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Is Streaming Worth Your Pennies?

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Spending on advertising for streaming TV is anticipated to continue its upward trajectory in the coming years; however, recent data from advertising intelligence platform MediaRadar reveals a decline in ad spend on the top six streaming platforms. This group, comprising Max, Discovery+, Hulu, Paramount+, Peacock, and Pluto TV, saw a year-over-year decrease of 8%, totaling $1.07 billion in the current year. The report, covering January 1, 2022, through October 31, 2023, highlighted a drop from the $1.2 billion recorded in 2022. The decline is attributed to significant reductions in ad spend by major financial advertisers, including Geico, State Farm, and Progressive, who collectively slashed their spending from $123 million to $32.5 million.

Breaking down the figures, nearly 47% of the ad spend, approximately $503 million, during this period, originated from verticals such as restaurants, medical and pharmaceutical, finance, retail, and technology. Pharma companies like AbbVie and GlaxoSmithKline, along with quick-service restaurants like McDonald’s, Taco Bell, and Subway, notably increased their ad investments. Max garnered 19% of its ad revenue from tech advertisers, including telecom giants like T-Mobile and former HBO owner, AT&T. Paramount+ and Peacock also saw substantial contributions from restaurants, while Hulu experienced robust ad investments from retail advertisers such as Target and Walmart, constituting 28% of its ad revenue.

The diminished ad spending on these major platforms coincides with a challenging period for streaming services. Todd Krizelman, CEO of MediaRadar, notes that these platforms are grappling with hurdles related to soaring content expenses, password sharing dilution, and an uncertain economic climate. He emphasizes that these factors are contributing to downstream challenges in both subscriber growth and advertising revenue across the industry. Additionally, consumer spending on streaming services has decreased due to economic pressures, as highlighted by market research firm Parks Associates. To counteract this trend, several platforms, including Disney+, Discovery+, Max, Hulu, Paramount, and Peacock, have raised prices in recent months to encourage subscribers to opt for less expensive ad-supported tiers.

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