“Today, there’s a broader understanding of streaming’s importance in TV advertising strategy, but consumer behavior keeps evolving,” explains Justin Fromm, Head of Insights & Thought Leadership at Samsung Ads. “In 2024, the majority of Samsung Smart TV households start their TV viewing with streaming. Therefore, advertisers need to rethink their TV strategies to be efficient and effective, as linear TV alone has become insufficient for reaching these streaming-centric viewers.”

ALAN WOLK (AW): Is that what prompted you to revisit the Rule of 40?

JUSTIN FROMM (JF): When we first introduced the Rule of 40, it was about highlighting the necessity for advertisers to shift a significant portion of their budgets to Connected TV (CTV) in order to effectively reach their target audiences. At that time, many advertisers were still heavily focused on linear television. Our data showed that to reach your target audience across TV, you needed to allocate 40% of your budget to streaming. But given today’s viewing patterns, that needs to be revised, and streaming needs to be front and center. 

AW: Many viewers aren’t officially classified as “cord cutters” because they still have some sort of pay TV subscription, but your data is showing they’re spending most of their time on streaming?

JF: That’s correct. Our data indicates that 62% of our households spend more than half of their TV time streaming. While some households are indeed cord cutters using antennas for over-the-air content, many still watch linear TV primarily for sports and news. However, the majority of their viewing time is dedicated to streaming. Initially, the Rule of 40 was about incremental reach—adding streaming to fill the gaps in linear TV reach. Now, without streaming, you can’t reach even half of the total TV audience.

AW: Previously, we assumed that if people kept their linear subscription, they were watching a wide variety of content. But your data seems to indicate they mostly watch news and sports on linear, and everything else on streaming?

JF: Exactly. There’s a specific use case for linear TV now. People might catch one or two programs, but predominantly, linear TV serves as a supplement to their streaming habits.

AW: Is this behavior influenced significantly by age demographics?

JF: To some extent, but nearly two-thirds (62%) of Samsung Smart TV households are streaming-centric, spending more than half of their TV time on streaming. This trend spans across all demographic groups.

AW: How representative is the Samsung audience of the overall US population?

JF: Samsung is the leading smart TV brand in the U.S., with over 72 million TVs and 18 years as the top brand. According to the Advertising Research Foundation, around 81% of TV households are smart TV households. While there’s a portion of the TV audience not covered by this group, the majority of American households are streaming.

AW: How does Samsung help advertisers leverage this trend? What are some specific offerings?

JF: Samsung has been at the forefront of CTV advertising. Our Tizen operating system allows us to serve ads on the home screen when viewers turn on their TV, as well as within different types of content. This gives us the unique ability to reach consumers right from the start, often being the only ad they see if they opt for ad-free environments.

AW: What specific strategies can advertisers implement to ensure they reach streaming-centric audiences effectively?

JF: Advertisers should focus on creating a holistic media strategy that integrates linear and streaming TV. They need to use data to identify where their target audiences are most active and allocate budgets accordingly. Utilizing programmatic advertising can also help in optimizing ad spends and reaching specific audience segments with personalized messages.

AW: Transparency and measurement have always been critical in advertising. How does Samsung address the transparency challenges in CTV?

JF: Transparency is indeed crucial, and it’s one of the main challenges in CTV. Samsung addresses this by leveraging our extensive TV dataset, which includes both linear ACR (Automatic Content Recognition) data and streaming data. This allows us to provide advertisers with detailed insights into where their ads are running, who is seeing them, and the overall effectiveness of their campaigns. We help advertisers understand duplication across platforms and optimize their media plans to minimize waste and maximize reach.

AW: What should be the best practices for advertisers in light of this report?

JF: Advertisers need to shift their mindset to prioritize streaming in their TV advertising strategies. They should consider all the different ways consumers watch TV and ensure they can reach them regardless of how they spend their TV time. Utilizing streaming TV needs to be one of the first tools in their advertising toolkit.

AW: What challenges do advertisers face in adopting this strategy?

JF: One major challenge is the lack of transparency in duplication across different streaming services. This is where partners like Samsung can help. We use our massive TV dataset, which includes both linear ACR data and TV device data, to help advertisers understand and efficiently reach their target audiences.

AW: Is there ample inventory available on streaming for advertisers?

JF: Yes. As more Americans choose streaming as their primary viewing option, the growth has been in ad-supported content. There’s plenty of inventory within streaming content and on the TV set itself through the Tizen operating system and other operating systems.

AW: What if advertisers lack first-party data?

JF: CTV, as a digital medium, provides a wealth of data about viewers. We can use our own Samsung data to target individual viewers and households, helping advertisers whether they have their own first-party data or not. We also use our first-party data, including linear ACR data and device-level data, to build custom segments for advertisers.

AW: Can advertisers place ads exclusively on Samsung TV Plus?

JF: Samsung Ads helps advertisers place their ads across the streaming landscape. While Samsung TV Plus, our native FAST (Free Ad-Supported Streaming TV) service, is a significant opportunity, we also serve ads across other streaming services via our Samsung DSP (Demand-Side Platform).

AW: Just to clarify, you’re able to place ads on other streaming services as well?

JF: Yes, we have relationships with all the streaming services on our TV sets, enabling us to serve ads across the entire streaming landscape.

AW: So given the findings of your new report, how do advertisers need to adjust their planning and budgeting strategies for TV media?

JF: Advertisers need to recognize that streaming should no longer be an incremental part of their media plan—it needs to be the foundation. Given that a significant portion of TV audiences is now streaming-centric, advertisers must allocate a substantial part of their budget to CTV to maintain reach and effectiveness. They should also leverage data-driven insights to understand viewing behaviors and optimize their ad placements across various streaming platforms.

AW: What are the future trends you foresee in the TV advertising landscape?

JF: We anticipate continued growth in streaming and a further shift towards ad-supported models. The integration of advanced data analytics and AI will enhance targeting and measurement capabilities, providing even greater transparency and efficiency. Additionally, cross-platform strategies that seamlessly integrate linear and digital will become the norm. Advertisers will need to stay agile and adapt to these changes to remain effective in reaching their audiences.

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