**Streaming Platforms Have Room to Boost Ad Revenues, Says Research Firm**
A recent report by Omdia has highlighted significant potential for growth in advertising revenues within the ad-supported connected TV (CTV) video services sector. The report establishes a new monetisation benchmark, indicating that these services could generate an average of $0.21 per hour of viewing if all available advertising slots were sold. This benchmark applies to various service models, including Hybrid Video on Demand (HVOD), Advertising Video on Demand (AVOD), Free Ad-Supported Streaming TV (FAST), and Broadcaster Video on Demand (BVOD).
According to Omdia, the current advertising operations within the CTV industry are only utilizing about 65% of their commercial capacity. Furthermore, they are operating at just 32% of the maximum regulatory advertising capacity allowed for traditional broadcast linear television. This suggests that there is a substantial opportunity for revenue growth, potentially increasing by two to three times if advertising volumes were expanded and inventory fully sold.
The benchmark of $0.21 per hour was derived from an analysis of video advertising loads across CTV streaming services in several countries, including Australia, Brazil, Canada, France, Germany, Mexico, the United Kingdom, and the United States, projected for the year 2025. Matthew Bailey, Senior Principal Analyst for Advertising at Omdia, emphasized the importance of measuring success in the CTV streaming market. He noted the remarkable consistency of the $0.21 benchmark across different types of video services, despite variations in advertising loads, cost-per-mille (CPM), and audience characteristics.
Bailey stated, “Understanding how these KPIs relate to one another will be critical for CTV players looking to grow and drive long-term value.” The report also pointed out several structural challenges within the CTV advertising ecosystem. These include the necessity for standardized measurement practices, improved regulatory alignment with traditional broadcast television, and the increasing influence of US-based companies in the global television and CTV advertising landscape.
Additionally, Omdia identified a notable monetisation gap between the United States and international markets. The US market commands advertising premiums approximately 30% higher than comparable markets due to its larger size and greater production investments. In contrast, international markets face various challenges such as lower purchasing power parity, regulatory constraints, and conflicts between commercial broadcasting goals and public service broadcasting mandates.
Laura Chaibi, a consultant and expert in CTV and TV streaming advertising at Omdia, pointed out that ad-light HVOD services like Netflix, Amazon Prime Video, and Disney+ have significant growth potential. However, to reach the $0.21 per hour benchmark, foundational work is required. This includes expanding the advertiser base to enhance advertising fill rates and improving advertising context protocols.
Chaibi also highlighted the need for a more equitable environment for local and national TV broadcasters in comparison to global CTV streaming platforms. She noted that addressing the existing two-tier advertising model is essential for creating a more balanced competitive landscape.
The research concluded that collaboration across the industry is vital for establishing reliable cross-platform measurement standards, fostering innovation in advertising models, and enabling local broadcasters to compete more effectively against global streaming giants. As the CTV advertising ecosystem evolves, stakeholders will need to address these challenges to unlock the full revenue potential of ad-supported streaming services.