Who among us hasn’t binged 12 hours of Netflix? Whether you care to confess it or not, there’s no question that streaming services have permeated the viewing culture, fueled in large part by the pandemic. By June 2020, 48% of US online adults had subscribed to at least one streaming service. And there they’ve stayed. Now, over two-thirds of US households have more than one subscription to a video-on-demand (SVOD) service.
Advertisers are taking note of this accelerated growth in streaming services — as well as the opportunities they open. Given the volatility and unpredictability of the current economic climate, marketers are more focused than ever on measuring ROI to make sure they’re getting the most from their ad spends. The question is: is streaming the best place to spend those marketing dollars? Let’s dive into that.
Navigating the World — and Vocabulary — of Streaming
But before we do, it’s probably worth clarifying some key terminology. Most marketers are already familiar with traditional or linear TV, in which content is delivered via satellite or cable. Then there’s CTV (connected TV), also known as traditional TV viewing, which refers to basically any home entertainment device that is connected to or embedded in a television that supports video content streaming. Think Apple TV, Roku, or PlayStation.
The various types of media content that users stream over the internet on CTVs is referred to as OTT (over-the-top), because it’s delivered over the top of cable, satellite, and broadcast TV systems. OTT can be served up on a TV, but also on a smartphone, tablet, or computer.
While linear TV advertising is still the go-to platform for many marketers, streaming ads are quickly gaining ground. In the third quarter of 2022, ad spends on connected TV had gone up almost 40% year-over-year across all product categories — reaching $926 million, compared to $664 million last year.
Why the increase? Simple: CTV ads demonstrably work. In one recent survey, 43% of marketers reported spending more on CTV because it supports their performance marketing goals. In other words, it delivers measurable results and achieves goals. Because CTV is quickly becoming ubiquitous, its reach is also alluring to marketers. Around 85% of households today have CTV, which many of them use to view ad-supported streaming content.
Which brings us to our next term: streaming. Streaming is not to be confused with TV, or even CTV. Rather, streaming refers to the content itself that is viewed on devices such as, desktop, laptop, mobile and tablet — reaching audiences wherever they consume media, regardless of platform. As such, it’s important to remember that streaming content isn’t confined to TV.
In fact, data indicates that 59% of US adults stream videos on connected devices other than TVs, including mobile phones, desktop computers, tablets, and eReaders. Half of adults watch video on their phones every day, and 83% of young adults (ages 18 to 34) are most likely to watch streaming content on non-TV devices.
Streaming viewing is so widespread now, that in 2022 it surpassed linear TV viewing for the first time, with a leading 34.7% share followed by cable at 34.4% and broadcast at 21.6%. That’s a whopping 22.6% jump year over year.
So Are Streaming Ads Where It’s At?
Many streaming services are supported by advertising: the user enjoys free or low-cost access to their streaming content in exchange for being exposed to ads. Around 37 million internet-connected US households use at least one ad-supported streaming service. And these households are paying attention to the ads they see when streaming their content. In one study, 23% of users of ad-supported streaming services reported that they frequently click on ads, with around the same percentage saying that they often buy products or services they see advertised.
Along with a captive, receptive, and click-ready audience, streaming is prime for optimization and precise targeting. The explosion of ad-supported streaming has enabled marketers to fine-tune ad spends based on a wealth of data to meet changing consumer preferences and local market dynamics. This in turn allows them to make sure their ad dollars are reaching the right audiences and drive ROI. In addition, streaming ad spends can be directly linked to business results — for example, an increase in sales.
It gets even better. Marketers can also gauge the effectiveness of different streaming ad campaigns with different audience segments — Generation Z vs. Millennials, for instance. This data can then be leveraged to determine which ads are more successful, when and where to run certain ads, and which ads need more fine-tuning.
Linear TV and Streaming: You Can’t Have One without the Other
All of which raises the question: Given the rise of streaming services, should you invest your ad dollars in connected TV, or stick with good ol’ fashioned linear TV? The answer is: both. Linear TV and streaming are the ideal complement to each other. And if you want to reach the full landscape of consumers wherever they are and whatever they’re viewing, you’ll need to have a presence on both.
While streaming shows no signs of slowing, streaming ad buys still play a back-seat role to linear TV ad buys. According to a recent survey, more than 51% of advertisers plan their linear TV buys first, followed by a secondary CTV ad buy. And only 15% of marketers buy their CTV media before they buy linear TV ads.
Increasingly, however, marketers are realizing that they should be giving equal weight to both CTV and linear TV in their ad spends. In the afore-mentioned survey, 34% of marketers say they plan linear TV and CTV spends together, to support each other. At River Direct, we see the wisdom in this strategy.
For starters, linear TV isn’t going away — by any stretch of the imagination. Even with the growth in streaming, over 60 million US households still have pay TV. And there’s no question that linear TV remains a giant in terms of attracting massive audiences. So, there’s a very strong case to be made for continuing to invest in linear TV media buys.
These days, most US households have both a linear pay TV subscription and a streaming one, which means they’re getting their content through streaming and traditional means. What’s more, viewers spend different amounts of time watching either linear TV or streaming content, depending on the individual and the circumstances. The Big Game or a celebrity-studded award show will drive linear TV viewership through the roof, while the much-anticipated season finale of a beloved Hulu show will send those streaming numbers rocketing. Invest too heavily on one over the other, and you’re likely to miss out on a significant number of eyeballs either way.
Performance Marketing Plus Lower Costs? Yes Please.
This hybrid viewing behavior is likely to stick around for the foreseeable future, and marketers are advised to adapt accordingly. Because hybrid viewing patterns can be complex, fluctuating, and hard to predict, a unified approach to linear TV and streaming ad buys is the best way to expand your reach, maximize your ROI, and make sure you’re not missing any opportunities. Finding the right partner to help you create that effective mix is key.
Whether you invest in linear, streaming, or a blend of both, performance marketing makes sense. At River Direct, we’ve perfected the art (and science) of performance marketing to deliver sales and conversions — with each linear TV channel you advertise on, down to the airdate purchased. Now we’re applying the same focus on performance marketing in our recently launched streaming division.
In addition to ensuring measurable results, we also have a strategy for lowering the costs of streaming ads. Streaming is typically purchased on a CPM (cost per thousand) impression basis — referring to the amount it costs to purchase a thousand opportunities to expose your ad to viewers. While many advertisers use costly DSP (demand-side platforms) to manage advertising across multiple networks, at River Direct we do things a little differently.
In addition to using a DSP to execute streaming buys, we create relationships and IO (insertion order) deals for ad placements directly with publishers to significantly drive down CPM rates. For a taste of what those savings look like: a DSP-only streaming ad buy may run between $30 and $40, while our blended or direct IO deal on a streaming buy costs in the low teens or even single-digit range. A lower price point means you get more impressions and exposure for your ad, which in turn increases chances of success for your campaign.
Now here comes the best part: We take this lower-cost/high-impression streaming strategy and combine it with our traditional linear TV performance-based strategy to expand your reach across the entire landscape of TV and online video audiences. So not only are we unifying your linear TV and streaming strategies, we’re maximizing the ROI for each. Win win.
If you’re wondering whether you need to invest more in streaming or better balance your marketing mix, let’s talk. If you’re interested in staying up to date all on things direct-to-consumer marketing, sign up for our Current newsletter.