• by Karlene Lukovitz  @KLmarketdaily, December 13, 2023

Although most projections offer an extremely optimistic growth outlook for ad-supported streaming, a new analysis finds that the collective performance of at least some major platforms has been challenged this year.

Six leading streaming services — Discovery+, Hulu, Max, Paramount+, Peacock and Pluto TV — brought in $1.07 billion in ad revenue between January and October 2023, according to data from advertising intelligence platform MediaRadar.

That is not an insignificant number, and it represents only a slice of the market. However, it collectively represented an 8% year-over-year decline versus $1.2 billion generated by these six services in 2022’s first 10 months.

“Streaming platforms are confronting steep hurdles around ballooning content expenses, password sharing dilution, and an uncertain economic climate,” said MediaRadar CEO Todd Krizelman. “These factors are fueling downstream subscriber and advertising adversities across the industry.”

Five categories — restaurant, medical/pharma, finance, retail and technology — represented nearly $503 million, or 47%, of the total ad spend for these streamers through October, and this represented a collective YoY decline of 10%.

The finance category, encompassing financial institutions, real estate and insurance providers, experienced the most significant drop: down from $180 million in 2022’s first 10 months to just over $80 million in the same period this year (chart above).

Insurance companies, which contributed 68% of this category’s spend through Q3 2022, dropped to 36% in 2023. Major insurers like GEICO, State Farm and Progressive slashed their spend from $123 million to $32.5 million during the period—a 74% drop in spend.

Among the top categories, restaurants and pharma were the only sectors to register increases in YoY ad spend: up 39% and 56%, respectively.

Quick serve restaurants, representing 74% of the restaurant category's spend, surged 38%, with brands like McDonald's, Taco Bell, and Subway amplifying their OTT ad investments.

Restaurants have been a top category for Hulu, Paramount+ and Peacock so far this year.

“Quick service restaurants are making a strategic move by advertising heavily on streaming platforms,” said Krizelman. “With viewers at home, ads for restaurants are likely to prompt immediate orders, placing these brands right where viewers can act on them.”

Pharma companies, including AbbVie and GlaxoSmithKline (GSK), allocated nearly $84 million to OTT, driving a 66% increase in YoY spend. Significant contributions were made in arthritis prescriptions and OTC hair growth products.

Pharma advertisers were prominent among the top spenders in Discovery+ and Peacock.

Retail advertisers, spanning everything from car dealerships to general retailers, accounted for 14% of Discovery+'s ad spend through October, with general retailers like Target and Walmart contributing 28%.

Retail also led contributions to Hulu (13%) and Pluto TV (12%), with car dealerships dominating Pluto TV's retail spending.

Technology advertisers, making up 19% of Max's ad spend, were led by telecommunications companies like AT&T and T-Mobile (61%), followed by software firms such as Adobe, Canva, and IBM (24%).

Paramount+ gained nearly 10% of its ad revenue from technology advertisers, totaling over $15 million, with T-Mobile and Verizon as leading spenders.

MediaRadar standalone streaming services data are sampled from the ad-supported streaming packages,across a panel of 2 million people in the U.S.