The CTV Ad Market is About to Get Weird

What's holding big media back from being just like the walled gardens?

Just a few short years ago, ad-supported streaming was considered tiny.

Most streaming occurred on ad-free services like Netflix, Hulu, and maybe HBO. When various ad-supported streaming services rolled out (like HBO Max in 2021, or Disney+ the following year ), there was talk of inventory shortages, and sky high prices.

Times have changed, rapidly.

Talking to folks this week at various Advertising Week events in New York, it seems we’ve gone from scarcity to an oversupply of CTV almost overnight. That change appears due to a few major factors:

• Amazon turned on ads as a default for Prime members earlier this year

• YouTube now accounts for 10% of TV, adding tons of inventory into the mix (if you count YouTube as TV that is, which continues to be debated by some)

• The proliferation of FASTs like Tubi

Today, the discussion among media buyers is about how supply is outstripping demand, and a soft market. Which is somewhat hard to reconcile with all the forecasts about just how “red hot” CTV spending is.

Well, it sure looks like things are about to get softer, as Amazon announced last week that it plans to up its ad load in 2025. Clearly, Amazon enjoyed a great upfront haul, and feel as though they’ve gotten away with the Prime ad switcheroo - so they might as well see how far they can push things with viewers.

Think they’ll be the only ones? While I don’t anticipate that the Disney+s and Peacocks of the world can fully abandon their ‘lighter streaming ad load’ pledges and go back to the 20+ minutes of ads per hour like the basic cable days. But thanks to Amazon, these services will likely feel they’ve been given permission to push the ad load threshold. As one executive said to me this week, it’s just smart business. “Know anyone that’s making money in streaming?” he said.

So a newly soft market promises to get softer, while the medium likely gets tolerable for consumers.

You might think this is the perfect moment for TV to do what it’s been talking about for years - ‘let’s widen the pool of advertisers we cater to.’ It’s why you see so many media companies rolling out self-serve platforms aimed at replicating the Google and Facebook ad buying simplicity . 

Yet a world with a bunch of disparate, unique programmatic TV platforms is not an easy task for many small and mid-sized business to navigate, which is why Blockgraph (Charter, Paramount and Comcast’s joint venture), is aiming at building a centralized hub for local advertisers, CEO Jason Manningham told me.

“They are more brand ready for this than people realize,” he said.

I also met an ad tech firm, Vibe, which has a similar goal of wants to build an interface that cuts across CTV. They join TVScientific, which has sought to bring direct to consumer and search brands to TV advertising over the past few years.

By now, you might think TV would be off to the races with its long tail push. Not so, according to Vibe co-founder and CEO Arthur Querou during an Advertising Week session on Tuesday.

“Ad tech, you need to wake the fuck up,” he said. “You’re just leaving that space to Google, to Facebook, to Amazon.”

So what’s the problem? Well:

• For one, TV networks are still hesitant to open too much ad inventory to third party players. They want a smaller programmatic supply chain, not a bigger one.

• Most big TV networks and streamers are able to sell large chunks of streaming ad space as part of big upfront deals at high prices ($30 to $50 CPMs). Do they want to mess with those agreements, and risk those rates, to cater to a bunch of mid-sized brands with multi-thousand-dollar TV budgets - even if they someday add up to billions?

• Plus, many streaming ad companies are new to being in the direct-to-consumer space today. They only want to go so far when it come to sharing data that smaller advertisers and DTC brands might need to execute on.

“Performance advertisers represent a massive spend that is not yet flowing into TV,” said Jason Fairchild, founder of TVScientific. “The big opportunity is to get social advertisers over to CTV. There’s literally 9 million of them. Even the top 5% would represent 450,000 net new advertisers to television, representing $100 billion in potential budgets.”

But before we get there, there’s a good chance that CTV ramps up its ad clutter -adding to consumer frustrations, while still mostly catering to the top 200-400 advertisers. If pricing doesn’t budge thanks to market forces, we might see some consumers balk at AVOD overall.

It’s going to be weird.

Living in Ryan’s World

I talked to Julia Moonves, SVP of Advertising Sales and Brand Partnerships at pocket.watch on my podcast this week about how the kids-focused media company has sought to turn YouTube talent like Ryan’s World into multimedia stars.

One recent area of focus has been taking proven YouTube content and repackaging it as TV programming (which other digital natives like Tastemade have espoused).

“The channels that we partner with, have access to all of their YouTube libraries,” said Moonves. “So we create content that can then be distributed on all these major platforms. We're on Hulu, Peacock, Pluto, Samsung TV +, Roku.”

“We have an entire team that's dedicated to, curating, enrich and packaging. The curating is identifying the creators that we want to partner with, signing them, then curating their library, finding what's the best stuff on here? What do people like watching the most? What's most engaging? What's good for kids to be consuming? And then pulling those videos and the basically stripping them of anything that feels overly YouTubey…they we can package them into 11-minute and 22-minute episodes.”

Check out the full episode here: