Netflix’s pivot to ads boosts an already hot smart TV market

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Jason Fairchild’s bet on the future of internet-connected TV ads seems smart this week, and not just because his startup just raised $20 million in new funding.

Fairchild is the co-founder and CEO of Pasadena-based tvScientific, one of many adtech companies trying to capitalize on the Booming Advertising Market for Connected TVs, also known as smart TVs. These are TVs with built-in streaming apps that allow viewers to directly access services like Netflix and Hulu. They have become increasingly ubiquitous; If you recently bought a new TV and opted for one of the newer models, chances are you have your own smart TV.

Spending on smart TV ads has grown rapidly in recent years, jumping 60% in 2021 alone, according to an Inside Intelligence study. Last week brought news that should only strengthen the market further: Netflix is ​​about to finally offer an ad-supported level of streamingin response to the streaming platform losing subscribers for the first time in a decade last quarter.

Every time Netflix starts running ads, it will join a growing list of streaming services opting in to sell cheaper subscriptions with ads, including Hulu, HBO Max and Peacock. As consumers continue to cut the cord from traditional cable TV in favor of online streaming, they are increasingly opt for these cheaper plans. Fairchild thinks that eventually up to half of streaming subscribers could end up on ad-supported plans.

“The big fight was [that] people don’t want to see ads on streaming services and that’s, I think, kind of true,” Fairchild told me. “But consumers are also fatigued with subscriptions, which means they may have one or maybe two services where there’s no advertising, but the others need an ad-supported service. [tier]…and we’ve seen this scenario play out with the rise of ad-supported services.

This is where tvScientific comes in. The company offers ad buying, measurement and optimization services for connected TVs, all while charging a 15% fee based on the client’s ad spend. The startup’s platform connects to 95% of ad-supported streaming apps and allows advertisers to measure their success by matching ad exposure with brand website visits and other outcomes desired. Founded in August 2020, tvScientific is trying to attract marketers who already buy lots of ads on Facebook and Google and link them to connected TVs, Fairchild said.

“They can advertise to over 100 million households and measure the impact of TV advertising in a very digital way, just like they do on Google and Facebook,” he said.

Norwest Venture Partners, a Silicon Valley venture capital firm, was joined by NBCUniversal and Hearst Ventures. The new capital brings the total amount raised by tvScientific to $23 million.

The Pasadena-based startup isn’t the only ad-tech company focused on smart TV to land investors recently: In February, MNTN, which has a major presence in Culver City, raised $119 million Series D led by institutional giants BlackRock and Fidelity.

With Netflix, which has 222 million subscribers worldwide, soon joining the ad-supported streaming fray, it’s likely we’ll only see more companies like tvScientific and MNTN make a name for themselves and bring in big bucks. venture capital along the way. — Christian Hetric

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