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The Monetization Story of 2024 and Beyond

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For the longest time, people I’ve interviewed have complained about how much of the video advertising budget went to social. Now the tide is turning. Social video is projected to rise to $23.4 billion in 2024, and CTV is expected to grow by 12% to $22.7 billion in 2024, 32% faster than total media overall, according to IAB’s 2024 Digital Video Ad Spend & Strategy Report. This math puts the 2024 advertising video market at 49.2% for streaming advertising, and 50.75% for social. Oh, so close!

TradeDesk’s May 2024 Sellers and Publishers Report, shows during the second half of 2023 marketers paid 78% more for CTV ad impressions with premium publishers (the top ten placement in order: Hulu, Disney+, Max, ESPN, Spotify, Peacock TV, CNN, National Geographic, NBC and Fox—see page 4 of the TradeDesk report). Time spent with these worldwide media companies (both video and audio) has increased to more than 5 hours per day in 2023. CTV viewing in 2023 was 115 minutes and music and podcasts hit 181 minutes. Their research shows 75% of 25–44-year-olds have increased CTV consumption in the last year.

The Video Marketplace According to FreeWheel

Another report from FreeWheel, Video Marketplace Report 2H 2023 shows CTV viewing has grown by 10% year-over-year (YoY) in the U.S. and 24% YoY in Europe. When we talk about targeting, the next set of numbers back this up: 61% of U.S. ad views are bought on target behavior vs. 32% in Europe. (Or the converse: 39% of ads in the U.S. are bought on demo and 68% in Europe.)

FreeWheel also compares programmatic vs. non-programmatic (see page 16 of the report). In the second half of 2023 in the U.S., 34% of ad views were sold programmatically, while 66% were either direct, reseller, or marketplace platform private. In Europe, the percentage of programmatic sales was even lower at 22%. Seventy-nine percent of the U.S. programmatic deals were non-guaranteed and 21% guaranteed. In Europe, 47% were non-guaranteed and 53% were guaranteed.

A few more stats show that, in the U.S., advertising is more common on live and in Europe it’s VOD. In the U.S., 59% of ad views are on live. In Europe, 81% of ad views are on VOD.

So, if we’re keeping score, the U.S. has 10% annual growth in CTV viewing. Thirty-four percent of ad buys are programmatic, 61% are bought on targeting, 59% are bought on live programming. Europe has 24% annual CTV viewing growth, with 68% of advertising bought on demo, 22% of ad buys programmatic, and 81% of ad views on VOD.

The Language Problem

Every major media company now touts selling their inventory via programmatic advertising. What they should be saying is, “We use automation to allow brands to buy our inventory.” But what they are saying is, “We can transact as Programmatic Direct or Real Time Bidding (RTB) Programmatic.”

Programmatic direct is a transaction between one buyer and one seller. When a specific amount of inventory is cited, it’s a programmatic guaranteed deal. RTB private marketplaces are for a pre-selected group of buyers. The open exchange RTB is like a stock market in which any buyer and seller can transact. Realistically, however, by the time this happens, it’s more likely that the remaining inventory has much less value to the publisher.

The idea that any companies have opened up their inventory (as several companies have said they’re doing) is a bit of a misnomer. Realistically, the most expensive inventory will still be transacted in private deals. These same companies could use a programmatic direct auction or a private marketplace, but this is really more about paying the right price.

Good content will always have a premium appeal to advertisers. It’s increasingly the business model streaming is relying on, especially since it’s become apparent that non-ad supported subscriptions are not the most profitable way to run a streaming service.

My hope is that we can invent a new way to speak about this. The term programmatic has nothing to do with the democratization of inventory as one executive mentioned recently. Programmatic is a method of automation. The best we can hope for is that automated auctions bring the best price to the publishers. A runaway success should benefit from high inventory prices.

What would be radical would be to eliminate the upfronts and newfronts and sell all inventory through an automated market. The idea that you are selling off part of your inventory in advance is based on a scarcity mindset. If programmatic was such a breakthrough in how ads are sold, why can’t I find statistics on the dollar value of inventory that is transacted using different programmatic methods?

Key Takeaways

The first takeaway is that digital video ad budgets are on the rise, and social is diminishing. Viewers seem to want premium content, so maybe the “social is stealing the eyeballs” story will finally be put to rest.

Advertising is more and more likely to be bought in an automated fashion. The automated fashion called programmatic has the power to level-set prices and sure there will be some inventory that can be bought by smaller budgets, but likely advertising on premium will still be expensive.

The key is gathering more data about viewers, which will only make ad CPM more valuable. Targeting is the thing at which digital still excels. It would be great if we stuck to conversations about targeting and dropped those about programmatic. We can only hope that the streaming ad experience will continue to improve, but for now, at least, an automated market will bring prices closer to where they should be.

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