Ad Spending On Six Major Streaming Services Declines by 8%

In a digital content-dominated landscape, the streaming industry has been a beacon of innovation, offering viewers a plethora of options and flexibility.

However, the recent advertising slump has cast a shadow even on the streaming giants, impacting their revenue streams. According to MediaRadar, ad spending on six major streaming services, including Discovery Plus, Hulu, Max, Paramount Plus, Peacock, and Pluto TV, witnessed an 8% decline, totaling $1.07 billion from January to October this year compared to the same period last year.

Once seen as immune to the advertising woes faced by traditional TV networks, streaming platforms are now grappling with some challenges. Todd Krizelman, CEO of MediaRadar, notes, “Streaming platforms are confronting steep hurdles around ballooning content expenses, password sharing dilution, and an uncertain economic climate. These factors are fueling downstream subscriber and advertising adversities across the industry.”

One notable factor contributing to the decline in ad spending is the absence of industry heavyweights Netflix and Disney Plus from MediaRadar’s data. Fox’s Tubi, Roku, and smart-TV makers are also not included, suggesting that the overall impact on the streaming ad market may be even more substantial.

MediaRadar’s data highlights the significant role played by advertisers in specific product categories. Retail, restaurants, medical & pharma, finance, and tech together represented nearly half the ad dollars spent on streaming platforms. The finance sector, represented by insurance giants like Geico, State Farm, and Progressive, notably reduced streaming spending by 74% to $32.5 million from $123 million a year ago.

In contrast, quick-service restaurants increased their streaming ad spending by 39%, with major brands like McDonald’s, Taco Bell, and Subway leading the charge. Krizelman suggests that “quick-service restaurants are making a strategic move by advertising heavily on streaming platforms,” capitalizing on the fact that viewers at home are more likely to respond to immediate prompts for food orders.

Pharmaceutical companies also upped their streaming ad spending by 56%, demonstrating a notable increase in the industry’s confidence in the effectiveness of streaming platforms as advertising channels.

While retail and tech sectors reduced their spending on streaming platforms, they remained significant advertisers on specific platforms. Retail accounted for 13% of the expenditure on Hulu and 12% on Pluto TV, while tech companies constituted 19% of spending on Max, with leading spenders like T-Mobile and Verizon on Paramount Plus.

Despite its recent challenges, the streaming ad market still holds promise, with the six major platforms analyzed by MediaRadar accounting for over $1 billion in ad spend from January to October 2023. As the industry navigates these challenges, it remains to be seen how streaming services will adapt and innovate to secure their positions in the evolving digital advertising landscape.

Source: Next TV