Advertising on Streaming Services

A lot of money is going into advertising on streaming but there are still many challenges to overcome to make it an effective place to advertise.

Connected-TV advertising is growing although it remains relatively small compared to the ~$70 billion that gets spent on traditional TV advertising in the U.S. every year. Ad spending on streaming TV will total almost $8 billion in the U.S. this year, up from nearly $6.4 billion in 2019, according to eMarketer.

Despite Netlix, which is ad-free being one of the most popular streaming providers, ad-supported offerings from providers including Amazon.com Inc., Roku Inc. and TV network programmers have been attracting more viewers.

One of the challenges relates to the fact that the media-buying landscape is fragmented which can result in viewers repeatedly seeing the same ad. Marketers buy ads in streaming TV from a host of providers, including app owners like TV networks, vendors that connect ad buyers with sellers, and device makers with their own operating systems such as Roku, Amazon and Vizio Inc.

However the range of options available also has some limitations. Roku, Amazon and Hulu, for example, each sell ads and have their own audience data. The issue is that it is hard for advertisers to track or target viewers from app to app, or from one operating system to the next. Ad inventory bought from multiple sellers can often show up in the same app.

The lack of transparency has been one of the reasons why not more money has been spent on streaming advertising. Advertisers entering the medium of streaming TV want better measurement and targeting capabilities than currently available. Additional transparency would come at the cost of user privacy, which could create a backlash and would need to be carefully considered for streaming to avoid the same privacy problems other digital media are facing.