Fubo tees up new CTV ad formats as ad revenue climbs in Q1

Fubo on Friday reported 21% year-over-year growth in ad revenue during Q1 and is working to bolster momentum, including with the introduction of new ad formats.

Fubo’s North American ad revenue totaled $27.2 million for the first three months of 2024. On the company’s earnings call, Fubo CEO David Gandler said the vMVPD has strategically invested in monetization capabilities is “focused on releasing new ad formats to drive value.”

This week during NewFronts the sports-focused live streaming TV service introduced formats including interactive ads, pause ads (which can include QR codes for added engagement), enhanced banner ads as well as marquee ads. Marquee ads are proprietary concept that include sponsored content carousels that are curated and highly visible on Fubo’s home screen. Activations are fully customizable and can incorporate branded and themed backgrounds, custom titles, subheads and logo placements.

Gandler on Friday said a focus on banner ads are “one of the key pieces” in driving value, noting that Roku’s has done “a phenomenal job selling banner ads on its platform.” Fubo is looking to boost targeting capabilities across its classic banner ads to enable more precision in reaching the right audiences. Gandler noted that banner ads don’t require any improvement to engagement, which was up 2% yoy in Q1.

“We’re very focused on advertising, we’re focused on new units,” he said.  

In the first quarter and during Q2 the vMVPD is also working to address issues related to fragmentation in the media landscape. According to Gandler, that includes signing a deal with Comscore for more cross-platform measurement for advertisers and an agreement with TransUnion “to append demo data to the Fubo subscriber and household information.”

In addition, it generates advertising revenue from free ad-supported streaming TV (FAST) channels. Fubo last year started launching FAST channels behind its paywall, which he said have been “performing quite well,” as well as helping on engagement – a metric the vMVPD is focused on to help generate advertiser interest.

Fubo users stream an average of more than five hours daily and just over 100 hours monthly. Of that, FAST channels account for 9%, or roughly 9 hours, of viewing monthly, according to Gandler.

He categorized this as a “tremendous amount of hours for content that…some folks believe may not be as high quality as cable content” - where Fubo is also fighting against what it views as exorbitant content fees imposed by programmers and FAST content can typically be licensed at a lower cost. He noted it’s monitoring this very closely and “part of that calculus is tied” into its negotiations with WBD for Discovery channels that left Fubo’s platform this week when the companies couldn’t reach terms.  

“But the FAST channels have really absorbed some of that viewing,” the CEO added.

FAST is also becoming a part of Fubo’s strategy to monetize and keep viewers engaged even when they pause their subscription.

With the number of trials coming into the platform of people testing out the service, Gandler said Fubo wants “to make sure that we are engaging consumers along the demand curve.”

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The goal is to expand advertising ARPU and the company plans to introduce a completely free tier later this year.  Initially the free tier will only be available to former Fubo subscribers and free trial users that don’t convert to paid subs. The Fubo Free Tier will feature more than 100 FAST channels, including its O&O Fubo Sports channels (which it said was the biggest ad revenue driver among FAST channels on the platform), as well as select premium UEFA games.

“Having that free tier, we think will allow us to continue to monetize users both...in the subscription realm, as well as when they’re pausing their subscription and waiting for the next sports season to start,” the chief executive said.

Helping to illustrate the opportunity, Fubo CFO John Janedis said in March for FAST channels, “hours per sub far over indexed our growth in overall subs in terms of the Fubo platform” with the fill rate consistent with the overall fill rate at the company and broadcast retransmission down yoy despite the significant increase in channels.

“So from a profit perspective, it’s turning into a pretty good profit driver for the company,” Janedis said.

On the tech side, Fubo is making good on plans to improve its DVR experience. Specifically, it’s launching a beta for user-controlled AI-generated playlists that enable viewers to personalize sports recordings and just watch moments that matter most to them. For example, fans could view all three-pointers or foul shots from a DVR-recorded basketball game.

For more from Fubo’s Q1 2024 earnings read here.