox bought Tubi for $440 million
• Netflix bought Animal Logic, an animation studio

Go back a year, and you can add the CBS-Viacom merger to that list.

The rash of purchases comes as media companies fight to position themselves ahead of the competition.

For legacy players that have made hay in broadcast TV, mergers and acquisitions are part of the evolution required to fend off the decline in TV revenue. In fact, pay-TV revenue is expected to fall by $56 billion by 2025.

“There’s been a drastic change among legacy media company executives the last two years,” writes Alex Sherman at CNBC. “Their CEOs won’t say it publicly, but they’re saying it privately: The pay-TV bundle, the lifeblood of the U.S. media ecosystem for decades, is dying.”

While the pivot away from traditional TV is top of mind, the real forcing function is the streaming wars. As of December 2021, 85% of households in the U.S. had access to a video-streaming service.

Even more telling of streaming’s popularity is that the average household uses 4.7 services.

Each player mentioned above (and countless others) has a stake in the streaming war. From a consumer and advertising standpoint, mergers and acquisitions are part of their plan to win.

How the M&A Madness Impacts Advertisers

Mergers and acquisitions are a tactic to woo consumers. At the end of the day, content is king.

Consider this: Netflix’s Stranger Things generated 5.1 billion viewing minutes across the four seasons.

A study following the hit show’s third season found that about 51% of current Netflix users planned to watch Stranger Things. About 5% of consumers who didn’t subscribe to Netflix said they planned to so they can watch the show. Meanwhile, 13% of former subscribers said they planned to return to watch the show.

As every major media company uses M&As as a means to attract consumers, advertisers for some of the world’s biggest brands are paying attention. Content is king for consumers, but the subscription bases reign supreme for advertisers.

By 2026, 73% of the U.S. or more than 252 million people, will use OTT services, including Netflix, Hulu, Disney+, and HBO Max.

Each of these players is investing in ads.

Netflix is the most recent entrant to the ad-supported OTT world.

In November 2022, the longtime OTT king introduced ads. At the time of the announcement, a source said the company was asking for a $10 million minimum commitment in annual ad spending from agencies.

Fast forward a few months, and the success of Netflix ads is up in the air.

While company executives are excited, adding more than 7 million paid subscribers in Q4 2022 (after losing nearly a million earlier in the year), Netflix is apparently letting advertisers “take back their money” due to a failure to meet viewership expectations.

Still, Netflix’s subscription base is too big for advertisers to ignore. As Netflix irons out the kinks in its new advertising engine, ad dollars will continue to flow.

Other major streaming platforms, like Hulu, are also attracting ad dollars. In 2021, brands collectively spent more than $400 million on Hulu. Top advertisers included Comcast and Berkshire Hathaway.

It will be interesting to see what Disney does with Hulu from both a content and advertising standpoint now that it’s the sole owner of the streaming giant.

The Great Shake Up

The first act of the streaming wars is over. It ended when NBCU launched Peacock, which meant every major media company had a streaming service live.

Will new streaming services arrive in 2023? It’s hard to believe that any big ones will—at least big enough to compete with the major players.

Launches may not be on the horizon, but mergers and acquisitions are inevitable as these companies fight for market share.

As they do, advertisers must pay attention.

For more insights, sign up for MediaRadar’s blog here.

Streaming platforms, podcasts and social videos may be making the headlines, but more traditional TV advertising is far from dead. There’s a reason, after all, that a Super Bowl spot costs at least $175,000 per second. 

In this 2019 TV advertising recap, we look at which categories are spending the most on TV ads, who the top advertisers are and the new players (including DTC brands) entering the field. 

Digital advertising revenue may have surpassed TV revenue, but TV advertising is still a $70+ Billion industry.  

So what did TV advertising actually look like for 2019, especially compared to 2018? 

The biggest categories in TV advertising

First up: which categories advertise the most with traditional TV? Retail and finance took the top spots in both 2018 and 2019, with tech and pharma not far behind.

Year-over-year, we see retailers accounting for a larger share of dollars spent on TV ads, becoming the industry spending the most on TV in 2019. The retail industry jumped from a 12.8% share of TV ad spend in 2018 to a 14.5% share in 2019.

Diving deeper into the category, it was eCommerce retailers like Amazon, Wayfair and even Etsy that helped push the category higher (DTC players, as we’ll see below, also played a part).

Read More:
These Are the 5 New DTC Brands to Keep on Your Radar 

At the tail end of the categories was the home furnishings category, which accounted for less than 3 percent of TV advertising spend (to be fair, retailers like Wayfair walk the line). 

The biggest players in TV advertising 

This year, the top 10 TV advertisers spent nearly $10 billion on television ads. That’s almost 15 percent of the entire market. 

But we’ll be honest: there aren’t any surprises when it comes to the biggest spenders in TV advertising for 2019 when compared to 2018. Most of the big players remain the same year to year. Take a look. 

Looking at the top 10 advertisers of the year, we see that 6 of them were also in the top 10 last year. The 4 who fell out of the top 10 this year (Verizon, Disney, Pfizer, Comcast) all still still make the top 15 spenders list in 2019. 

It gets better: those new to the top 10 this year (Amazon, T-Mobile, Hyundai, and PepsiCo) were all in the top 20 last year. 

The new players in TV advertising 

Again, TV advertising is far from dead. Over 2,000 companies advertised on national TV for the first time this year — including DTC brands and those with a digital-first marketing focus. 

These companies collectively spent over $1B — a far cry from the $10 billion spent by just the top 10 spenders this year. 

Some notable examples of these new players include: 

• PostMates
• Robinhood 
• Essentia Water
• Mirror 

Faced with the possibility of being edged out by both quickly expanding media giants and streaming natives, Viacom and CBS announced that they will be reunited in an upcoming merger. 

The newly formed ViacomCBS does not come as a surprise, even as it signals some big changes for broadcasters and advertisers alike. For example, we alluded to the potential for a merger in our recent trend report aimed at TV advertising in 2019 versus 2018. 

“Viacom’s Paramount film studio and MTV and Nickelodeon cable networks will be added to the broadcast giant CBS,” writes Edmund Lee at The New York Times. It’s also a clear move to bolster streaming capabilities for both companies. “The deal will allow the company to invest more in streaming, which is the future of entertainment. CBS already has a thriving digital television service with original series.” At the same time, Viacom brings the extensive catalogues of Paramount, MTV and Nickelodeon. 

The result is a $30 billion media company, closely rivaling Disney and Comcast. 

How the Merger Impacts the TV Landscape

Back in May, we wrote on how the past year of mergers have dramatically transformed the TV landscape, pointing to the Viacom/CBS merger rumors as a sign of continuous change. 

“If the merger between Viacom and CBS goes through, the newly formed network would become the third largest player in the market, alongside Disney and Comcast NBCUniversal,” we wrote. “And it would push the newly formed Fox Corp, which is still holding its own despite selling most of its assets to Disney, right to the bottom.”

The conjecture has now come to pass. Using 2018 total TV ad revenue as a proxy for future earnings, the merger makes ViacomCBS the third largest player in the market for linear TV ad revenue. Post-merger, ViacomCBS will see 18 percent of the market revenue — third behind Comcast NBCUniversal (20 percent) and Disney (21 percent). 

Source: MediaRadar

What ViacomCBS’ Reunion Means for TV Ads

The ViacomCBS roster is huge, including all CBS channels, CBS Sports, Nickelodeon, Comedy Central, BET, and MTV — not to mention major film distributor Paramount.

This introduces both the possibility of new markets for advertisers and new opportunities for the networks’ ad sales teams. 

In 2018, Viacom channels collectively sold ad space to over 2,000 advertisers, while CBS owned channels sold to over 1,500. At the same time, the networks only had a 36 percent overlap in advertisers. The merged networks and media properties should give their ad sales teams much more inventory to sell to the two-thirds of advertisers who previously went with one and not the other. 

But that’s just linear TV space. The implications for streaming and over-the-top TV may be greater. Kelsey Sutton at AdWeek writes that the deal means ViacomCBS could emerge as a formidable streaming force. “When CBS and Viacom’s various streaming offerings come under one giant umbrella, the company will have about a half-dozen existing subscription and ad-supported services, some of which have been around for years and already boast millions of subscribers,” Sutton writes. 

The result is an already diversified company seemingly ready to take streaming’s major players head on.

Streaming and on-demand media with skippable, short ads mean that traditional broadcasters are searching for new ways to add value to their offerings. Turner, Viacom, NBCUniversal and Fox have all made announcements regarding their reduction in ad load.

Want more TV industry trends?
Our annual TV Trend Report is hot off the press!

“Whether it’s brands shifting from print to digital, or from direct to addressable, or vice versa, the industry is always shifting, often in ways that are difficult to forecast. Among the madness, however, television advertising has remained a consistent go-to for brands near the top of the economic food chain.”

~ A Year in Television: MediaRadar’s Overview of TV Advertising in 2018 and 2019

Words are one thing, but are TV commercials really getting shorter as promised?

Our data says yes.

MediaRadar Insight: Yes, TV Commercials Really Are Getting Shorter

MediaRadar’s recent trend report on TV advertising in 2018 and 2019 focused on comparing ad spend and trends from Q2 of 2018 through Q1 of 2019.

Outside of identifying TV’s top advertisers and new advertisers, the report identified one of the biggest takeaways as TV ads continuing to get shorter.

When looking at Q1 of 2019 versus Q1 of 2018, MediaRadar found that the average length of TV ads continues to go down, dropping 8 percent year-over-year. The trend is consistent with a few different mediums (such as YouTube).

In that same timespan, traditional broadcasting saw an 18 percent increase in the number of TV ads with a run-time of 15 seconds or less. These ads now make up just over 55 percent of all television ads, and the 15-second ad still remains by far the most popular ad length.

Furthermore, the 6-second ad, originally made famous by platforms like Snapchat and YouTube, saw a 36 percent YoY increase, though due to its young age still makes up less than 1 percent of all TV ads.

“To maintain revenue while trimming ads, networks must raise prices on the remaining spots,” writes Jeanine Poggi at AdAge. “Less commercial clutter seems like it should make ads more effective (and reduce the chance that viewers change the channel during breaks), but how much that’s worth is in debate.”

With the effectiveness of shorter ads still up for debate, what’s driving this shift?

Behind the Trend: Personal Primetime

The convergence of TV’s upfronts week and NewFronts (for digital media) makes the move toward shorter and fewer ads clear. Traditional broadcasting now has to compete with a format that puts short, skippable and personalized ads front and center.

If you weren’t convinced before, YouTube’s new Personal Primetime crystalizes the connection. “We can deliver personalized media in a way we never could before,” YouTube CEO Susan Wojcicki said at NewFronts.

Stephen Battaglio at The Los Angeles Times writes that the shorter ad formats in broadcast TV are networks’ way of avoiding viewers to commercial free, over-the-top television.

“The broadcast and cable networks that took in $19.7 billion in revenue for advanced sales of commercial time last year don’t want to see that happen,” writes Battaglio. “Many of the major entertainment cable networks have experienced double-digit declines as video content gets consumed to a greater degree on digital platforms… Airing fewer commercials could help reverse that trend.”

Is it a strategic move or a natural progression? Either way, broadcasters going in this direction will lead to fewer ads and shorter ads.

“[Digital] is just a better environment with a lighter ad load. We had to be honest with ourselves and say, ‘Knowing that, how do we figure out a way to make TV more like digital?’ We’re talking about something that has never been done before. You’ll be able to see one or two spots in the first 24 minutes of ‘This is Us,’ the No. 1 drama on TV.”

~ Mark Marshall, executive vice president for entertainment advertising sales, NBCUniversal

Networks are also offering less ads on the streaming platforms associated with their content — one episode of NBC’s “This is Us” has just seven minutes of ads, for example.

Whether or not the new ad format for linear TV works remains to be seen. But the shorter ads do seem to be driven by consumer demand, which points to a win/win scenario — as long as broadcasters can keep ad sales revenue up.

It’s important to stay on top of trends in TV advertising — who is advertising with whom? Why, and how? Understanding the current state of the television landscape is necessary to find out which upcoming opportunities shouldn’t be missed, how best to prepare, and how to maintain a competitive and desirable edge.

MediaRadar will release its annual TV Trend Report later this month. Ahead of the full report, we put together the most critical insight for publishers and media companies — including the biggest TV advertisers with RFPs coming up in the next few months.

Top TV Advertisers With Upcoming RFPs

The most important part of the upcoming report will be an overview of the top TV advertisers — and how they are spending their ad dollars. The top TV advertisers with the largest ad spend that have upcoming RFPs between now and July include:

• Procter & Gamble: 12 RFPs predicted in the next 3 months.
• Berkshire Hathaway: 4 RFPs predicted in next 3 months.
• Pfizer: 6 RFPs predicted in next 3 months.

All three of these companies spent over $1 billion each on TV advertising in 2018.

Insight From MediaRadar’s TV Trend Report

In the past year, there have been a few noteworthy changes in the product categories investing in TV advertising. Tobacco vaporizer and pet-related companies increased their TV ad spend the most, whereas travel and non-alcoholic beverage companies decreased their investments more than any other category.

Over 2,000 new advertisers entered the TV ad market this year — apparel companies highest among them. Apparel TV advertising hit an all-time high, making up 13% of all dollars spent on TV advertising throughout the past 12 months.

In the last 12 months, the top five product categories for TV advertisers included:

1. Retail: $8.7 billion
2. Finance & Real Estate: $7.9 billion
3. Tech: $7.4 billion
4. Pharma: $6.6 billion
5. Auto: $6 billion

Among each of those product categories are household names like Target, Geico, T-Mobile, Pfizer and Toyota.

The full report, set to be released later this month, readers can expect further insight into major events of Q1 2019, shifting TV ad length, how direct-to-consumer brands are entering the TV advertising market, and the impact of the latest round of mergers and acquisitions on the national TV landscape.