How a Streaming Video Breakthrough Can Reshape the $600+ Billion Digital Ad Landscape
Meta, Alphabet and Amazon generate 8X the ad revenue of all video streamers combined. Yet, users spend a full third more time on streaming video than on those other platforms. In 2022 people spent 2 hours a day using Meta, Alphabet, and Amazon which generated $320 billion in ad revenue. In contrast, people spent 3 hours a day streaming videos which generated $41 billion, just 1/8 the ad revenue of those Ad Giants. This disparity arises from the fact that the Ad Giants’ platforms enjoy high levels of active user engagement (content sharing, web searching, and shopping), providing valuable data on user preferences, interests, and purchase intent. This information allows them to deliver targeted ads based on user behavior. In comparison, streaming video offers a more passive, one-sided experience, where users simply watch content. The nature of streaming also means that ads can disrupt the viewing experience, limiting the number of ads shown per hour.
The ‘Shopping Pause’: A paradigm shift that could level the playing field for streaming platforms.
The rise of streaming networks as serious contenders against the Ad Giants could hinge on a single technological breakthrough: the ‘Shopping Pause’ a transformative technology that allows viewers to purchase products they discover as they watch their favorite TV shows and movies just by clicking pause. After years in development, my startup, Contxtual, is preparing to release our breakthrough platform for streaming video that enables the Shopping Pause. This groundbreaking innovation can unlock tens of millions of ad placements and transform user engagement behavior in streaming. It is the first of its kind to automate at scale the delivery of contextual pause ads that are astoundingly accurate and can be deployed in large video catalogs.
Integrating the Shopping Pause into streaming platforms could mark a turning point for the streaming industry. The feature enables users to shop directly from the content they’re watching, making the streaming experience more interactive and engaging. Passive viewers become active participants, providing the user-intent data essential for crafting high-performance ads. With this enhanced user engagement, streaming platforms can amass and analyze vast quantities of data, and deploy advanced targeting and segmentation capabilities that rival the advertising prowess of the Ad Giants.
Implications for market incumbents
The potential revenue growth powered by this paradigm shift in streaming platforms could have several consequences for the incumbent Ad Giants:
- Competition for ad spending: As ad revenues for streaming platforms increase, advertisers may shift their ad spending from their current ad platforms to streaming platforms, intensifying competition for ad dollars and potentially impacting the dominant positions of the ad giants in the digital advertising market.
- Pressure to innovate: Streaming platforms’ success in monetizing their content using the Shopping Pause could push other ad platforms to explore new ways to enhance user experience and generate additional revenue streams, driving further innovation in the digital advertising and technology sectors.
- Cross-platform partnerships: Ad Giants may seek partnerships or collaborations with streaming platforms to capitalize on the growing user base and ad opportunities in the streaming market, resulting in new business models, joint ventures, or strategic alliances.
- Consolidation: The increasingly competitive digital advertising landscape may trigger consolidation through mergers and acquisitions, as the big incumbent companies and streaming networks look to solidify their market positions and diversify their offerings.
The ability of streaming platforms to harness the Shopping Pause, enhance user engagement and interaction, and leverage data-driven advertising has the potential to dramatically reshape the digital advertising landscape. This breakthrough technology could ultimately level the playing field between streaming platforms and the today’s Ad Giants, leading to increased competition, innovation, and new business models in the industry. As the digital ad market evolves, Contxtual will continue to innovate to help companies adapt to these transformative changes.