Streaming TV ads will be larger than linear TV by 2028. YouTube should be the biggest winner. It isn't, yet.
Why it matters: YouTube is the biggest name in streaming viewing, but its ad sales are growing slower than the streaming ad market.
Let's break it down into 4 big questions:
1) Who has the largest streaming ad business?
2) Who is growing the fastest?
3) How important is advertising to the streaming business model?
4) What is going on with YouTube?
Who has the largest streaming ad business?
U.S. streaming TV advertising revenue (eMarketer):
1) YouTube - $4.7B (13%)
2) Amazon - $4.6B (12%)
3) Fox + Roku - $4.1B (11%)
4) Disney - $3.3B (9%)
5) NBCUniversal - $2.3B (6%)
6) Paramount + Warner Bros. - $2.0B (5%)
7) Netflix - $2.0B (5%)
8) Other - $14.4B (38%)
Key point: YouTube and Amazon are the top two players, but together they have only 25% of the market. The long tail (Other) has 38%.
Who is growing the fastest?
YoY growth in streaming TV advertising revenue:
1) Netflix - ↑ 95%
2) NBCUniversal - ↑ 55%
3) Fox + Roku - ↑ 26%
4) Amazon - ↑ 22%
5) YouTube - ↑ 18%
6) Paramount + Warner Bros. - ↑ 10%
7) Disney - ↑ 7%
8) Other - ↑ 11%
How important is advertising to the streaming business model?
Between the lines: For streamers that sell both subscriptions and ads, advertising is a major business.
Total SVOD ad revenue (Kagan):
1) 2010 - $9M
2) 2015 - $596M (↑ 6,834%)
3) 2020 - $2.2B (↑ 276%)
4) 2025 - $9.7B (↑ 331%)
5) 2030P - $18.1B (↑ 87%)
Ad share of total SVOD revenue:
1) 2010 - 1%
2) 2015 - 9%
3) 2020 - 9%
4) 2025 - 15%
5) 2030P - 20%
Ad share of total SVOD revenue by streamer:
1) Peacock - 41%
2) Hulu - 38%
3) Paramount+ - 22%
4) Netflix - 13%
5) Disney+ - 12%
6) Amazon Prime - 12%
7) HBO Max - 11%
8) Apple TV - 0%
9) Entire group - 20%
What is going on with YouTube?
YouTube should be crushing it in advertising. Instead, its ad sales are growing slower than the overall streaming TV ad market.
Growth between 2021-26:
1) YouTube streaming TV advertising - ↑ 95%
2) All streaming TV advertising - ↑ 123%
Surprising: YouTube's Nielsen Gauge share gets all the headlines, but its ad business is growing much slower than its viewing time.
Why this matters: If YouTube had grown ad sales as fast as viewing time, its U.S. streaming ad business would be $6.4B (↑ 35%).
Bottom line: Every streamer not named Netflix would trade places with YouTube. Even Netflix would give it a serious look. Building engagement is harder than building an ad business.
What's next: YouTube needs to ask why advertisers don't see it as a no-brainer for streaming TV.
