- 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.
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.