How live sports is changing the new TV landscape
Growing streaming inventory will drive down costs for media buyers – and force live sports streaming platforms to up the ante to entice ad spend, predicts Standard Media Index’s Darrick Li.
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While some components of traditional TV viewership struggle to withstand consumer behavior shifts, one aspect has found its stance in both linear and streaming – live sports. As streaming becomes increasingly mainstream and live sports straddle both linear and streaming, how is the rest of the advertising ecosystem impacted?
What the field looks like today
In 2022, digital ad spend reflected in the Standard Media Index pool earned a 58% share of dollars compared to traditional channels. A large portion of that growth was driven by digital video – specifically over-the-top video (OTT) ad spend which increased by 24% year over year (YoY). And this growth was even more significant when looking at live TV on OTT (26%) – an area where live sports is starting to dominate. In fact, a sampling of the top sports media OTT revenue was up 10% YoY.
Within the past year alone, major legacy sport broadcasters like ESPN, NBC and Fox have expanded into digital TV. In tandem, established streaming players have also bought rights to live sports events – such as YouTube’s December deal for the highly coveted Sunday Night Football programming. Moves like these are causing a gradual shift in where advertisers allocate their spend – linear TV ad spend was down in 2022 YoY but sports is still seeing investment – the linear TV sports programming ad revenue was only down 5% YoY.
The impact of more inventory
As this migration occurs, it’s important to examine the impact of live sports on the connected television (CTV) and streaming industry as a whole. As CTV continues to grow in popularity, we’re seeing a huge influx of video ad inventory as new streamers or ad-supported tiers launch to engage this audience. For example, earlier this month, MSG Network announced its new streaming service–unsurprisingly called MSG+ – for fans to watch Knicks, Rangers, Islanders and Devils games.
With more content and, therefore, ad inventory becoming available, the cost per 1,000 impressions (CPMs) that streaming providers can demand will be impacted. When there was less CTV inventory available and advertisers tried to bid on the same spots, it drove up the cost. Now that there will be an overabundance of inventory, costs may likely go down for advertisers. With linear TV pricing also potentially going down, advertisers will be in a better position to access more inventory across different channels at possibly lower costs.
How to win the live sports war
With so many new streaming apps in the mix creating more inventory options for advertisers, live sports streaming apps and channels will need to rely on unique content offerings, audience data and creative advertising capabilities to differentiate themselves. YouTube won’t struggle to demand a premium for Sunday Night Football – advertisers know the viewership there is strong and they have exclusive rights to the content.
But for many other players in the live sports space, data will be central to their winning strategies. Smart marketers will take a strategic approach to their investments by leaning on data to understand their audience when they’re watching, on what platform and at what cost. In this way, new streaming services like MSG+ can find success by providing advertisers with data on how best to reach their audiences.
The live sports TV landscape is in flux as it slowly makes its transition to digital. And with the right data and strategies, both live sport streaming providers and advertisers looking to reach sports fans can stay ahead of the ball.
Darrick Li is vice-president of sales, North America media owners at Standard Media Index.