Home On TV & Video Shift To Streaming Drove Premium Video CPM Pricing Up

Shift To Streaming Drove Premium Video CPM Pricing Up

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It’s no surprise that premium video — commercially produced, long-form episodic video — commands much higher premiums than standard digital video, but recent research from Standard Media Index (SMI) showed just how much.

SMI found that average premium video CPMs were nearly two times higher at 192% of the total digital video market, and accounted for 43% of total digital video revenue share.

CTV device pricing commands a 190% upcharge across both premium and non-premium video inventory — 90% higher than all digital video CPMs, which includes desktop and mobile, as more consumers view premium content on their television screens.

“Which is huge,” SMI President Ben Tatta told AdExchanger. “Advertisers will pay significantly more for that video being watched on the large glass on the wall versus desktop and mobile.”

SMI did not give exact dollar amounts.

Hulu had the largest share of premium digital video revenue, or 10.8%, followed by YouTube Select TV, Roku, ABC, and Google Preferred, among others.

“Premium video is growing significantly — you’ve got every major network group launching new OTT services,” Tatta said. “We’ve seen both revenue and premium video really grow based on all the new services, and then changing consumption habits, which was more a reflection of this shift from linear TV to OTT. As a result of that, the dollars are following and really driving the CPMs up.”

While it’s still early days for OTT, Tatta expects the launch of new streaming devices to drive up ad spend and premium pricing. That includes smart TV manufacturers such as LG, Samsung and Vizio launching their own operating systems to compete with market leader Roku.

“I think that we’ll see new services launching, at least on the OTT side, each quarter,” he said.

The average CPM for non-premium video — mainly user-generated, short-form videos that are not commercially produced — under-indexed at 72%, less than half of premium pricing and less than the average of all digital video, but still accounted for 57% of total digital video revenue share.

YouTube had the largest share, or 7.1%, of non-premium video revenue, followed by The Trade Desk and DoubleClick Bid Manager.

Tatta said that OTT became a breakout category within premium video last year as consumers cut the cord — both CTV and OTT are seeing premiums previously found only within linear.

“Based on the significant growth in consumption, there’s a need for more supply,” he said. “I think we’ll continue to see CPMs grow.”

The growth of AVOD and hybrid streaming services will continue to drive up premium CPM pricing, Tatta said, adding that ad-free services like Disney Plus have hinted at potentially introducing ad-supported models.

“There’s a ton of consumption on subscription-based services like Netflix,” Tatta said. “If they were to [adopt a hybrid model], there could be some significant opportunities there for them, as well as the advertisers.”

A Broad Landscape

SMI’s data will be released in Q2 and is aimed at providing more transparency around pricing between premium and nonpremium video.

“In the past, a lot of buyers and sellers were just looking at video really broadly and not really distinguishing between the different types,” Tatta said. “There was a lot of gray areas and it was really hard to get a good handle on pricing, in general, with video.”

The report marks the first time SMI looked at CPM pricing data in digital video, where ad revenue increased 18% overall in 2020, outpacing all other media and a stand out in digital advertising.

“We started with video because there’s the greatest amount of need in the marketplace today, given all the new services,” Tatta said, adding that SMI will also look at CPM pricing in display, social and search.

SMI aggregates billing data from all of the major holding companies, and the report accounts for a total of $90 billion in ad spend across all channels.

SMI looked at pricing data across a broad OTT landscape that includes pure-play AVOD and virtual multichannel video programming distributor services such as Hulu, Tubi, Roku, Peacock, Pluto TV, and FuboTV; ad-free services like Disney Plus and Netflix; “TV Everywhere” MVPDs and TV networks such as DirecTV and NBC; and programmatic exchanges, including The Trade Desk.

Last year, TV Everywhere drove the highest pricing within OTT — with NBC Sports and DirecTV in the lead — indexing at 118%, followed by OTT pureplay (led by CBS Interactive and Roku) at 105%. Ad network exchanges indexed the lowest at 80%, however, though tech startup VideoAmp outranked OTT pure-players.

NBC Sports Network, DirecTV, CBS Sports, and VideoAmp were among the top 10 vendors with premium pricing among TV networks and MVPDs — including live streaming service Twitch — while Bloomberg drove the highest average non-premium pricing within online video.

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