After a number of high profile partnerships have been announced, the future of advertising in the streaming space is about to get very interesting. Recent announcements by Netflix, Disney, and NBCUniversal highlight the advertising ambitions for each of these streaming services, as well as new opportunities for companies looking to try and take ad spend market share away from the likes of Google and Amazon.
Each of these recent announcements highlight a number of key approaches that companies are making, hinting at underlying priorities, and even a market leader looking to partner with a once-dominant partner. Google’s ownership of YouTube and Amazon’s Prime Video are key challengers in the streaming wars, but each of these help to highlight a market that is ready to fight to try and take ad revenue away from the likes of Google and Amazon.
Yahoo And NBCUniversal
Late last year, it was announced that NBCUniversal would partner with Yahoo to sell their Advertising-based Video On Demand (AVOD) inventory, namely Peacock. While Peacock’s market penetration is limited, especially compared to giants like Netflix, Amazon Prime Video, and Disney+, this is still a big move for NBCUniversal, as it represents the first time Peacock has explored programmatic capabilities.
Peacock is only available in select markets but is looking to expand in time. There are currently three tiers of subscription options available, with the Free and Premium tiers coming with ads, while the highest level, Premium Plus, contains no ads though costs twice as much as the Premium tier. This means that this is a high chance to reach unique audiences across Peacock. Yahoo has highlighted a launch campaign they ran for a telecom client in the US on Peacock, finding that 92% of audiences reached on Peacock were not reached through linear TV.
Microsoft And Netflix Partnership – A Perfect Match
Microsoft is looking to build out its advertising arm again, after a number of years of struggle. Despite being the fourth largest ad seller in the US, behind Google, Meta, and Amazon, Microsoft’s ad revenue last year represented less than a third of that of their closest competitor, Amazon.
They are, however, looking to build on top of their existing infrastructure, starting with the purchase of Xandr earlier this year. Xandr, formally known as AppNexus, provides Microsoft with an ad buying and selling platform, putting it in line with the other big ad sellers in the market.
This is why their recent announcement of a partnership with Netflix makes perfect sense for both parties involved. Microsoft acquires a highly desired inventory source to help solidify their position in the ad sales market. Meanwhile, Netflix can maintain independence, importantly not giving away any key insights and data to their competitors, namely Amazon and Google.
Disney Takes A Slightly Different Approach
Disney and The Trade Desk (TTD) announced that Disney would look to use TTD’s Unified ID 2.0 to help inform Disney’s audience targeting capabilities. Unified ID 2.0 is an evolution of The Trade Desk’s identity solution. The purpose of this is to create a free to use, secure, open source piece of code designed to function interoperably everywhere. The solution is designed to help advertisers identify and target key audiences, particularly first party audiences, in a similar way that they are currently able to through cookies. This solution, however, uses far more advanced tech than cookies, meaning it is better equipped for future based targeting capabilities.
Disney is looking to leverage this tech to feed into their Audience Graph, a solution that looks to help better understand people using Disney’s media properties, such as Disney+, Hulu, and ESPN. It should not be underestimated how much data Disney currently owns, with Disney reportedly seeing 218 million monthly unique visitors in the US alone. When factoring in that Disney+ has become one of the biggest streaming services in the world, there are endless opportunities available to them if they can curate their data successfully.
Disney does not currently offer an ad-supported tier of Disney+, though they have announced they will release an ad-supported offering in late 2022 in the US, and internationally in 2023. Of course, they do already have this offering for Hulu, where Hulu is available. This partnership works twofold for Disney. Firstly, it better positions them to provide an effective ad-supported offering using existing technology. Secondly, it allows for improved targetability across Disney’s owned and operated channels. This means that clients looking to target their first party audiences will be able to work with Disney and TTD to match these audiences.
What Does This All Mean For Consumers?
Subscription fatigue is becoming a real issue for a number of people. With an endless list of ever-growing streaming services, amongst other subscription services, knowing which to get and paying for all of them is getting out of hand for many people. By offering a free tier, many streaming services are recognising this and looking to provide consumers with an easier and cheaper way to watch the content they want. The caveat to this, however, is that consumers will have to watch ads again.
This could help address some subscription fatigue, while also opening up the possibility of increasing the number of people using each of the streaming services. This works for both companies and consumers.
The underlying intrigue is how the streaming services have partnered with tech companies that are looking to try and take market share from the major players like Google and Amazon, who remain dominant in their owned spaces. As streaming has solidified its place as a quotidian action, there are changes coming in the way people will interact with them. How will consumers react when all major streaming platforms offer a cheaper, or free, version of the service with ads? Time will tell on this of course, but one thing is for certain, the race to deliver ad supported content at scale is going to be a serious battle, not just for the streaming services but also tech companies.