Media Update: Ad-Supported Gaming, Threads Feature Rollout, Advertising Growth Outlook
Key Highlights
- TV & Audio: With tentpole events generating durable audiences, major publishers like Disney are looking to capitalize with multi-platform approaches.
- Paid Social: Threads is reportedly about to roll out a feature that would allow users to pull over their followers from X.
- Display & Programmatic: Ad-supported gaming on connected TVs is gaining momentum.
- Search: Shifts in consumer behaviors and referral traffic from GenAI sources suggest brands may need to rethink how we’re measuring impact of GenAI search.
- Ad Economy: Economic uncertainty reshapes advertising growth outlook.
- Consumer Economy: Inflation moderated slightly in February, but that bright spot is counterbalanced by tanking consumer sentiment and a host of negative indicators on consumer spending.
TV & Audio
Though news viewership has held up well relative to 2024, the remainder of linear TV is on the decline. Typically, we show the below chart to represent year-over-year changes. This week, we’ve added a second version of the chart to show change indexed to the eleventh week of 2022 (three years ago) to show the longer-term, secular decline in linear viewership. Even for a period with COVID effects in the rearview mirror, entertainment programming – which holds the bulk of linear audiences – has done nothing but decline for more than three years. Broadcast and sports have strong seasonality effects, but their peaks appear smaller as well. News, however, has held up well and is trending up in recent months amid election, Ukraine, and Gaza coverage.
1. The Oscars turned out to be more of a hit than we – or audience measurers – initially realized. Two weeks ago, we shared our thoughts on the event, noting a reported 8% audience decline year-over-year. However, Disney later updated its estimate from 18.1M Oscars viewers to 19.7M, turning an 8% decline into a 1% gain. According to Disney, the change came from a high number of primarily younger viewers who watched the broadcast on their phones / laptops, which Nielsen is slower to report. While we’re unlikely to ever return to 1998-level viewership, when 55M viewers tuned in to see Titanic take home the top prize, we are seeing a bit of a return to form for live event and awards show programming.
In that context, Disney has publicly positioned itself as a go-to source for tentpole programming across both traditional and digital endpoints. The House of Mouse has clearly leaned in on premium events, as ABC will take on the Super Bowl for the first time in two decades in 2027, inked an 11-year deal for the NBA Finals last year, and will be taking over the Grammys from CBS starting in 2027 while holding the Oscars through 2028. To support these major events, Disney has leaned on its expansive inventory and platform set, launching Best Picture-winner Anora on Hulu last week and announcing that it will leverage its popular Manningcast product from ESPN2 during the 2027 Super Bowl. Disney has been clear that it wants to capture every eye, everywhere, with Disney SVP John Campbell remarking, “What we’ve instituted and implemented is a content everywhere strategy. The three things that we continue to hear consistently from CMOs is they want a return to content, they come to Disney to help maximize these big moments, and then ‘bring me your live tentpoles,’ because they want to actively join those cultural conversations… We’re creating packages for Anora right now that brands are looking to get a part of… That’s the everywhere approach, and that’s really something only Disney can do because of the breadth and the scale of our platforms.”
Its confident posturing isn’t unfounded. Nielsen’s February Gauge readout showed Disney’s share of the streaming pie continuing to grow, trailing only Netflix and YouTube and holding a healthy lead over Prime Video. Overall, advertisers should take two lessons from this posturing. First, as publishers think more holistically about their content, there is a growing opportunity to work directly with publishers on integrated media planning to maximize full-funnel impact. Tinuiti has already helped many advertisers do so, with combined multi-platform approaches to key events like the Super Bowl, March Madness, and more. These approaches can help advertisers efficiently and effectively reach huge audiences while driving full-funnel performance. Second, advertisers should recognize the upside this presents for the largest streamers as well. Holistic offerings across endpoints are a luxury for the biggest publishers, and smaller platforms will feel the pressure. This could contribute to further industry consolidation, which could lead to increased CPMs down the line. Advertisers should look to take advantage of their opportunities while staying alert for competitive changes that could impact efficiency. | Nielsen, TheWrap
Paid Social
In an aggressive move to poach users from X (formerly Twitter), Meta’s Threads is now testing a feature that allows users to follow the same accounts they engage with on X. This cross-platform migration effort could be a game-changer, making it easier than ever for users to transition away from X without losing their existing network. Given X’s struggles with brand safety concerns and user engagement plateaus, this test signals Meta’s confidence in Threads as a viable alternative. While it’s still early days, this is the second notable advancement for Threads, following the announcement of ads testing earlier this year. If successful, this could further accelerate Threads’ user growth and solidify its position as a true competitor in the text-based social media space.
If Threads continues to gain traction, it could become an increasingly attractive option for brands looking to diversify their media mix. However, Meta’s existing advertising ecosystem prioritizes AI-driven placements across its broader network, meaning dedicated ad inventory on Threads may not be immediately scalable, and will instead be more performant when bought in conjunction with other placements across Meta. That said, if user adoption scales and engagement deepens, we could see more widely available monetization opportunities emerge quickly. | SocialMediaToday, X
Display & Programmatic
Last month, we discussed the growing potential of gaming on connected TVs. Now, just weeks later, we are starting to see developments in ad-supported gaming on connected TVs.
A newcomer, Phynd (pronounced “Find”), has entered the cloud gaming market with a focus on connected TVs. Leveraging advances in cloud computing and widespread high-speed internet, Phynd focuses on providing subscription-free access to high-quality games supported by ad revenue. However, instead of traditional in-game or rewarded video ads, it will feature 15- and 30-second ads during game loading screens, keeping them non-intrusive yet engaging while players wait to resume gameplay.
Set to launch later this year, Phynd’s biggest challenge will be building a substantial game library to attract and retain users and attract advertisers. For soccer fans, the involvement of investor Jozy Altidore could mean soccer-themed games designed to engage millennial and Gen Z players could be on the horizon.
On a similar note, Jackbox Games, known for its popular party packs (You Don’t Know Jack, Fibbage), is also entering the space. This spring, it will launch a free, ad-supported gaming service on one or two connected TV platforms, with a paid subscription model likely to follow for full access to its gaming library.
For advertisers, these announcements are exciting as they open up new ways to connect with audiences as their behaviors change. Cloud gaming is expected to reshape the industry. A report by Fortune Business Insights estimates the global cloud gaming market will grow from $15.74 billion in 2024 to over $121 billion by 2032. As part of this growth, we expect free, ad-supported gaming and gaming on connected TVs to become more prominent.
As this market evolves, it will become increasingly important for brands to expand into gaming to reach their audience and develop ads that align with not just the audience but the gaming experience. For example, delivering ads on Jackbox’s party games will probably pair well with fun, comedic ads that enhance the social atmosphere. On the other hand, connecting with gamers on puzzle and stress-relief games would benefit from subtle, engaging messaging that respects the player’s mindset. | AdExchanger, The Verge, Fortune Business Insights
Search
A recent Adobe report highlights key behavioral trends among online shoppers who engage with Generative AI during their shopping experience. The study found that GenAI users are more engaged on websites, but convert less often than traffic from other sources (ex: paid search, organic search, social media, etc.). This suggests that while AI-generated responses may encourage deeper exploration, they may not yet provide the same level of purchase intent as traditional sources.
Specifically, compared to non-AI traffic, GenAI traffic on retail sites saw:
- 8% higher engagement (more time on site)
- 12% more pages per visit
- 23% lower bounce rate
- 9% lower conversion rate
Notably, the study found that while GenAI traffic still lags behind other sources in conversion rates, the gap has narrowed significantly since July 2024, indicating increasing consumer trust.
Another study published on Search Engine Land showed that referral traffic from GenAI rose by 123% between September 2024 and February 2025, with ChatGPT consistently showing as the largest source of AI referral traffic. Granted, the total share of referral traffic from GenAI is considerably smaller than organic traffic (current ratio is 1.24% of organic traffic, up from 0.54% six months ago).
To that end, a recent SparkToro study is a good reminder to keep perspective about where the majority of search scale comes from. The study found that Google Search grew by over 20% in 2024, and Google received 373x more searches than ChatGPT, reinforcing Google’s dominance even as alternative search models emerge. That disparity is striking.
So while the total piece of the pie remains small, the pace of growth from GenAI referral traffic is notable. These GenAI search trends suggest brands and marketers may need to shift how we’re thinking about the impact of search results appearing from GenAI sources. Tools like ChatGPT, Perplexity, and Gemini appear to be encouraging more curiosity and exploration from searchers, perhaps more akin to “awareness” plays in marketing rather than traditional “lower funnel”, conversion-based performance plays. It’s possible, and likely, that this visibility is still driving value even if it’s not generating immediate clicks or conversions. Marketers may need to start focusing more on brand presence in GenAI vs. more traditional measurement approaches that are limited to traffic and conversions. | Search Engine Land, Search Engine Land, SparkToro
Ad Economy
The U.S. advertising market is cooling more rapidly than anticipated, prompting analysts to downgrade their 2025 and 2026 growth forecasts. This week, Madison and Wall shared a report projecting just 3.6% growth for 2025 (lowered from an original forecast of 5.3%), a significant downward revision. The Interactive Advertising Bureau (IAB) had already signaled caution in January, noting an expected growth of 7.3% (lowered from a 11.3% forecast in 2024), pointing to a sluggish digital ad sector weighed down by macroeconomic uncertainty. Notably these reports deviate in their forecasts due to scope of data, however, it’s notable that they follow similar trends as no form of advertising is seemingly immune to contraction at this moment.
Historically, ad spend has typically mirrored GDP trends, and as fears of stagnation or recession persist, businesses are tightening their budgets. A notable shift is emerging: digital advertising, once resilient during economic downturns, is now more closely tied to broader economic cycles. The pandemic-driven boom in digital ad spend is firmly in the rearview mirror, signaling a more mature market where sustained growth is no longer a given.
Ad spending often serves as a bellwether for corporate confidence, as it is, after all, an investment in future revenue potential. When companies curtail marketing budgets, it frequently signals wider concerns about consumer demand and profitability. This slowdown may create ripple effects across the media industry, which has become highly dependent on the rapid expansion of digital advertising over the past decade. Historically, we’ve seen ad spend growth contract sharply in times of uncertainty, such as in the early days of the pandemic, only to rebound once economic conditions stabilize. However, a downturn also presents unique opportunities – brands that maintain or even increase investment during periods of diminished competition often emerge stronger.
Key Considerations for Marketers:
- CMO & CFO Alignment – As budgets tighten, expect greater scrutiny on marketing effectiveness and ROI. CMOs will need to demonstrate the impact of their advertising strategies beyond deterministic attribution models. Clear alignment on confidence signals and performance indicators will allow brands to seize opportunities as competitors pull back.
- Increased Diversification – Market volatility may lead to fluctuating competition across platforms. Some channels may see reduced ad competition, creating openings for cost-effective reach, while others could experience consolidation as brands revert to the safety of Google and Meta’s walled gardens. Additionally, uncertainty around TikTok’s future presents an opportunity for brands to explore alternative platforms.
A contrarian may suggest that a slowdown in digital ad investment could ultimately benefit the industry, leading to auction recalibration and more sustainable pricing models. Regardless, brands that take a measured but proactive approach to investment during this period will likely be better positioned when the market stabilizes. | AdAge, MarTech, StLouisFed
Consumer Economy
1. Let’s start off with some good news – a fresh inflation print was released last week, showing overall prices rose by 2.8% YoY in February; the MoM increase of 0.22% was just above the 0.17% level consistent with 2% annual inflation. Core CPI, which excludes more volatile food and energy prices, rose by 3.1%, its smallest increase in four years!
Inflation has been the United States’ central macroeconomic problem for four full years now, ever since the ‘combination therapy’ of massive monetary and fiscal stimulus in the wake of the pandemic injected oceans of money into the economy. For context, cumulative inflation over the past five years has been 23.3% – the Fed’s inflation target of 2% implies we “should” have had ~10% inflation over that period of time.
The Fed responded to the inflation outbreak with more restrictive monetary policy, i.e. interest rate hikes, which raised costs for borrowers across the economy, including the biggest borrower of them all: the federal government. In Q1 of 2020, the feds spent $544 billion on debt service; in the last quarter of 2024, debt service consumed $1.1 trillion, which was about 18% of the entire federal budget. The Fed has thus been under some pressure, from both private and public constituencies, to bring interest rates down.
This is looking unlikely to happen soon. At its Wednesday meeting, the Fed held rates steady and revised down its projections for 2025 GDP growth from 2.1% to 1.7%; markets expect a ~23% chance of a rate reduction of any size at the Fed’s next meeting in May. | WSJ
2. Now let’s do the bad news – US consumer sentiment plummeted in March, reaching its lowest level in 2 ½ years, and long-term inflation expectations rose by the most in over 30 years, illustrating growing angst among a broad base of consumers.
Consumers don’t seem to be fretting over nothing. The S&P is down 10% in less than a month, and businesses are sounding the alarm bell – Kohl’s stock declined by 24% after it forecast a 4% – 6% sales decline on weaker consumer spending; Shein and Temu, which were directly impacted by the tariffs imposed on Chinese imports, both saw sales slowdowns in February. And the impact is not restricted to one end of the income distribution – American consumers’ spending on the luxury market fell 9.3% in February from a year earlier, worse than the 5.9% decline in January. The percentage of Americans who are late on their car payments is at the highest on record. Overall retail sales rose by less than forecast in February and the prior month was revised down to mark the biggest drop since July 2021.
This is a pretty grim picture, and consumers have internalized it. The fraction of consumers who believe business conditions are deteriorating is at its highest on record:
Lest we catastrophize, there are some bright spots. The unemployment rate is 4.1%, which is very low by historical standards, and we had a decent jobs report for February; the labor market seems to be in pretty good health. And forecasters still believe we’re more likely than not to avoid a recession in 2025 (though the probability has risen dramatically in recent weeks). But the state of the American consumer, upon which most businesses depend, appears more parlous than it has for a long while. | WSJ, Bloomberg, WSJ, Apollo Academy
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