Scaling and Accelerating Ad-Based Monetization: A New Era for Streaming

Advertising is increasingly becoming the more dominant revenue model for streaming services, with platforms optimizing ad-based monetization through FAST, AVOD, and hybrid models. A key innovation is non-linear ads formats, which overlay content without interrupting the viewing experience. Formats like L-bars, split screens, pause ads, FLEX ads and picture-in-picture are all gaining traction, offering smoother user experiences and higher brand engagement.?

Roku reported an 18% YoY revenue increase, reaching $4.1 billion in 2024. Platform revenue hit $3.5 billion, with streaming households growing to 89.8 million. Roku’s Devices segment strengthened its market leadership, and The Roku Channel’s engagement surged by 82% YoY. The company projects continued growth in streaming hours, ad revenue, and platform monetization.

YouTube introduced AI-generated video clips for Shorts, expanding its Dream Screen feature. Users can now create videos using text descriptions, with Google’s Veo 2 model ensuring high-quality AI-generated content. The feature is rolling out in select regions, enhancing creative possibilities for short-form content.

These developments highlight the ongoing evolution of digital advertising, streaming innovation, and AI-driven content creation, shaping the future of entertainment.

The streaming industry is evolving rapidly, and advertising is at the center of this transformation. As platforms shift toward ad-based models, the challenge isn’t just about monetization. This is about doing so without compromising user experience! Non-linear ads are emerging as a game-changer, allowing for seamless, engaging ad experiences that benefit both viewers and advertisers.

At Hawk Digital, we’re always exploring the latest advancements in ad tech, and it’s clear that innovation in formats, targeting, and engagement will define the next era of streaming. Whether it’s leveraging 1st-party data for smarter ad placements or embracing new interactive formats, the key is to balance revenue growth with viewer satisfaction using SGAI (Server Guided Ad Insertion).

The latest moves from Roku, YouTube, and other industry leaders reinforce that the future of streaming is not just about content, but about how we deliver and monetize it effectively. Let’s continue to push the boundaries of digital advertising together. Reach out about some of our new FLEX units for CTV and DooH.?

Scaling and Accelerating Ad-Based Monetization: A New Era for Streaming

Advertising is quickly becoming the dominant monetization model for streaming services, with most platforms already shifting or soon to adopt this approach. The critical question now isn’t "when" but "how" to scale and accelerate the transition. Streaming providers are at different stages of this transformation:

• FAST platforms are still fully reliant on an ad-driven model.
• Top-performing native streamers see AVOD as the fastest-growing avenue for attracting new users.
• Aggregators are in the optimization phase, often implementing hybrid models like "subscription with ads."
• Broadcasters are capitalizing on Addressable TV both directly (D2C) and through distributors (e.g., revenue-sharing deals).
• Operators are beginning to diversify their revenue beyond subscriptions.

The challenge for all of these players is how to increase ad revenue without diminishing the user/viewing experiences.?

There are several ways to tackle this, such as:

• Optimizing linear ad distribution (e.g., pre-rolls, mid-rolls, workflows)
• Maximizing the value of existing inventory (higher CPM pricing through local sales, using 1st party data for better targeting)
• Creating new accretive ad formats with non-linear inventory using Server Guided (SGAI) and Hybrid Ad Insertion!?

While the first two options are viable, the third non-linear ads has the potential to disrupt the market in a significant way in 2025. Although only a few streaming platforms are using these formats today, the growth potential for this kind of ad is immense.

In a recent IAB Europe / PubMatic report, 60% of advertisers highlighted that non-linear TV is a means of extending the reach of broadcast campaigns.

So, what exactly are non-linear ads?

Hawk Digital’s Multiview Technology partner- Omnilive

What Are Non-Linear Ads?

In simple terms, non-linear video ads are typically images that "overlay" the content you're watching. They run concurrently with the video without interrupting the viewing experience. These ads are independent of the streaming workflow, meaning they can apply to all types of content. (Live, VOD, catch-up, start-over, etc.)

Non-linear ads can either be an overlay directly on the content or appear alongside it. The key difference from traditional ads is that they don’t disrupt the viewing experience by interrupting the program. We can also push the ad or checkout to the mobile device or enable check out on the CTV screen.?

Examples of non-linear formats include:

• L-banner (L-shape) during content or when transitioning to a new program
• Split screen
• Pause ads
• Overlay ads for product placement or branding (Check out Hawk’s Flex units for accretive revenue opportunities)?
• Picture-in-picture (PIP) ads?

Benefits of Non-Linear Ads

Non-linear formats offer several advantages, especially in terms of monetization. These formats allow for a smoother user experience, which avoids the drop-off seen with traditional ad breaks. As per the WURL, APPLOVIN, and ADJUST 2024 CTV report, viewers tend to drop off at the start of ad breaks and return only after the break is over. Non-linear ads eliminate this trough by keeping the viewer engaged.

Via ->>>> Broadpeak

Types of Technology for Non-Linear Ads

There are several technical options for non-linear ads:

1. Proprietary closed ecosystems (client-side)
2. Proprietary closed ecosystems (server-side re-encoding)
3. IAB SIMID standard-based solutions

While Option 1 might seem convenient, it’s often restrictive in the long run. Option 2 can quickly lead to scalability problems, especially in programmatic environments, as each combination of ad and content requires re-encoding. Option 3- The VAST tag based approach is emerging as the most scalable, future-proof solutions. It uses an industry standard that is compatible with Server-Side Ad Insertion (SSAI) and opens the door to advanced interactive experiences like polling, gamification, AR/VR experiences, tune-ins, checkout and so much more.

Why Non-Linear Ads Are a Game-Changer

Non-linear ads are a win-win for all parties involving advertisers, publishers, and viewers. They provide a smoother ad experience without disrupting the content and can significantly increase ad revenue. For streaming platforms looking to optimize their ROI or those starting their journey with ad-supported models, non-linear formats are a game-changer.

Publishers can implement non-linear formats like L-banner ads, split screens, pause TV ads, and even product placements. Interactive versions of these ads (e.g., shoppable TV ads) offer even more potential for increasing CPM by open ad slot revenue and transitioning toward running more performance-based advertising.

If you're interested in learning more about these strategies, ecosystems, and solutions, we'd love to connect with you and explore the potential together. Hawk Digital

Roku Advertising Reports 18% Revenue Growth in FY 2024, Strengthening Its Market Position

Roku has announced its full-year 2024 financial results, reporting an impressive 18% year-over-year (YoY) increase in total net revenue, reaching $4.1 billion. The company’s platform revenue stood at $3.5 billion, marking an 18% YoY growth, or 15% YoY when excluding political ad spend. Roku's gross profit increased by 19% YoY to $1.8 billion, demonstrating its strong business momentum.

The company saw substantial growth in its user base, with Streaming Households reaching 89.8 million an increase of 9.8 million from 2023. Streaming Hours rose by 21.1 billion YoY, totaling 127.1 billion hours. Additionally, Roku’s Average Revenue Per User (ARPU) increased by 4% YoY to $41.49 on a trailing 12-month basis.

In a letter to shareholders, Roku highlighted its exceptional Q4 results, noting it was the first quarter in which Platform revenue surpassed $1 billion, growing 25% YoY. The company also achieved significant penetration in U.S. broadband households, surpassing 50%. The Roku Channel experienced an 82% YoY increase in Streaming Hours, reaching approximately 145 million people in the U.S. The company aims to further enhance ad demand, improve the Roku Experience to drive monetization, and expand Roku-billed subscriptions. Looking ahead, Roku forecasts continued growth in key performance metrics (KPMs) such as Streaming Hours, Platform revenue, Adjusted EBITDA, and Free Cash Flow. Notably, the company anticipates being operating income positive for the full year of 2026.

Roku’s Device Segment Strengthens Leadership in the Market

Roku's Devices segment also performed well in 2024, reinforcing its dominance as the #1 selling TV operating systems (OS) in the U.S., Canada, and Mexico. Devices revenue increased by 20% YoY to $590.1 million, with Q4 revenue specifically growing by 7% YoY to $165.7 million. However, Q4 revenue and gross profit were impacted by increased seasonal discounts across the industry, including at Roku. While Q4 Devices gross margin stood at -29%, the full-year Devices gross margin was -14%.

Roku’s TV OS has now been the best-selling TV OS in the U.S. for six consecutive years. Sales of Roku-powered TV units in Q4 and across 2024 exceeded the combined sales of the #2 and #3 selling TV operating systems. On a global scale, Roku surpassed 90 million Streaming Households in early January 2025, following a net addition of 4.3 million Streaming Households in Q4 and 9.8 million for the full year. However, Roku announced in its Q3 2024 Shareholder Letter that it will no longer provide quarterly updates on Streaming Households and ARPU beginning with its Q1 2025 earnings report.

The Roku Channel Continues to Expand Its Reach

The Roku Channel reached approximately 145 million U.S. households in Q4, maintaining its position as the third-most popular app on the Roku platform in terms of both reach and engagement. Streaming Hours on The Roku Channel increased by 82% YoY, with over 80% of those hours originating from within the Roku Experience rather than a standalone Roku Channel app with a 15 point increase from the previous year.

Roku’s 2025 Outlook: Strong Revenue and Profitability Forecast

For Q1 2025, Roku projects total net revenue of $1.005 billion, representing a 14% YoY increase. The company expects Platform revenue to grow 16% YoY, while Devices revenue is projected to remain flat due to elevated inventory from lower-than-expected holiday sales. Roku forecasts Q1 total gross profit at $450 million and Adjusted EBITDA at $55 million.

For the full year 2025, Roku anticipates total net revenue of $4.61 billion, total gross profit of $2.005 billion, and Adjusted EBITDA of $350 million. Platform revenue is expected to reach $3.95 billion, reflecting 12% YoY growth (15% when excluding political ad spend). Devices revenue is forecast to grow 12% YoY, reaching $660 million. The company expects Platform gross margin to range between 52% and 53%. Read more: https://advanced-television.com/2025/02/14/roku-fy-revenue-up-18/

YouTube Introduces AI-Generated Video Clips for Shorts

YouTube has rolled out new generative AI-powered video creation features for Shorts, utilizing Google’s Veo 2 video model. Initially launched in September 2023, the Dream Screen feature allowed users to generate AI-based images and videos for use as green screen backgrounds. The latest update expands its capabilities, enabling users to generate standalone video clips that can be directly incorporated into Shorts.

To access the new feature, users can navigate to the Shorts camera, select the media picker, and choose “Create” to generate AI-powered video content based on text descriptions. The AI-generated clips include stylistic options such as cinematic effects and enhanced realism for human movement. These videos will carry Google’s SynthID watermark, ensuring transparency in AI-generated content.

The feature is currently rolling out in the U.S., Canada, Australia, and New Zealand, with plans for broader availability in the future. Read more: https://www.theverge.com/news/612031/youtube-ai-generated-video-shorts-veo-2-dream-screen?jid=171783&sid=35464053

Final Thoughts

The future of streaming is being shaped by ongoing innovation in advertising, AI-driven content creation, and evolving monetization strategies for all screens. As platforms continue to refine their ad-based models, non-linear ads stand out as a key solution for balancing revenue growth with user experience. The success of Roku and YouTube’s latest advancements further highlights how data-driven strategies and emerging technologies are reshaping the digital entertainment landscape.

As the industry moves forward, staying ahead means embracing these new formats, optimizing engagement, and leveraging AI to create more immersive experiences. The next wave of digital advertising is here—are you ready to adapt??

The future of streaming is being shaped by ongoing innovation in advertising, AI-driven content creation, and evolving monetization strategies for all screens. As platforms continue to refine their ad-based models, non-linear ads stand out as a key solution for balancing revenue growth with user experience. The success of Roku and YouTube’s latest advancements further highlights how data-driven strategies and emerging technologies are reshaping the digital entertainment landscape.

As the industry moves forward, staying ahead means embracing these new formats, optimizing engagement, and leveraging AI to create more immersive experiences. The next wave of digital advertising is here to help you monetize!

Are you ready to adapt??Reach out or comment below!!