Three Ways Streaming Will Change the Digital Advertising Industry


More and more traditional broadcasters are entering the streaming space – with varying degrees of success. And yet, even before the COVID-19 pandemic sent streaming adoption skyward, industry leaders were subscription fatigue warning. There’s been a lot of talk about public breaking points for racking up subscriptions to new services. We are seeing signs that when it comes to video streaming platforms, they are anticipating this breaking point and developing new ad-supported options for audiences who want the freedom to participate in a variety of platform offerings.

These developments are sure to be a game-changer for streaming platforms and their advertisers. Ad-supported video needs technology to support it in turn. And it needs to incentivize marketers to spend. It’s time to take a look at the changes to the streaming business model and how the platforms and their partners will win.

A dual-subscription/ad-supported model will look like linear – with technology at its heart.

In the moves made in recent months by some of the biggest names in streaming, we are seeing a repeat of history. Disney+, YouTube television, and Amazon have all announced that they are rolling out ad-supported versions of their subscription services. This dual-subscription/ad-supported revenue model, with the same high-quality content delivered both ways, is very similar to the linear delivery model. And this model will play a prominent role when these platforms join the ad-supported fray. This is, after all, in line with the flexibility viewers want – Amazon said it was simply following the public• Look to ad-supported options.

Ultimately, these big names in the ad-supported model are pushing to reinvent digital video distribution. We are going to see a bifurcation with video providers – those who can manage their advertising business with in-house technology and those who will rely on a number of intermediaries to manage their technology stack. The latter we have seen more often with legacy media companies. The former is harder to build, and in the past was largely the domain of Big Tech companies that also offered streaming services. But that bifurcation won’t be as neat and orderly as the dual ad/subscription model will take off in the next two years. Disney gave us an example of where ad-supported streaming could go: the company is using its tech stack in conjunction with Hulu’s ad server. For a media company with lots of family-friendly content, having such control over its advertising technology would be a boon to complying with privacy and other unique concerns its business faces in advertising. Controlling the technology stack is also important for delivering unique, platform-specific ad experiences, as we see with YouTube’s skippable ads, for example.

Sports programming will be the canary in the coal mine to gauge the technology’s effectiveness.

Through the emergence of this dual economic model, sport will prove to be the inflection point. It’s not just that broadcasters have historically had an edge in the sports market, and that Amazon and Apple are making strong entries there. It’s that the sport is really testing the breadth of video streaming. For a Big Tech company, professional sports are a historical case study in the sustainability of their technology.

Take the case of Amazon broadcasting football (soccer) from the British Premier League. An Arsenal/Manchester United match in December recorded 4 million simultaneous streaming views in the UK. That’s a very large number. After this point, a number of ad tech features start to work less well, including bidding and real-time measurement. keep in mind Super Bowl 2022 recorded 11 million streaming views in the USA. The goal for a media company is to have technology powerful enough to serve an audience on a similar scale. Disabling ad technology features to support content and video distribution is not a sustainable option.

Targeting and measurement will bring “TV” as we know it closer to digital campaigns.

With this audience scale and the ad technology that can support it, we’ll see an acceleration in the tendency for marketers to think about video streaming the same way they’ve long thought about digital signage. For traditional broadcast networks and digital native streaming platforms, digital video allows marketers and media buyers to target broad or very specific audiences and effectively measure campaign KPIs. And marketers welcome these changes – they create new opportunities to reach highly engaged audiences through, for example, direct-to-consumer (DTC) or performance campaigns. Streaming enables data-driven buying to reach specific audiences (regions, demographics, etc.) and more effectively display ROI by connecting ad exposure to KPIs and results. More ad spend is shifting from linear to streaming, and the ability to measure ROI will only increase spending and reinforce the imperative that streaming companies invest in their technology stacks.

As high-quality streaming video continues to proliferate and its audience grows, traditional broadcast networks and digital pure players in the market may not have the obvious advantages and disadvantages one would expect. It’s not about new business models versus older models. Realistically, it’s about how each streaming company understands not only the value of their content and audience, but also the strength and utility of their technology. The vehicle is only worth what is under the hood.

Written by Tal Chalozin, CTO and co-founder of Innovid


Comments are closed.