In Saturday Night Live’s famous sketch, every problem had the same solution: more cowbell.
Netflix is applying the same prescription to advertising. It has tripled its ad load from one minute per hour in 2023 to three minutes today. More ads produced more revenue, but not enough. Netflix just cut its annual ad forecast by roughly $300M.
Let's break it down into 4 big questions:
1) How much do streaming TV ads cost today?
2) Which streamers are running the most ads?
3) Who is making the most advertising revenue per hour?
4) What's next?
How much do streaming TV ads cost today?
Streaming TV CPMs average around ≈$24 for all households.
Streaming TV CPMs (eMarketer):
1) Netflix - $34
2) HBO Max - $32
3) Peacock - $32
4) Amazon Prime - $27
5) Paramount+ - $26
6) Disney+ - $24
7) AVOD/SVOD Average - $24
8) The Roku Channel - $18
9) FAST Average - $17
10) Tubi - $17
11) Hulu - $17
12) Pluto TV - $14
13) YouTube - $9
Which streamers are running the most ads?
Average ad minutes per hour (eMarketer):
1) FAST Average - 9.2
2) Hulu - 7.8
3) Amazon Prime - 6.5
4) Disney+ - 4.9
5) HBO Max - 4.7
6) Netflix - 3.0
7) Paramount+ - 2.4
8) Peacock - 2.1
Director’s note: The ad load numbers from eMarketer differ significantly from Ampere’s estimate, which I have used in the past.
Flashback: The Great TV Ad Swap
Why this matters: My baseline model for the entire streaming ad industry projected 25% ad load growth between 2025-26. If eMarketer's projections are correct, then that clearly isn't happening.
Who is making the most advertising revenue per hour?
This is where it gets interesting. Multiply the price (CPM) by the number of ads to get ad revenue per hour of viewing.
Ad revenue per hour:
1) Amazon Prime - $0.35
2) The Roku Channel - $0.34
3) FAST Average - $0.31
4) Tubi - $0.31
5) HBO Max - $0.30
6) Hulu - $0.26
7) Pluto TV - $0.26
8) Disney+ - $0.24
9) Netflix - $0.20
10) YouTube - $0.17
11) Peacock - $0.13
12) Paramount+ - $0.12
Director’s note: eMarketer does not break out an ad load for Pluto TV, Tubi, The Roku Channel, or YouTube. For those, I used the FAST average (9.2 minutes per hour).
Notice who wins: It's not the streamer with the highest price. Netflix charges the most but ranks 5th. Amazon charges a middle price but runs more than twice as many ads.
Why this matters: Linear TV generates $0.24 per hour in ad revenue, and streaming appears to have caught up.
Contrarian take: Streaming will be a much better ad business than linear TV at its peak. This will require both a change in how impressions are valued/sold as well as a dramatic increase in the customer base.
How streaming doubles linear TV: Either CPMs grow to $32, ad loads increase to 10 minutes per hour, or some combination of the two.
What's next?
There are only two levers. Raise prices or run more ads.
Running more ads is easy. Every streamer is doing it. But it's a lever that pushes prices down, which is exactly what Netflix just ran into.
Raising prices is hard. It takes more buyers. National TV runs on about 200 big advertisers. Streaming needs 100X more buyers to reach $100 CPMs.
The rule of 100 is the endgame:
1) 100% of TV will be streamed
2) 100% of TV advertising will be streamed
3) 100X the advertiser base vs. national TV today
4) $100 CPMs
5) $100B US TV ad market
Flashback #1: O Captain, My Captain.
Flashback #2: $100 CPMs and the Future of TV Ad Prices