What is the current state of CTV ad revenue and what are the present costs of serial churn? Evan Shapiro, CEO, ESHAP, sketches out the current streaming media revenue picture, as the SVOD side of the house contends with serial churn and the imminent revival of a sluggish ad market promises uneven distribution, in this clip from his closing keynote at Streaming Media East 2023.
“Money is stampeding towards streaming,” Shapiro says. “Connected television advertising has been the fastest growing part of the advertising economy for the last two or three years. However, not all streams are equal. When you think about premium SVOD advertising products, that phrase carries a lot of baggage. Most notably churn.” He shows a graphic titled “Serial Churners Share of New SVOD Signups in 2022,” which notably highlights data from Antenna displaying the dramatic increase in serial churners from 15% in 2020 to 29% in 2022. Shapiro says that serial churners are “People who have signed up for and canceled at least three services. In the previous year, we did a survey of 16,000 people. 40% of people under the age of 44 now occasionally or regularly sign up for a service, binge one show, and then get the heck out of Dodge. 40% serial churning is the new channel changing. And so when somebody churns out, when somebody cancels a subscription, not only do they lose that subscriber revenue, they also lose those ad impressions.”
Shapiro says, “So if you’re taking an ongoing campaign, the number one churning month in Netflix history was last July when they dropped the last binge fest of Stranger Things. The most cancels in their history. So they came in, people watched it in a weekend or a week and then got the heck out of Dodge. Well, if you’re taking an ad campaign on Netflix, is that good for you?” He brings up a graphic titled “SVOD Churns vs. ADDS,” with information from Antenna.
“This is millions of data points,” he says. “And in the fourth quarter of last year, all of SVOD signed up 41.3 million subscribers and lost 33.8 million subscribers. That’s an 82% loss. That’s shitty business. And by the way, not great for the advertisers who sign up for a lot of these platforms, but we are also in the middle of an ad recession. It’s nine straight months of ads buying declines in the United States. However, a bold prediction for you, the ad recession will end this July. Want to know how I know the math? Look at what happened here. The reason why we’re in an ad recession is primarily due to the comparison to the year prior, which look at January, look at February, look at March. It’s hard to keep that pace up, right? Now in July, the comparison’s going to be easier than it was a year ago. The ad recession’s going to end magically in the middle of this summer because math, and you’re going to hear about advertising’s back this fall, right?”
However, Shapiro says the share will not be as evenly distributed as before. “Ads are going to go where the ads are most effective,” he says. “They’re not going places where the data sucks, or we’re not sure whether they’re working.” He displays a graphic titled “US Advertisers Video Budget Allocations.” “This is a poll of advertisers from Advertiser Perceptions,” he says. “And what you can see is this year people moved money out of the upfront, out of big brand advertising and into performance marketing in scatter. This happened in the upfront and it’s going to happen all year. Performance marketing, return on media investment, return on ad spend. Return on Marketing Investment (ROMI) and Return On Advertising Spend (ROAS). These are going to be the magic words on a moving forward basis for the advertising economy.”
Shapiro counters any perception that FAST will essentially replace cable as a key advertising medium. “I just don’t think it’s as easy to say as that. I think it’s going to be a much more nuanced play between paid streaming and free streaming. And here’s one of the reasons why: we just keep adding so many channels.” He mentions Plex, offering over 600 channels, as an example of highly fragmented programming. “However,” he says, “what I will tell you is news is one of the big reasons why these channels have been proliferating, and it’s one of the biggest use cases on FAST.”
Still, Shapiro says he believes the landscape will look much more like streaming versus “old school” television. “I don’t think you’re going to see as much nuance between FAST and paid streaming with ads, especially when you look at who has ads,” he says.
He shows a graphic titled “Ad Subs vs. Ad Free Subs 4Q 2022.” “So not all streams are equal, right?” he says. “Netflix came out and said they had 5 million monthly active users in the upfront. YouTube has 2.5 billion monthly active users. Which are you going to buy? But more importantly, not that much of Netflix’s programming or views has ads in it. Same with Disney+, same with Apple TV+ — zero ads, although they’ll start adding ads later this year. Even Prime has very little advertising on it. However, Freevee, Paramount Plus, Pluto…they have more advertising. So if you’re an advertiser, where are you going to put your money? Are you going to put your money where a hundred percent of the available ecosystem has an ad product in it? [Or] are you going to put it where only 1% of the ecosystem has an ad product in it?”
Learn more about a wide range of streaming industry topics at Streaming Media Connect 2023.
Why did Free Ad-Supported Streaming Television (FAST) take off in such a significant way in 2020? LG’s Senior Director of North American Innovation and Development Team, Matthew Durgin, discusses this topic with VP Marketing for Plex Scott Hancock and media cartographer Evan Shapiro in this clip from their Streaming Media East 2023 panel.
28 Jul 2023
As streaming media and CTV overtake broadcast as the most watched form of entertainment television, media cartographer Evan Shapiro breaks down how that usage is distributed via OTT and other channels in this clip from his closing keynote at Streaming Media East 2023.
10 Jul 2023
As ad-driven monetization increasingly takes center stage in the OTT and premium content worlds today, where is the ad spend growing fastest, and how is the underlying tech evolving? Quickplay’s Chris Drake and Altman Solon’s Jonathan Hurd discuss current and emerging trends in ad-based streaming content monetization–particularly in the sports world–in this clip from a panel at Streaming Media West 2022.
13 Feb 2023
How much have recent inflationary pressures been driving OTT SVOD churn in combination with an increase in FAST services, and what are the best possible approaches to meeting new consumer streaming needs in this present economy?
15 Aug 2022