'A big winner' Market for advertising on streaming services to pass £1bn

A Little more than two years after Netflix moved to further disrupt the TV industry by introducing commercials, galvanising already fierce competition to grab budgets targeted at traditional TV, the market for streaming advertising in the UK will pass the £1bn milestone.

- Mark Sweney

For the first decade of the streaming revolution the received wisdom, most fervently espoused by Netflix, was that the days of the TV commercial were numbered, with consumers willing to pay for uninterrupted viewing.

A combination of the cost of living crisis making consumers more open to paying less in return for seeing a few ads, and the growth potential in tapping a new revenue stream as subscriber growth petered out, has made the ad break the streaming winner of 2024.

By November 2022, when Netflix had its Damascene moment, launching a cost-conscious, ad-supported tier to reignite stalling growth, the advertising opportunity in the video-on-demand sector was already clear.

That year the UK market - which includes free, ad-supported, on-demand TV services (Fast), including the Channel 5 owner Paramount's Pluto TV, Fox's Tubi and Samsung's TV services - hit £746m. At the time, the streaming advertising sector amounted to a fifth of the then £3.9bn traditional TV advertising market in the UK.

By the end of 2024 the streaming ad market will have grown by £300m to £1.1bn to be 30% of the size of the under-pressure traditional TV ad market, which will shrink to £3.58bn, according to Ampere Analysis.

"Advertising supported streaming has been a big winner," says Rory Gooderick, a senior analyst at Ampere. "But when looking at the advertising landscape in the UK, the ad tiers offered by the [US] streamers are still fairly immature, with low advertising loads, and a minority of customers are on ad-supported tiers, aside from Amazon which introduced ads for all customers."