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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 is looking smart this week—and not only because his startup just raised $20 million in new funding.

Smart TV\'s Kenya

Fairchild is the co-founder and CEO of Pasadena-based tvScientific, one of a growing list of adtech firms trying to capitalize on the red-hot advertising market for connected TVs, also known as smart TVs. These are TV sets featuring built-in streaming apps that allow viewers to directly access services like Netflix and Hulu. They’ve become increasingly ubiquitous; if you’ve bought a new television lately and opted for one of the newest models, chances are that you have a smart TV of your own.

Spending on smart TV ads has rapidly risen in recent years, jumping 60% in 2021 alone, according to research from Insider Intelligence. This past week brought news that should only further bolster the market: Netflix is poised to finally offer an ad-supported streaming tier, in response to the streaming platform losing subscribers for the first time in a decade last quarter.

Whenever Netflix starts airing commercials, it’ll join an expanding roster of streaming services opting to sell cheaper subscriptions with ads, including Hulu, HBO Max and Peacock. As consumers continue to cut the cord on traditional cable TV in favor of online streaming, they’re increasingly opting for these less expensive plans. Fairchild believes that half of streaming service viewership is already ad-supported.

“The big argument was [that] people don’t want to see ads on streaming services and that is, I think, somewhat true,” Fairchild told me. “But consumers also get subscription fatigue—meaning they can have one or maybe two services where there’s no ads, but the rest of them need to have an ad-supported [tier]… And we’ve seen that storyline play out with the increase in the number of ad-supported services.”

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

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

Leading the startup’s $20 million Series A round was Silicon Valley VC firm Norwest Venture Partners, which was joined by NBCUniversal and Hearst Ventures. The new capital brings tvScientific’s total amount raised to $23 million.

The Pasadena startup is not the only smart TV-focused adtech firm to have recently landed a haul from investors: In February, MNTN, which has a major presence in Culver City, raised a $119 million Series D led by institutional giants BlackRock and Fidelity.

With Netflix, which has 222 million global subscribers, soon joining the ad-supported streaming fray, it’s likely we’ll only see more firms like tvScientific and MNTN making a name for themselves—and luring plenty of VC dollars along the way. — Christian Hetrick

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