The Day Online Video Advertising Became More Expensive Than the Super Bowl

Live video marketing concept.

By Joseph Antonucci, VP of Strategy and Planning at Croud

The last decade has seen the term “digital gap” be utilized in various ways to show the constant evolution and growth in consumption and adoption of all digital channels (i.e. digital video & audio, etc.) catching up to their companion traditional properties (i.e. linear television, terrestrial radio, etc.). While the divide has since closed overall, a few applications have remained stalwarts to disruption; including the Super Bowl, the holy-grail in the advertising industry.

All that has changed since Netflix recently announced that they will not only allow ads on their platform but would also charge a reported price that is more expensive, at a CPM base, than that elusive Super Bowl spot. This makes it harder for advertisers to figure out how to navigate the complex world of new media.

The major shift

There has been a major shift within media away from the silos of traditional and digital media, away from brand and performance marketing, and towards brand building performance through cross channel media. This is why digital media has moved to the lead consumer channel, while traditional media has shifted to an extension of digital for the critical reach and awareness moments needed. The ‘digital gap,’ as it once was referred to in the video landscape, has officially closed when it comes to its hardest challenge, the US cable TV lion share in terms of both minutes consumed and attention.

And this won’t be the last time a digital channel overtakes the lionshare of consumption from a traditional ATL space, as digital OOH (dOOH) and digital audio are reducing the final two spaces where the so-called “digital gap” still exists.

Untapped audiences

The excitement driven by new digital ad opportunities resides around the exploration and potential of driving incremental reach with new customers. This makes sense for Netflix given their market position and approximate base of 70% exclusive visitors compared to other top streaming websites.

The problem is that the audience that has been built on a subscription platform is not the audience that will be available immediately in the new model. Instead of eating into its current customer base, Netflix hopes to attract new subscribers in this tier.  Therefore, advertisers need to carefully evaluate the uncertainty around this new audience, the exclusivity they hope it provides and any potential overlap with other digital video properties. The most consistent comparison to this launch is TikTok’s entry into the advertising sphere as a new platform, but that situation is completely unique and unparalleled when accessing an audience; as it provided the opportunity to reach the full existing consumer base rather than a supplemental tier.

Risk v. reward of it all

Despite the existence of distinct/targeted audiences and the change in consumption patterns, we are continuously seeing new to market digital properties far exceed traditional pricing. The marketplace has changed; while demand has remained strong, the quickly accelerated supply will begin to level out.

Therefore the risk is complicated by a much heavier initial investment ~$65 CPM (Netflix), compared to ~$50 CPM expected through Disney+, or even ~$20-40 CPM seen within Hulu. Even more egregious when you compare to the advertiser entry of a ~$10 CPM offered by TikTok when the platform first launched in late 2019.

The advertiser casualties of the next wave of digital disruption will be those who failed to find new ways to reach new audiences as well as the need and understanding to market more effectively. There is no longer the low hanging fruit of finding your next fruitful audience pool by just flipping a switch for an ad-supported model. The communities of today and tomorrow have shifted out of the view of easily influenced paid channels. Off of Meta & Twitter to platforms like Discord where they need to be embraced and engaged not retargeted. From singular set top boxes to a desire for shared viewing experiences on Twitch or Caffeine TV.

Instead of obsessing over the most recent “first” to hit the market, we should start solving for the new rules of media; surrounding and embracing communities to cultivate the next generation of audiences.