Streaming TV Commercials Are Bewildering, Repetitive, and Growing Like Crazy

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Ben Chappell was binge-watching The X-Files on Hulu recently when he kept seeing the same ads for sports betting apps again and again. He estimates that over three hours he watched the same commercials many times. (Hulu says it caps the frequency a user can see the same commercial at two times per hour, four times per day, or 25 times per week. Customers can exceed those limits when additional ads are sold by third parties.)

“It’s complete overkill,” said Chappell, 37, who lives in Lakewood, Colo., where sports betting is legal and ads from the industry are flooding the zone. “Maybe I’d watch them if it wasn’t the same commercial over and over.”

Fans of streaming services also say the commercials can be too loud or prone to freezing. Chappell has considered upgrading to a commercial-free version of Hulu, a Walt Disney Co. unit, but he isn’t ready to pay an extra $6 a month. And the problem is hardly confined to Hulu. He’s also noticed repetitive ads on ViacomCBS Inc.’s Pluto TV. For now, he just hits the mute button and vents his frustrations on Twitter, where he recently wrote, “So, are we all just ok with watching the same 7 commercials on streaming services until we goddamned die?”

In spite of such complaints, which are commonplace on social media these days, the market for streaming TV ads is growing fast. This year U.S. advertisers will spend $11.36 billion on streaming TV commercials, according to EMarketer, up from $8.11 billion in 2020.

Streaming TV Commercials Are Bewildering, Repetitive, and Growing Like Crazy

The boom is being driven, in part, by a slate of new services catering to consumers willing to sit through a few commercials in exchange for paying less to access the programming. Some services with ads, such as Pluto TV and Fox Corp.’s Tubi, are free, while others, like Discovery+, Paramount+, and Peacock, typically cost $5 to $6 a month. Paramount+ and Peacock also charge $10 a month to go commercial free. In June, WarnerMedia will roll out a new ad-supported version of HBO Max. Executives at AT&T Inc., which owns HBO Max, have yet to say how much it will cost. According to CNBC, the service will initially be priced at $9.99 a month.

The newcomers are competing for ad dollars with older services including Hulu and YouTube, streaming platforms like Roku and Amazon, and even the makers of smart TVs, such as Samsung, that sell ads inside their apps or inside other streaming services. In the year ended in January 2021, ad-supported services grew their share of U.S. streaming homes to 26%, from 24%, according to Nielsen.

Advertisers, however, are struggling to figure out how many people are actually watching their commercials, how often the ads are appearing, and where the spots are being shown. Advertisers can buy directly from a streaming service like Peacock or Discovery+ or buy across hundreds of streaming apps from connected-TV platforms, TV manufacturers, or third-party brokers. Many have their own way of counting viewers. Currently there’s no independent measuring group to play referee across all streaming services the way Nielsen does for traditional TV. Nielsen is developing a metric for the industry to buy and sell advertising more easily across TV and streaming services, but it won’t be ready until 2024. “It’s fragmented, and advertisers have to stitch it all together,” says Dave Morgan, chief executive officer of Simulmedia, which helps marketers buy more-precise TV ads. “It’s cumbersome.”

Brad Adgate, an industry consultant, says the current state of the business is reminiscent of the early days of cable TV, when advertisers bought commercials on new channels like MTV or USA with no way of knowing whether they were getting their money’s worth. After Nielsen began measuring cable audiences in the 1980s, advertisers got more comfortable with the medium, and the whole thing took off. “It was the Wild West back then, as it is now with streaming,” Adgate says.

Media giants such as Comcast Corp.’s NBCUniversal, ViacomCBS, and Discovery Inc. say that in some crucial ways their streaming services offer an upgraded experience for advertisers and viewers compared with the advertising options of yesteryear. They’ve introduced new formats that aim to be less irritating to customers than traditional breaks full of 30-second spots, such as commercials that appear on the screen only when the viewer pauses a show.

The media companies also like to point out that ad-supported streaming platforms tend to show significantly fewer commercials than their progenitors in traditional TV. Discovery+ and Peacock promise to show no more than five minutes of commercials per hour, which is less than half the usual load on cable or broadcast TV.

Streaming services also promise advertisers they can better target particular slices of viewers. Jon Steinlauf, Discovery’s chief U.S. advertising sales officer, says that on Discovery+ “if you only want to reach women with two children under 12 with $100,000 in income, we can sell you that.” Yoplait can buy a Discovery+ ad right after a scene on a cooking show during which someone said the word yogurt—something that would be hard to do on TV.

Because the inventory per hour is limited and streaming ads typically can’t be skipped, media companies argue that such spots are more valuable. The price of ads on Discovery+ is about three times higher than on the company’s cable networks, which include HGTV and TLC.

By this fall, Peacock’s viewership among a key demographic, 18- to 49-year-old viewers, should be roughly the same as the audience on the NBC broadcast network in prime time, so the ad rates are expected to be about equal, says Laura Molen, president of advertising and partnerships at NBCUniversal. “Media is a vehicle to get advertisers to consumers,” she says. “Think of Peacock as a luxury vehicle.”

Some ad buyers say the streaming services should be priced more like economy sedans. On traditional TV, advertisers typically know the exact time, network, and program during which every commercial appeared. But some streaming platforms will only disclose in which group of content, like lifestyle or sports programs, the ad ran, or only provide the total number of times an ad was seen. That can make it hard to determine whether a commercial appeared next to controversial content or how many times it aired to a specific household.

“They’ll say, ‘We’re not going to tell you where it ran. Just trust us that it ran against this target audience,’” says David Spencer, assistant manager of audience buying strategy for General Motors Co. “That’s not something that we’re OK with.”

Advertisers also say streaming services can’t target viewers with the same precision as can be done on Google or Facebook. Jack Kelly, national integrated media manager at Subaru of America, which advertises on Peacock, Discovery+, Hulu, and Paramount+, says he’d like to show viewers different commercials depending on whether they own a Subaru or are just thinking about buying one. But he can’t do that yet on a streaming service. “That’s the holy grail of advertising,” he says.

Advertisers are also wary of irritating potential customers by inadvertently bombarding them with the same spot ad nauseam. An automated ad server sometimes shows viewers the same spots repeatedly when marketers ask to reach a certain number of streaming viewers quickly. The repetition may be exacerbated when a streaming service sells inventory to only a small number of sponsors—NBC had only 10 advertisers at Peacock’s launch last July, for instance—and that smaller pool of advertisers may make it seem that subscribers are seeing the same ads over and over.

Pluto TV tries to ensure viewers don’t see the same commercial more than once every 30 minutes, though there are some cases when an advertiser runs multiple ad campaigns at the same time, which can lead to repetition. NBC has tried putting caps on how often a commercial appears on Peacock. It also recently started selling Peacock commercial time to a wider array of advertisers. Another possible reason for the sense of repetition, Molen says, is that some ads are just catchy. “Jake from State Farm is a memorable guy,” she says.
 
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