Data suggests that while internet use is popular, television remains a significant part of daily life. Nearly 5.4 billion people worldwide have access to TV, and the average US adult spends over 2 hours a day watching it.
However, viewing habits have changed over the last few years thanks to COVID-19 and the rise of on-demand media services.
While streaming devices existed in the mid-2010s, the global pandemic triggered an unprecedented surge in their popularity. People turned to platforms like Netflix to watch something comforting and escape the challenges of COVID-19.
Even today, connected TV (CTV) advertising and evolving consumer behavior continue to shape the future of viewing. In this blog, we’ll delve deeper into the evolution of streaming ads and explore the exciting opportunities they present.
Let’s get started.
The origin of streaming advertising
Tracing the origins of streamed advertising television can be tricky because what we are talking about here is over 80 years old. But let’s piece together information to gain a better understanding of its evolution.
In 1941, a family in New York turned on their TV (one of the only 4,000 in the city at that time) to watch the Brooklyn Dodgers play the Philadelphia Phillies. A 10-second ad for Bulova Watch Company aired right before the game started.
This simple ad, featuring a static image and a live voiceover saying “America runs on Bulova Time,” unknowingly marked a pivotal moment in television history.
Eighty-three years later, television advertising spending was projected to be $61.3 billion on US broadcast and cable TV. Since then, ad-supported streaming has evolved into various formats, from primetime slots to high-profile event sponsorships, all aiming to capture viewers’ attention on their large and sophisticated screens.
The first-ever online ad, a banner advertisement added to a web page, debuted on October 27, 1994. This ad was posted as a precursor to today’s tech site, Wired. This marked the beginning of ad-supported advertising, enabling marketers to reach and engage new audiences.
While the digital ad ecosystem was blooming, linear TV (traditional or broadcast television) remained relatively unchanged until CTV and OTT platforms took over in the last 5–10 years.
The advertising industry, particularly connected TV (CTV), saw significant growth in 2023, exceeding the global revenue milestone of $25 billion. Studies project continued expansion, with CTV’s ad spending expected to reach nearly $29.29 billion in 2024 and climb to $36.86 billion by 2026.
Although Hulu, Netflix, and Amazon have existed for decades, it’s undeniable that the year 2020–21 saw the emergence of new players in the market. During this period, subscription-led over-the-top (OTT) and subscription video-on-demand (SVOD) platforms witnessed a spike in paid subscribers.
Advertising-based video-on-demand (AVOD) platforms struggled to monetize their viewership growth during the lockdown due to a depressed ad market.
Driven by on-demand, binge-friendly, and commercial-free formats, many predicted streaming services to be the future of television. However, the rise of free advertising-supported streaming television (FAST) services has brought us full circle, taking us back to linear, passive, and ad-supported channels.
Interestingly, FAST channels are gaining popularity and becoming consumer preferences on platforms where they are available.
How do streaming ads work?
Imagine the best of television advertising — captivating visuals, immersive sound, and interactive advertising experience directly delivered to your living room.
Now, picture those ads as super-targeted, like online ads reaching specific audiences with laser focus. That’s the transformative power of CTV advertising.
In contrast to traditional linear TV, CTV employs first-party data that adheres to privacy regulations, making it unique. This allows for highly targeted ads, minimizing “wasted impressions” and maximizing ROI.
Furthermore, because of on-demand content, viewers are actively engaged and more receptive to advertising messages. This creates a powerful platform for impactful brand storytelling.
Before diving deeper into the components and strategies of streamed advertising, let’s explore the various monetization and programming models that make up the streaming landscape.
The first model is SVOD services, which you’re probably familiar with. For those unfamiliar, it’s the popular monetization model for streaming platforms like Netflix, Amazon Prime, and Disney+.
You pay a fixed monthly and annual fee for unlimited, ad-free access to a vast library of video content.
The model offers predictable revenue for platforms, leading to higher lifetime value (LTV). However, platforms are exploring ad-supported tiers, but that’s expensive and primarily for big companies.
The second model is FAST. Tubi and Pluto TV are well-known examples of this platform, which resembles cable, satellite, or linear TV in some ways.
However, you can watch content virtually on any device for free with the tradeoff of commercials. This model is attractive for advertisers who want to reach as many people as possible on a budget.
Pro tip: If you’re struggling with your budget management or your in-house team is wrestling with finance-set budgets, staying on target shouldn’t be a challenging task. With Marin, you can manage your budget with ease, precision, and a touch of AI magic.
How do advertisers buy ads on CTV?
Here are two prominent ways in which advertisers can buy ads on CTV.
1. Direct Deals
Here, the advertisers strike a deal directly with a channel like Tubi or Hulu to have their ad shown there. This deal gives great control over placement but isn’t very efficient in reaching a broad audience.
2. Programmatic Buying
These platforms help you connect a vast selection of streaming channels at once so that you can target specific audiences with ease and adjust your budget easily for maximum impact.
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Why are streaming ads so successful?
CTV is booming, and it’s widely considered a huge success. Advertisers particularly love it because it helps them:
- Safeguard their brand image while ensuring quality content.
- Reach their target audience.
- Personalize ad experiences.
Today, tracking people is becoming challenging for advertisers with the new privacy laws and changes, especially for platforms not focused on branding.
However, CTV advertising platforms address this issue by:
- Leveraging real-world information like location, purchases, and memberships to create detailed profiles of viewers, all while following privacy rules.
- Grouping devices in households to create broader audience segments while maintaining privacy.
Furthermore, through programmatic technology and targeting data, advertisers can:
- Measure their effectiveness (also known as ROI).
- Understand their frequency levels.
- Learn who sees their ads.
All of the above attract new companies to CTV advertising.
Also, today, customers expect personalization. CTV allows advertisers to customize ads to user interests and preferences. It’s similar to what they see on websites and social media.
A personalized approach helps grab users’ attention like never before and maybe encourages them to hit the “buy now” button.
But how does this personalization work? The answer is programmatic advertising.
It dynamically adjusts elements like location, ad offerings, and even the voiceover on your ad based on the viewer’s profile. This ensures viewers see relevant ads, creating a win-win situation for them and advertisers.
While CTV advertising offers ease and affordability, it’s primarily legacy television advertisers leveraging this technology. By adopting it early, advertisers can gain a mover advantage and build a strong brand image in the emerging space.
5 Key trends shaping the future of streaming services in 2024
Here are a few trends that’ll transform the future of streaming services in 2024 and beyond
1. Hyper-Personalization
The rising data availability and AI capabilities will help CTV advertisers look beyond basic demographics. They can now personalize ads based on the following:
- Real-time behavior
- Purchase history
- Buying behavior
- Viewing habits
As a result, this will help them boost engagement and ROI.
2. Interactive Ads
CTV ads will become more interactive as viewers become accustomed to interactive experiences. It’ll lead to the rise of:
- Shoppable ads, where users can click on the ads and make direct purchases without leaving the app
- Interactive storylines that respond to viewer choices
- Polls and quizzes to boost engagement
3. Effective Measurement
Measurement of CTV ads and their effectiveness will evolve in 2024.
Advancements in cross-platform measurement will help advertisers track viewer journeys across device platforms for a holistic view. This will paint an accurate picture of the true impact of CTV campaigns.
4. AI-Powered Creativity and Optimization
With the emergence of tools such as AI Email Writers, it's now much easier to tackle all marketing avenues, streaming ads included. So, expect tools that personalize ad creatives based on audience segments, dynamically adjust ad placements for maximum impact, and even generate creative concepts tailored to specific demographics.
5. Privacy-Compliant Solutions
With rising user privacy concerns, advertisers will have to look out for privacy-compliant solutions. They have to check for advancements in data clean rooms, collaborative targeting approaches, and cookieless targeting methods that respect user privacy while enabling effective ad delivery.
Wrapping up
Navigating the CTV ad journey requires a strategic approach. Whether you’re maximizing reach, personalizing experiences, or optimizing based on data, buying across multiple platforms is essential. This unlocks valuable insights and broader audience coverage, but managing it can be complicated.
That’s where solutions like Marin come in. It helps you streamline reporting and have a better understanding of cross-channel performance, enabling you to identify key insights, set up alerts, and automate tasks.
