OTT ad spend reaches $1.3B as budgets shift to streaming content

Dive Brief:

Five streaming services — Hulu, HBO Max, Discovery+, Paramount and Peacock — accounted for 65% of over-the-top (OTT) ad spending last year, per a new MediaRadar report shared with Marketing Dive. Total OTT ad spending reached $1.3 billion in 2021.
Currently, OTT spending represents approximately only 3% of total digital spend per month. The biggest spenders in Q3 and Q4 included retail, finance and media.
The study found that OTT spending is a growing segment of the advertising space. As TV watchers migrate from cable to streaming services, advertisers must meet them where they are.

Dive Insight:

Cord cutting has grown substantially since 2015. Currently, only 56% of Americans report watching TV through cable or satellite, down from 76% in 2015. However, 78% of consumers living in the United States have access to a subscription video service. Despite this major shift, OTT spending, meaning spending spent on streaming service advertisements, makes up only 3% of digital advertising spending because the space is dominated by subscription services with no or light ad loads. This increase in spending, despite still being a fraction of overall spending, reflects a growing shift towards ad-supported streaming.

The streaming industry has seen growth in recent years. While some platforms, such as Netflix and Disney+, do not run advertisements, many other platforms have advertising options. As competition for eyeballs grows, streaming platforms have an incentive to keep prices down. Advertisements are a good way to do that, as the report found most Americans do not want to spend more than $30 for a streaming service. Hulu previously was the dominant ad-supported service, but the field has since become crowded with other options.

In 2021, 5,530 advertisers ran ads across the top 5 streaming platforms, per MediaRadar. In total, the spend across those platforms reached nearly $438 million in Q4, with approximately half a million ads being placed in the second half of 2021. Between Q4 and Q3 alone, there was a 22% increase in OTT advertising spend.

Retail was the top spending category in Q4 of 2021, representing 16% of the market and growing 57% from Q3. Retail advertising was the most common on Discovery+, accounting for 22% of all advertisements on the platform.

Insurance and credit services held the next largest share, representing 14% of advertisements in Q4. Ads from companies in this sector were the most common on HBO Max, representing 19% of all advertisements. Tied with insurance was media, which saw a growth of 46% from Q3. House advertisements that promote programming within the same parent company represented 16% of OTT advertising in Q4.