Streaming ads getting cheaper as more competitors squeeze the market

Ashley Regan
By Ashley Regan | 30 July 2024
 
Raquel Baires via Unsplash

The prices of advertising on streaming media has fallen as platforms build more ad space.

Subscription Video On Demand (SVOD), with a growing appetite from advertisers, has seen Prime and Paramount+ enter the streaming advertising market in the past month.

Insiders say Binge has lowered prices and Netflix has almost halved the cost of reaching 1,000 viewers (CPM). 

Prices for each platform will be in flux as the brands find their footings in the smaller market of Australia, say media buyers who spoke to AdNews on the condition of anonymity.

Media buyers, confined to contract restrictions, could not speak on the record regarding the pricing of ads.

Streaming in Australia has one major issue: local audience numbers are difficult to find, buyers said.

“Whenever we ask for audience numbers they always give us global ones and it's hard to actually understand how many of those users are local,” an agency head of investment told AdNews.

Since Australian consumers have a huge amount of entertainment choice, it's hard for media buyers to catch that fragmented audience. 

And because “advertising pricing all comes down to economics and supply versus demand,” a buyer told AdNews, there could soon be more ad spaces available than demand in the current soft ad market.

Streaming ad prices revealed

Prime is still in its launch phase with rollouts not starting till October. But for agencies who want to be a part of that initial launch period the streamer is looking for intentions to spend $1 million with a CMP sitting around the $50 mark.

When Netflix launched 18 months ago CPM started at $100-$150 wanting commitments of $300,000. 

Now it has come down to around $60 CPM with buyers expecting the cost to drop further.

Netflix remains very particular about clients with limited ad space and only a limited number of independent agencies have access.

“The near term challenge is we’re scaling faster than our ability to monetise our growing ad inventory,” Netflix said in its earnings letter to shareholders.

“It’s why continuing to build our ad sales, measurement and tech capabilities is so important.”

Paramount+ which launched almost two months ago is slow in the market, according to buyers, especially indies who don't receive much contact.

Holdcos are starting to get opportunities with meeting requests now popping up.

AdNews understands Paramount+ CPM costs are not set yet, buyers expect its unlikely the platform will have large minimum spend targets. 

Despite this Paramount ANZ chief sales officer Rod Prosser told AdNews “the market has shown strong interest in advertising opportunities on Paramount+ Australia.”

Foxtel’s platforms Binge and Kayo are the most proactive in market compared to all the players and has delivered the best experience according to agencies.

This could be because Foxtel is closer to the local market, being locally managed as well as having the backing insights of the Foxtel business.

Foxtel has been more open with their audience bases, has no minimum spends and they haven't excluded businesses - clients that want to be involved can be but it can be hard to get inventory in.

Binge costs have also come down from an initial launch of $60 CPM to now $40 CPM but remains hard to get your foot in the door, buyers said.

Similarly Kayo is well priced at $30-40 CPM but spots sell out far in advance.

In the US, Disney+ ads have gotten down to the teens for CPMs, one source said.

Total TV and other digital video ads

Despite SVOD prices dropping - on average SVOD is around $40 - the costs are still more premium than other digital video ads and total TV.

YouTube CPMs have also dropped significantly, depending on how much targeting you apply, costs can be down to $15-20. 

BVOD prices may also drop, according to Spinach general manager and media director Ben Willee.

"The concern is there's lots of high value ad inventory on streaming which will put downward pressure on BVOD prices," Willee said.

"That's on top of TV's current battle with more viewers moving to on-demand watching."

Interestingly players like Samsung are also coming to play in the lower price high quality video space, UM Australia head of media planning Michael Mellington said.

"This is putting pressure on the market, and doing it at a time when LIVE/FAST inventory from BVOD providers is still being treated as "ON DEMAND" style," Mellington said.

"BVOD/ SVOD and FAST play different roles in this ecosystem, with FAST being seen as a more passive experience comparatively, so the question is, should that be reflected in the cost?"

Linnear has a good supply and a lower demand at the moment, so Seven and Nine prices seem to be a bargain at around $25-30 CPM.

In contrast, Ten and SBS have always been slightly more expensive at $35-50 because there is less supply and demand.

One buyer told AdNews they have debated with Ten to lower CPMs.

But as more and more people shift their budgets away from the linear buy into the digital buy, there is speculation that the linear prices will go up. 

“Will publishers reprice as less people watch linear but must still make revenue numbers?” a media buyer posed to AdNews.

Last month Variety quoted media executives saying CPMs in the US are expected to dip as much as 3% for less-valued inventory on linear TV and in streaming. 

Meanwhile, CPMs could rise as much as 5% for properties that generate more interest, typically tied to sports.

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