Connected TV Advertising Prices Are Falling Thanks To A Deluge of Streaming Services
What makes more money: a premium plan or an ad-supported plan? Netflix says ads, but that was before Amazon came into the frame. Over the last few years, video streaming platforms Hulu and Netflix have embraced connected TV advertising (CTV) — unlocking a lucrative revenue stream while offering consumers a more affordable way to watch their favorite shows. However, one new entry is reducing prices in the CTV market — and jeopardizing the entertainment business’s cash cow.
- In January, Amazon announced it would enter CTV, adding ads to Prime Video in an effort to expand its fast-growing advertising business with affordable costs (CPMs).
- Since then, Prime’s lower costs and large advertising inventory have “upended” the CTV business, “driving down ad prices for everyone.”
Brought to you by Amazon: Other streaming services have reduced pricing to compete with Prime’s $30 CPM. Dramatically, Netflix’s ad rates are down 23.8% year-over-year. This could lead to price hikes for ad-free customers, but the rapidly expanding CTV market might help streamers avoid that outcome. According to eMarketer, CTV spending will push $30B this year and is expected to grow at a 20%+ rate for the next few years. This means there should still be plenty of money to be made on the internet’s most valuable new stream of real estate.
