Disney+/Netflix To Add $1.2B To CTV Ad Spending Next Year, Linear Poised To Fall Below 50%

If there was any doubt that the TV advertising marketplace is poised to shift to one dominated by CTV, the major agency forecasters laid it to rest this week. 

Among the sidebars in GroupM’s update was a prediction that so-called “linear” TV options – broadcast channels and cable networks available via MVPDs and even vMVPDs – will become a minority of the way Americans watch “television” within three years. 

“We estimate that pay TV penetration, including multichannel video programming distributors (MVPDs) and virtual MVPDs (vMVPDs) will fall below 50% of U.S. TV households in 2025,” GroupM Global Director of Business Intelligence Kate Scott-Dawkins writes in the agency’s just-released “This Year Next Year” year-end forecast.



And while she did not explicitly address the impact on ad spending, she notes that “by 2025 all pay TV providers combined will reach fewer than half the homes in the U.S.” 

In it’s year-end update, IPG Mediabrands also provided an interesting sidebar insight into the impact of previously subscription-only streaming services Netflix and Disney+ adding ad-supported tiers to defray subscription costs for subscribers. 

“The launch of the ad-supported tier of Netflix and Disney+ shows the value of ad-supported media, especially in an uncertain economic environment,” Magna’s Luke Stillman says, adding, “This launch will ad more than a billion dollars of global revenue in 2023 and that new money will drive connected TV growth of nearly.”

Magna’s official estimate is the ad-supported options by those two services will add $1.2 billion in spending to the 2023 marketplace, driving connected TV ad growth up 29%.

“[This is] much faster in 2023 than search at 10% and social media at 7%,” Stillman noted.

1 comment about "Disney+/Netflix To Add $1.2B To CTV Ad Spending Next Year, Linear Poised To Fall Below 50%".
Check to receive email when comments are posted.
  1. Ed Papazian from Media Dynamics Inc, December 6, 2022 at 10:09 a.m.

    We concur with these estimates, generally, but some people make a faulty interpretation of their significance. For example, let's say that "pay TV" ---broadcast and cable ---is limited to about half of the total TV population base. To that you must add over-the-air reception households which are big broadcast TV users and will account for 15% or more of the total TV population. So "traditional TV" will reach roughly two thirds of the TV home population by 2025. In addition there's the matter of commercial loads and with it the extent of "premium" quality content that will be available via "linear TV" and streaming services. In the latter case, commercial loads are now considerably lower than traditional TV and the proportion of content that is comprable in terms of professional quality is in question for streaming sources such as YouTube, in particular. So the number of qulity GRPs will not be evenly split between the two methods of access---unless there are big changes from what we see today.

    In fairness, I should also note that traditional TV is increasingly an older adult venue so the media planners of 2025---as well as now---will have to consider many variables---demographics, the cost of attaining incremental reach, program quality, how commercials are placed, ad clutter rates, etc. etc. in making their recommendations to clients. In most cases a sensible mix of "linear TV" and streaming will be the result, not one or the other.

Next story loading loading..