Streaming claimed the largest share of U.S. TV viewing in July 2022, according to Nielsen — a first after four consecutive months of hitting new viewership highs. What’s more, Americans have been adopting ad-supported streaming services at a faster rate than purely subscription-based options: The number of U.S. homes streaming ad-supported streaming services increased 29% in 2022 versus a 21% increase in the same period for non-ad subscription-based streaming services, according to Comscore’s June 2022 State of Streaming report.

To appeal to brands and consumers alike, the top ad-supported streaming services offer a variety of plans and pricing, device availability, ad and software innovations, and ad targeting capabilities, all in the hopes of winning advertisers’ dollars and viewers’ attention. 

In this second installment of our two-part series on ad-supported streaming services, we dive deep into the results of Digiday’s recent survey of brands and agencies to analyze how advertisers’ preferences match up with the platforms’ offerings. We also examine challenges advertisers face when placing ads on ad-supported streaming services and how they measure campaign success on the platforms, and we provide a guide to which platforms are right for key advertiser needs. 

Digiday identified the top-earning ad-supported streaming services by 2022 ad revenue and also included other popular platforms selected by the Digiday editorial team for their prominence. Here are those platforms in alphabetical order: 

• Amazon Freevee
• Discovery+
• Disney+ Basic with Ads [launched December 2022]
• Hulu
• HBO Max (Ads) [transitioning to Max on May 23]
• Netflix Standard with Ads [launched as Netflix Basic with Ads, November 2022]
• Paramount+
• Peacock
• Pluto TV
• Samsung TV Plus
• The Roku Channel
• Tubi
• YouTube

Digiday surveyed the 13 ad-supported streaming platforms for basic data, including plans and pricing, launch date, device availability, audience size, and ad software. Digiday updated data for platforms that did not provide updates when possible based on available information. 

Digiday interviewed executives at Hulu, Peacock, The Roku Channel, Tubi and YouTube about their platforms’ ad offerings and recent innovations. 

Digiday fielded a survey in February to 49 brands and agencies on their streaming platform buying behaviors and preferences. Netflix Standard with Ads [formerly Netflix Basic with Ads] and Disney+ Basic with Ads were included in the survey, but do not appear in the results charts due to nascency and lack of data.

02

Frequency capping, short ad breaks matter most to advertisers as they aim to avoid clutter

Chief among the options brands weigh when deciding on which streaming services to place ads are the ad attributes themselves — factors such as ad break length, the number of ads in a pod and whether viewers are exposed to the same ad too often. Advertisers and platforms alike don’t want to alienate viewers with lengthy breaks and repetitive messages. 

To assess the value of various ad attributes to advertisers, Digiday asked brands and agencies which they considered to be most important for platforms to offer. Short ad-break length (30 seconds or less) and frequency capping tied at first place as the most important ad options for platforms to offer advertisers, with almost half (48%) of brand and agency respondents selecting each of those options, respectively.

When it comes to frequency capping — one of the two most important ad options — the issue advertisers generally run into is that individual viewers are exposed to the same ad too many times in a given week. Typically, advertisers try to limit a video ad being shown to the same person to two to three exposures per week. However, sometimes viewers are served the ad more than three times that threshold, creating a negative brand experience for consumers. 

“If you look at an average brand, their CTV frequency curve looks as bad, if not worse, than their linear [TV] frequency curve,” said Mohammad Chughtai, global head of advanced TV at MiQ, which specializes in managing programmatic buying for advertisers and agencies. 

Advertisers also struggle to rein in ad exposures across differing streaming services. Individual platforms can cap ad exposures within their own services, but if a person uses multiple ad-supported streaming services each week and an advertiser is running a campaign across each service, that person is prone to see the ad in excess. 

Cheryl Gresham, CMO at Visible, Verizon’s mobile virtual network, said she’s aware of the negative impact of repeatedly serving the same ad to viewers. “The AVOD piece that I struggle with … is making sure that we are not spamming the consumer,” Gresham said. “Seeing the same ad over and over again makes a viewer frustrated. When it comes to any video advertising, [it’s important to make] sure that we’re able to include frequency caps and certain — I’ll relate it to linear — buy guidelines to ensure you’re not hitting a person too much that it becomes wasteful.”

Among the platforms Digiday surveyed, nine confirmed that they offer frequency capping: Amazon Freevee, Discovery+, HBO Max (Ads) [soon to be Max], Netflix Standard with Ads, Peacock, Samsung TV Plus, The Roku Channel, Tubi and YouTube. For example, Tubi’s Advanced Frequency Management tool, which the company launched in 2020, reduces ad repetition by scanning frames to algorithmically identify logos and text. It prevents advertisers from placing multiple ads from a brand in the same program when advertisers buy from numerous aggregators and prevents targeting the same households multiple times.

Jenny Burke, evp of advertising strategy at NBCUniversal, said Peacock imposes its own restrictions on ad frequency, which is no more than one ad per 30 minutes and four ads per day per brand. “We know from just our own consumption behavior or research that frequency has been a problem for consumers, which has made them go elsewhere,” Burke said. “And obviously advertising plays right into churn and we’re all in … to make sure that advertising is additive to the experience versus potentially deterring consumers.”

The other side of the frequency capping coin is that sometimes advertisers grapple with reaching viewers a sufficient number of times. A study published by ad tech firm Innovid in 2021 that tracked 36 connected TV ad campaigns found that 85% of households were only shown a given ad one or two times during a campaign.

Brian Albert, YouTube’s managing director of media partnerships and creative works, said ads placed on YouTube fail to reach some viewers often enough precisely because of the streaming service’s size. “It’s largely due to just the scale of the platform,” he said. “You could spend a lot of money in a week and your ad may only reach the same person one or two times.”

To address this, Albert said YouTube launched a Target Frequency tool for advertisers late last year. “It basically enables advertisers to set their optimal frequency per week, up to four exposures, and then our system will optimize delivery to maximize unique reach at that frequency,” he said. “If you’re used to seeing one to two times frequency per week, and you know that three to four times frequency is going to deliver better results because you’re not hitting that point of diminishing return, then being able to essentially manage the delivery to hit that target frequency is game changing for clients.”

Tied in first place with target frequency as the most important ad option for platforms to offer advertisers was short ad-break length (30 seconds or less). Among the platforms Digiday surveyed, eight confirmed that they offer short ad-break length: Amazon Freevee, Discovery+, HBO Max (Ads) [soon to be Max], Netflix Standard with Ads, Peacock, Samsung TV Plus, Tubi and YouTube.

The ability to provide viewers with shorter ad breaks matters to advertisers for much the same reason as frequency caps do — advertisers run the risk of alienating viewers by showing them too many ads at once. Lengthy ad breaks create an interruption that distracts the viewer from the main video, potentially causing annoyance and a negative brand experience. 

YouTube’s Albert said the effects of ad breaks that are too long can snowball quickly. “If we’re serving too many ads, we’re going to see that because our viewers won’t show up and watch as much as they did,” Albert said. “And if they don’t show up, there’s a loss of an opportunity for creators to showcase their content. … [User experience] is ultimately what is most critical and influences our decision making around how many ads you’ll see in a single user session.”

03

Fewer ads in pod is next most important ad option to offer

Coming in second after short ad-break length and frequency capping, survey respondents said fewer ads (fewer than four in a pod) was the most important ad option for platforms to offer advertisers. Nearly one-third (31%) of brand and agency respondents selected this ad option. And, among the platforms Digiday surveyed, nine confirmed they offer fewer ads in a pod: Amazon Freevee, Discovery+, HBO Max (Ads) [soon to be Max], Netflix Standard with Ads, Peacock, Samsung TV Plus, The Roku Channel, Tubi and YouTube.

Having fewer ads in a pod is preferable to many advertisers because limiting the number works hand-in-hand with limiting overall ad-break length. Previous reporting by Digiday found that owning the first and last slot ads within a pod is also important to advertisers because those slots are more likely to be seen by audiences since they are placed closer to the content a viewer actually intends to watch.

In April 2022, nonprofit research and development consortium IAB Tech Lab released OpenRTB 2.6, an updated protocol for programmatic advertising that includes support for pod bidding. Pod bidding allows advertisers to bid on specific ad slots within a multi-ad break or pod — an option that has always been available to traditional TV advertisers. 

If implemented by streaming services, adopted by advertisers and supported by demand-side platforms, this fix could thread the needle between maximizing ad revenue and minimizing ad exposures. “It’s going to provide a lever to get that nice balance between monetization and engagement of content upfront,” said Adam Markey, director of product management at Roku.

After “fewer ads in a pod,” limiting the total minutes of ads shown during a block of programming to five or less was brands’ and agencies’ next most important ad option for platforms to offer advertisers. However, only 17% of respondents selected small ad load (less than five minutes per hour) as the most important ad option, making it a distant third to pod size.

Keeping in line with its lesser importance to advertisers, among the platforms Digiday surveyed, only five confirmed they offer small ad loads: Amazon Freevee, Netflix Standard with Ads, Peacock, Samsung TV Plus and Tubi. 

Tubi, for example, offers four to six minutes of ads per hour, which Tubi’s Chief Revenue Officer Mark Rotblat said strikes a balance between advertiser and audience needs. “Our priority is creating the best viewing experience possible to keep users satisfied and engaged,” Rotblat said. “We’ve found that this ad load doesn’t overwhelm our viewers and keeps our advertisers happy.”

Ultimately, the most important ad options for platforms to offer advertisers depend on an individual advertiser’s needs and the products it sells. Instacart CMO Laura Jones said that for a company like hers, which isn’t a consumer packaged goods company but does sell that category of products, it pays to take a more holistic approach. 

“It’s a little more of a nuanced value proposition where you have to really make sure people understand the breadth of goods that we can deliver,” Jones said. “We’re less focused on, for example, frequency capping or the specific attributes of the platform. We’re taking more of a portfolio based approach saying, ‘Where are we going to get that value for our media dollars?’”

YouTube’s Albert said his company’s research shows that having the right mix of ad formats, rather than one specific ad option, is most important. “We’ve found that the most effective storytelling on YouTube happens when clients have a full suite of creative assets at their disposal, meaning they have six-second ads, 15-second ads, long-form ads, vertical ads,” Albert said. “So we spend a lot of time talking to clients about the need to have a mix of assets ready, … so it’s not just about innovative ad formats. It’s also about ad format mix.”

04

Watch time is standout metric for advertisers hoping to gauge campaign success

Once advertisers have settled on which ad platforms to place ads and what ad options are the most important to have, they naturally want to measure the success of the campaigns they’re running on those platforms. To do that, brands and agencies consider a range of metrics, everything from watch time to impressions to click-through rates. 

Among the brands and agencies Digiday surveyed, watch time/view duration/average completion rate was the No. 1 success metric that advertisers consider for the top three streaming services where they place the majority of ads. Forty-eight percent of respondents said this constellation of attention metrics was most important for Hulu, 45% percent said so for YouTube and 40% said the same for The Roku Channel.

It’s not overly complicated to understand why watch time/view duration/average completion rate comes in as the top success metric for advertisers on almost all platforms, and particularly on the services where advertisers place the majority of their ads. Put simply, no one wants to spend money on ads that aren’t being watched. 

Casey Terrell, CMO at Krystal Restaurants, said an important part of achieving completed views is to strike the right balance of providing ad content that engages customers without annoying them. “I want you to see my message, but I don’t want to infuriate you with 30 seconds of having to look at my brand spot,” he said. “It’s very subjective, but we try to get research and clicks.”

“The other side is the type of [ad] content you’re putting in front of — pre-roll, especially on YouTube,” he added. “If [the viewer is] trying to get to content that’s [time sensitive] or really important … seeing pre-roll in front of it will really upset customers. … We need the eyeballs and engagement, and somebody to complete [a view], but where was the brand love in there? You can really upset customers if you don’t think about it that way.”

Visible’s Gresham said her company monitors how many of their video ads are skippable versus non-skippable, in addition to assessing how well customers receive the ads. “It’s something we watch closely,” she said. “For us, with such low brand awareness, we have to ensure that we have a certain amount [of ads] that are non-skippable. However, we use a lot of social listening to see if we’re breaking through with people. Is the message resonating with them, or is it upsetting them?”

Ad-supported streaming platforms have an equal, if not greater, interest in making sure viewers stay engaged with advertisers’ content for the duration of ads in order to retain their valuable ad dollars. YouTube’s Albert said his company takes numerous factors into consideration when assessing a campaign’s success. 

“We will look at a range of metrics and signals to try to measure user satisfaction, things like view through rates, skip ads, satisfaction surveys,” Albert said. “We’re also obviously very concerned about how well an ad campaign performs for the client, so that’s a factor as well. But it does really come down to striking the right user experience balance, so that we’re keeping this ecosystem in harmony between viewers, advertisers and creators.”

NCBUniversal’s Burke said Peacock conducts research to understand how long viewers stay engaged not only with ad content, but with platform programming too. “We do ad impact studies as well that are more traditional, through the purchase funnel from brand awareness down to purchase intent, and how our formats perform vis a vis the marketplace,” Burke said. “In 2022, we were at 98% completion rates for our ads. [In terms of] engagement … our subscribers are doing more than 20 hours per month and advertising is a piece of that, right? If advertising wasn’t done well, viewers wouldn’t [complete] that same amount of time.”

In March of this year, Tubi announced its Alternative Audience Measurement tool as part of a larger marketing integration. The tool lets advertisers measure their campaigns using Comscore Campaign Ratings and VideoAmp Audience Measurement and, according to Tubi, gives them the ability to test a variety of partners and to measure reach, frequency and attribution on Tubi. 

“While viewer engagement is a key metric for advertisers, we also weigh in on various viewer conversion and retention metrics,” said Tubi’s Rotblat. “Our goal is to maximize the value exchange between our viewers and advertisers so that it’s a positive and beneficial experience for both.”

05

Equally important to advertisers measuring success: Impressions

Impressions was the top success metric — or of equal or more importance as watch time/view duration/average — on platforms where brands and agencies devoted a mid-range of their ad placements. Fifty-seven percent of respondents said impressions were their main metric of success on Pluto TV; 44% said so for HBO Max (Ads) [soon to be Max], Discovery+ and Amazon Freevee; and 38% said the same of Peacock and Tubi. 

Impressions, which measure how often viewers are exposed to the initial in-stream portion of a video ad, can help drive the shift of TV ad dollars to streaming by providing a commonly understood measure of ad-supported streaming’s performance in the language of ad views. Platforms are keen to offer this data as proof of scale as they seek to grow their streaming businesses and to woo advertisers away from traditional TV, using it to paint a richer, often demographic-based picture of their audiences. 

Roku, for example, already provided impression-level data for marketing mix models that break down campaigns by designated market areas, i.e. groupings of U.S. cities and ZIP codes like New York, Honolulu and Montgomery-Selma, Alabama, that TV and radio advertisers historically refer to when measuring campaigns. 

But, in April 2022, Roku struck deals with four marketing tech providers — Analytic Partners, Ipsos MMA, IRI and Nielsen — to expand that data set. “What we’re trying to provide is a little bit more information on creative type, daypart, more granular view of DMA so that you can get even down to the ZIP code to provide a little bit more granularity into those models for each one of those measurement partners,” said Asaf Davidov, head of ad measurement at Roku.

Advertisers are eager to have impressions data, like what Roku offers, because impressions give a basic assessment of how many — and which types of — people are viewing ads on a particular streaming service. By calculating the number of impressions a campaign generates, brands and agencies can determine how far a streaming platform, and a campaign, are really reaching.

While watch time and impressions are important metrics to help advertisers measure audience reach, they don’t quantify how many people took action after seeing an ad. That is where clickthrough rates come in. Clickthroughs measure the total ratio of impressions to clicks, or in the case of streaming, how many viewers took action when watching an ad by doing things like scanning a QR code with their smartphone, speaking into a remote control to request more information about a product or to make a purchase — or simply clicking on a button.

It is perhaps not surprising then that shoppable ads have emerged as a leading ad innovation among the platforms surveyed for this report. Amazon Freevee, Peacock and The Roku Channel all said they’ve put effort toward expanding their shoppable ad offerings in the last 12 months. Interestingly, however, no survey respondents said clickthroughs were an important success metric on Amazon Freevee or Peacock, and only 7% said they were on The Roku Channel. Perhaps their recent investments in new formats will make this a more essential metric in future years.

Overall, clickthroughs were less important to advertisers than watch time and impressions. They were most important to advertisers on platforms that ranked lowest in advertisers’ 2022 ad placements and ad spend, such as Samsung TV Plus, Pluto TV and Paramount+. 

Visible’s Gresham said success metrics can be different for brands with lower consumer awareness and that traditional key performance indicators don’t always tell the full story. “A lot of times my KPI, my CPM or my view-through rate will be 20% more effective by moving [A to B], and that’s important, but what’s most important is how does that connect back to my cost per order, my cost per add to cart?” Gresham said. 

“Last year, our media team was testing out a new partner and the KPI they had been given was site visits. The new partner was driving a ton of site visits so everybody was high-fiving and saying great job … but when you pull it through to add to cart and cost per order, it was zero,” she added. “We learned that site visits wasn’t the right KPI and quickly pushed on changing the KPIs. So, it was a hard learning, but a great learning.”

06

DSPs are top ad software thanks to premium ad targeting, but proprietary offerings gain traction

Beyond providing ad options and measurement tools to assist advertisers in their quests for effective ad campaigns, platforms also offer brands ad targeting options based on viewer watch behavior and demographics like age, geographic location or gender via demand-side platforms. DSPs automate the ad buying process for advertisers, and most platforms have relied on the targeting capabilities built into a handful of top DSPs, like Adobe Ad Cloud, The Trade Desk and Yahoo, to attract advertisers as they boast about the niche segments they can target through the DSPs.

Digiday’s survey results show that, in fact, the majority (60%) of advertisers said it’s more important for ad-supported streaming services to offer premium or targeted audience reach capabilities than it is for them to offer higher total audience reach (chosen by 40% of respondents).

Targeting a niche audience is important to many brands because it gives them the ability to focus almost exclusively on the specific part of the market they’re trying to reach. As a result, the return on investment may be higher because they’ve presumably spent their marketing budget efficiently, targeting only the consumers they know are in the market, or fit the specific demographic, for their products. 

YouTube’s Albert said his company has been encouraging clients to consider a more premium/targeted audience strategy. “The conversations we’re having now with clients is that if you open up the aperture a little bit and go beyond just broad demo targeting — instead of targeting adults 18 to 49, think about reaching some advanced audiences — and marrying that with target frequency, now you’re getting the best of the best Google AI capabilities to ensure that you’re delivering the right ad to the right person at the right time to drive the best outcome,” Albert said. 

It should be noted that YouTube has access to some of the most extensive targeting capabilities through parent company Google’s DSP (Display & Video 360), the dominant DSP in streaming and online advertising. Offering premium or targeted audience reach may not be as simple for smaller or newer platforms with less access to first-party data reserves for targeting. 

Netflix Standard with Ads, for example, debuted in November 2022 with limited ad targeting options, and the service struggled to meet advertisers’ audience number expectations as well. That can be particularly frustrating for brands and agencies that have their own first-party data that they’d like to match with platforms’ data, according Laurie Crowley, svp and group director of investment at Havas Media. 

“We know that some of these premium ad-supported tiers that just came into the marketplace did come in with very limited and/or no targeting,” Crowley said. “And I think that is so key right now for clients that are dedicating a lot of resources to developing their own internal strategic targets using their first-party data. And to be unable to transact on that at least in the nascent stages of some of these top-tier streaming networks, I think it’s challenging and frustrating for clients.”

“I do think that that’s part of the issue is that those audiences might not be there at scale to be able to target on a more granular basis,” she added.

As advertisers strive to reach their coveted premium audiences, the majority of brands and ad agencies said DSPs are still the most important ad software to achieve their targeting goals. More than half (56%) of survey respondents said DSPs are the most important ad software for ad-supported streaming services to offer advertisers. The need to use a variety of DSPs is a given for advertisers because some DSPs have exclusive access to certain inventory while other DSPs have exclusive access to specific user data — like Google’s D&V 360, which has access to YouTube’s inventory. Therefore, advertisers can’t use a single DSP to consolidate a full CTV buy. 

However, perhaps of more interest is the percentage of advertisers who said platforms’ proprietary ad buying tools are the most important software for platforms to offer advertisers. More than one-third (35%) of brand and agency respondents said self-serve ad buying tools, such as Hulu’s Ad Manager, are the most important ad software for ad-supported streaming services to offer advertisers — perhaps indicative of a desire by advertisers to shift from relying on a select few giant DSPs to engaging with more platform-relevant offerings. 

Indeed, ad-supported streaming platforms have been experimenting with providing their own ad buying tools for several years now. Hulu, for example, launched its Ad Manager, which allows advertisers to target users by age, interest, gender, location and show genre, in July 2020. Roku began offering OneView earlier that year in May, and Samsung launched Samsung DSP in September 2020. 

Among the platforms surveyed for this report, nine confirmed that they offer proprietary ad buying software: Amazon Freevee, Disney+ Basic with Ads, Hulu, Paramount+, Peacock, Pluto TV, Samsung TV Plus, The Roku Channel and YouTube (via parent company Google’s DSP). Hulu and Disney+ Basic with Ads tap into parent company Disney’s Disney Real Time Ad Exchange (DRAX), while Pluto TV and Paramount+ access Paramount’s EyeQ. 

More recently, in April 2022, Peacock launched its Peacock Ad Manager. NBCUniveral’s Burke said part of the reason for providing the in-house platform was that the company had noticed a shift in how agencies and brands were buying ad time. “We have a large programmatic business in partnership with many, if not all, of the DSPs,” Burke said. “We’re finding the trend of agencies and clients either taking that in-house or having their own proprietary buying methods. Hence, not only having DSP integrations, but Peacock Ad Manager.”

“We want to offer the capabilities to buy the way the client wants to,” she added. “And because of our democratization of inventory and our client base growing so much … it’s really changing, particularly as our small- and medium-size business growth is a bit more of a hockey stick [in terms of] growth rates.”

Krystal Restaurant’s Terrell said he’s noticed a trend toward ad-supported streaming services offering and promoting their proprietary self-serve ad buying tools directly to brands, and his company is willing to consider using those tools. “You can go to [media agency] OMD and they’ll bring a billion dollars to market and you can just get packaged up with everybody else and they’ve got DSP, and it’s fine,” Terrell said. “In the last year or two, it feels like there’s a lot more direct happening, of people coming straight to us — a Hulu or an Amazon — saying, ‘No, just come straight to us.’”

However, a potential downside to using proprietary ad buying software, or even multiple mainstream DSPs, is the cost and training required to get staff up to speed on using a different service. “[A consideration for us] is ROI but also, ‘Do I now need to have a complete media team on my side? Does that fall into the digital vertical? Are we going to get the scale that we could get through an agency partner that’s bringing a bunch of brands with them?’” Terrell added. 

Terrell said his company is letting media agencies handle the bulk of its ad buying for now, but they’re testing out proprietary services as well. “Let’s see what a Samsung direct buy is, because they reached out and said, ‘Hey, we have our own proprietary cable service now, an OTT [offering],’” Terrell said. “It’s interesting. I just don’t know what they can do yet and if there will be a drastic shift over to that. Everybody’s kind of waiting.”

07

Advertisers and platforms vacillate on best types of first-party data to use for ad targeting

Successful ad targeting can be a fine line to walk for both advertisers and platforms, as many consumers are turned off by targeting that feels precise or invasive while others find irrelevant ads more annoying. A Morning Consult poll from 2021 found that 38% of all adults are bothered by ads that are too relevant to them or their lives, while 51% were bothered by irrelevant ads. 

That audience uncertainty about how consumers want to be reached by advertisers is mirrored in brands’ and agencies’ mixed responses to Digiday’s survey questions concerning first-party data reserves. The majority (65%) of survey respondents said that demographic information, including age and income level, is the most important type of first-party data reserves for streaming platforms to have for ad targeting, but nearly one-half (46%) of respondents said the more general category of consumer activities and interests was most important. Almost another one-third (31%) of respondents selected geographic information, such as the city or region a viewer is located in.

Platforms themselves have a vested interest in providing the most useful first-party data reserves to advertisers, as the data have become a critical selling point to appeal to advertisers with the rise of privacy concerns and regulations around using third-party cookies in programmatic advertising.

The Roku Channel, for example, has focused on reaching larger contextual audience segments using demographic data — advertisers’ most important type of first-party data reserves — and serving ads intended to be useful rather than meddlesome. “Brands find that [for example] we can reach women 18 to 34 more accurately and more precisely than a traditional TV approach,” said Jordan Rost, head of ad marketing at Roku, in a 2022 Digiday interview. “But we also understand what those same streamers are watching. Based on the types of content or the ads that they’re exposed to, advertisers can re-engage with those same audiences.”

NBCUniversal’s Burke said Peacock is placing resources toward local geographic targeting — advertisers’ third most important type of data reserves — while continuing to address traditional demographic audience segments. “The ability to buy local inventory across our streaming footprint is meaningful and local marketers need to find their audiences,” Burke said. “Traditional age and gender remains an interest for some buyers, but more and more we’re seeing interest intent — are they in-market for a particular product? Age and gender is still a targeting capability … [but] it is getting smaller as those advanced targeting capabilities grow.”

YouTube’s Albert said the platform has found that a mix of contextual and niche ad targeting is the best approach for advertisers to take. “We introduced YouTube Select [formerly Google Preferred] because there are some clients who want to run against the best content on YouTube,” he said. “We built an algorithm to help identify channels based on passion and popularity signals, so that we can essentially package the top five percent of channels on YouTube and make it available for clients to buy. That’s very much a contextual buy.”

“We have other clients who prefer to buy based on the specific or niche audiences,” he added. “We find that when you do both, you can actually drive the best results. … If you’re truly trying to maximize your unique reach, your effectiveness and your efficiencies, clients who do both see the best results.”

Ad-supported streaming platforms collect first-party data for use in ad targeting in a number of ways, depending on their size and whether the platforms are smart-TV-based streaming services or owned by larger media companies. 

Platforms owned by larger parent companies have the advantage of accessing large reservoirs of first-party data spread across media properties. As noted in Digiday’s year-ago report on ad-supported streaming services, Google’s YouTube and Disney’s Hulu (and now Disney+ Basic with Ads too) have the largest first-party data reserves compared to other platforms, and they rely on those reserves and in-house tech stacks to appeal to brands and target ads. 

Meanwhile, NBCUniversal’s first-party identity platform NBCUnified consolidates first-party data across all of its media properties, including Peacock, and across NBCU’s data clean room. “We can connect our data with marketers’ data in a privacy-compliant way to find the audiences they’re looking for,” NBCUniversal’s Burke said. “And then it helps the consumer because we serve more personalized or additive ads that are useful to their consumption behaviors.”

On the other hand, smart TV-based streaming services like The Roku Channel and Samsung TV Plus use first-party data collected during device registration and through automatic content recognition (ACR) technology built into smart TVs for ad targeting.

In an effort to expand its data collection capabilities beyond ACR tech, Roku launched its own clean room in April 2022. An agency, brand or publisher can bring its data to Roku and combine it with the platform’s first-party data to measure and target campaigns, but without either side exposing its customer data to the other. The Roku clean room creates audience segments that can only be targeted with its proprietary DSP OneView.

Disney also added clean room technology to enhance its already massive first-party data reserves within the last year and a half. The company said in a January 2023 press release that, “Disney Advertising has engaged with most major agency and media holding companies … as well as nearly 75 advertisers” for its clean room. Dana McGraw, svp of audience modeling and data science at Disney Advertising, said in a statement that the company had anticipated a need for expanded, cross-platform data collection for more than a decade.

As brands and platforms continue to navigate the best ways to target ads and to understand what types of first-party data are most useful to them, more platforms will likely follow Disney’s and Roku’s lead with expanded first-party data collection capabilities.

08

What’s holding back further investment: Cost challenges followed by lack of scale

While advertisers may have differing opinions on what types of first-party data reserves are most important for platforms to offer them, they are generally united in their beliefs on the biggest challenges they face when placing ads on the streaming services. Most advertisers said the expense of buying and placing ads on platforms is the largest roadblock they encounter when it comes to ad-supported streaming services. 

More than half of brand and ad agency respondents selected cost of media as their top challenge on all platforms, excluding Amazon Freevee and Pluto TV, where lack of scale was their main barrier. Peacock skewed more heavily toward cost than other platforms, with three-quarters (75%) of respondents saying cost of media was the top challenge they face at Peacock. The next platforms where cost of media was a main hurdle were Hulu and Discovery+, both at 56% of respondents, followed by YouTube and The Roku Channel at 53% each.

Considering the services’ select programming, the pricing premiums aren’t entirely unexpected or unwarranted and, as long as programming remains consistent, are only likely to increase. But some agency executives are frustrated by high CPMs coupled with lack of measurement. 

“Pricing is high, and it’s high in my opinion when the lack of insights are not as robust,” said Natalee Geldert, head of brand media at digital agency PMG. “So I feel like advertisers … when we go to plan, those CPMs or those rates have premiums on them, and my question is why, when on the backend of the campaign I might not be able to have the depth of the reporting in order to realize the impact of having that premium rate.”

“So, it’s very top-line in terms of content bucket, genre bucket,” she added. “I can’t see an age breakdown or begin to pinpoint a segment of age in a post-campaign or a hindsight report, and so for me that’s a constant tension when pricing is premium yet the lack of insights just sometimes doesn’t warrant that premium.”

As the cost of acquisition continues to grow, advertising executives will have to make tough decisions about where to place ads, according to Visible’s Gresham. However, the rise of innovative ad formats that prompt viewer action and emphasize quick ROI, such as shoppable ads and ads with scannable QR codes, may help executives more readily make those decisions.

“We always have to tie it back to the sales,” Gresham said. “We have got to grow. And the accountability and the pressure that CMOs have for the budget — the fiduciary responsibility of not spending $1 unless that dollar is going to return, and more — we’ve got to be really, really critical and really honest with ourselves on the decisions we’re making and the way we’re spending our dollars.”

Another area of concern for some advertisers is brand safety, particularly on YouTube. Thirty-three percent of respondents said they had concerns about brand safety on YouTube, the largest percentage of respondents to say so for any platform. Marketers have always been cautious about their media placements appearing alongside content that could negatively affect their brand, but in YouTube’s case, those concerns are amplified by the platform’s user-generated content.

With hundreds of thousands of hours of UGC uploaded to the platform daily, it is seemingly impossible, even with the help of automation — and despite being accredited for brand safety by the Media Ratings Council — for YouTube to ensure all advertiser content is placed next to appropriate video content. Indeed, UGC, the main factor that distinguishes YouTube from its competitors according to YouTube’s Albert, could be one of its biggest challenges, depending on the campaign. 

Interestingly, instead of cost of media, brands and agencies found lack of scale to be the top challenge facing them on two of the 13 platforms assessed in this report. Fifty-six percent of respondents said lack of scale was the top challenge they encountered on Amazon Freevee and 43% said the same of Pluto TV.

While no clear trend regarding lack of scale emerges when analyzing only two platforms, in general, smaller ad-supported streaming platforms naturally have less audience reach. Amazon Freevee, the rebranded IMDb TV, notably hasn’t publicly shared audience numbers.

Additionally, many ad-supported streaming platforms are nascent offerings, with lower numbers of users signing on to the ad-supported versions initially. Netflix Standard with Ads, for example, which launched in November 2022, was falling short of ad-supported viewership guarantees made to advertisers as of December. As a result, Netflix allowed advertisers to take their money back for ads that had yet to run, according to several agency executives. The specific shortfall amounts varied by advertiser, but in some cases, Netflix had only delivered roughly 80% of the expected audience, the executives said. 

“They can’t deliver. They don’t have enough inventory to deliver. So they’re literally giving the money back,” one agency executive said at the time. 

If and when the smaller and newer platforms are able to grow their audience, that will seemingly serve to reduce one barrier advertisers say they face from ad-supported streaming services. The more prevalent challenge of cost of media is likely to remain for the foreseeable future — or at least for as long as advertisers are willing to pay platform premiums. 

09

Conclusion: Which platforms are right for advertiser needs?

Platforms’ recent efforts to expand their services while matching advertisers’ needs to compete for their budgets run the gamut from launching entirely new ad-supported platforms or merging existing streaming services to expanding data collection and ad targeting capabilities and leaning into cutting-edge format and software innovations.  

Based on what each platform told Digiday it offers advertisers (plus Digiday’s own research and reporting), and taking into consideration what brands and agencies shared as their greatest platform needs, Digiday has put together this quick guide on which platforms are right for campaigns that rely on some key advertiser demands:

If you’re an advertiser looking for:

• Shorter ad breaks and smaller ad pods
  • Amazon Freevee
  • Discovery+
  • HBO Max (Ads) [transitioning to Max on May 23]
  • Netflix Standard with Ads
  • Peacock
  • Samsung TV Plus
  • The Roku Channel (fewer ads only)
  • Tubi
  • YouTube

• Frequency capping
  • Amazon Freevee
  • Discovery+
  • HBO Max (Ads) [transitioning to Max on May 23]
  • Netflix Standard with Ads
  • Peacock
  • Samsung TV Plus
  • The Roku Channel
  • Tubi
  • YouTube

• Content takeovers
  • Amazon Freevee
  • Tubi
  • YouTube
• Shoppable ads
  • Amazon Freevee
  • Peacock
  • The Roku Channel
• Dynamic product placement 
  • Peacock (In-scene ads, launching later in 2023)

• Proprietary ad software
  • Amazon Freevee
  • Disney+ Basic with Ads
  • Hulu
  • Paramount+
  • Peacock
  • Pluto TV
  • Samsung TV Plus
  • The Roku Channel
  • YouTube (via parent company Google)
• Deep first-party data reserves 
  • Disney+ Basic with Ads (The Walt Disney Company)
  • Hulu (The Walt Disney Company)
  • Peacock (NBCUniversal)
  • YouTube (Google)

• Clean room capabilities
  • Disney+ Basic with Ads (The Walt Disney Company)
  • Hulu (The Walt Disney Company)
  • The Roku Channel

• Expanded audience reach, measurement and targeting services
  • Peacock
  • The Roku Channel
  • Samsung TV Plus
  • Tubi