Streaming ad market to surpass linear TV within three years, Magnite CEO predicts
Analysis shows how streaming platforms are reshaping TV advertising landscape through data, targeting and small business reach.
The streaming advertising market is poised to overtake traditional linear television within three years, according to Michael Barrett, CEO of Magnite, the largest independent sell-side advertising platform. This prediction comes as streaming platforms continue gaining viewer hours while traditional TV viewership declines.
According to Barrett, streaming content already surpasses broadcast television in terms of hours watched in North America. "If you look at the charts, streaming's supposed to be growing in the 20 plus percent compound annual growth rate for the next four or five years, linear slightly down," Barrett noted in a December 2024 interview.
The transition represents a seismic shift in an advertising market currently dominated by linear TV, which commands approximately $60 billion in annual advertising revenue - double that of connected TV (CTV). However, this gap appears set to close rapidly as viewing habits evolve.
A key factor accelerating this transition is the valuable demographic profile of streaming viewers. According to Barrett, streaming platforms attract "younger, wealthier" audiences who have not yet made permanent brand decisions. This makes them particularly valuable to advertisers seeking to influence long-term consumer preferences.
The shift gained momentum as major streaming platforms reversed their stance on advertising. Netflix, which previously rejected advertising in favor of pure subscription revenue, launched an ad-supported tier that has become one of the largest in the market. This move has made advertising a standard feature across most major streaming platforms.
Artificial intelligence may significantly expand access to TV advertising for small and medium-sized businesses (SMBs). Barrett identifies the creative production process as a major barrier that has historically prevented smaller advertisers from entering television advertising.
"The creative hurdle to be able to produce content that's approved by the broadcasters and goes through that system is prohibitively expensive and frankly doesn't actually meet the needs of these advertisers," Barrett explained.
AI-generated advertising could help streaming platforms expand from their current base of 500-1,000 major advertisers to potentially 15,000 advertisers. This would mirror the accessibility that has made social media advertising attractive to small businesses.
Despite the push for greater accessibility, streaming platforms maintain strict standards for advertising content. According to Barrett, major services like Netflix and Disney+ require high production values, distinguishing their ad inventory from local cable advertising of previous decades.
The technology exists to target ads by household rather than broad geographic regions. However, production quality requirements mean that low-budget local advertising common in traditional TV's "fringe time" slots may not transfer directly to premium streaming inventory.
Changes in data privacy regulations and technical standards are forcing adaptation in how streaming advertising targets viewers. The advertising technology industry faces varying restrictions across different regions and U.S. states regarding what viewer data can be collected and how it can be used.
"It's becoming damn near impossible to be able to run your same playbook across the states, let alone Europe, let alone APAC," Barrett noted. This has led much of the industry to support federal privacy legislation to create consistent standards.
As third-party cookies phase out, direct relationships between content publishers and their audiences gain strategic value. Barrett indicates a shift toward publishers leveraging their first-party data and content context for ad targeting.
Technology platforms can aggregate similar content across multiple publishers to achieve the scale advertisers require. "More and more they're leaning on tech partners like a Magnite and others that can take that pickleball content from a thousand publishers, bring it all into one pickleball segment, and now it's scaled and buyers trust it," Barrett explained.
While major technology platforms dominate digital advertising through their vast stores of first-party user data, Barrett suggests their share of total advertising may be reaching its limit. He questions whether "marketers are comfortable with 95% of their budget going to walled gardens and 5% going to the rest of the world."
The migration of television advertising budgets to streaming creates opportunities beyond the major tech platforms. Traditional media companies launching streaming services may capture significant portions of these budgets due to their experience with broadcast-style advertising.
The advertising technology industry faces continuing evolution, with major structural changes occurring roughly every five years. Success requires balancing operational excellence with product innovation and adaptability to changing market conditions.
For streaming platforms and advertisers alike, the next three years appear likely to bring accelerated change as advertising dollars follow viewing hours from traditional to streaming television. This shift promises to reshape not just how advertisements reach viewers, but which businesses can access television advertising.