Is Pluto TV Tricking Ad Companies into Overpaying for Spots?
In recent years, Pluto’s ad bidding process has caused many agencies to pay what they feel is too much based on the streamer’s audience size.
![](https://thestreamable.com/media/pages/news/is-pluto-tv-tricking-ad-companies-into-overpaying-for-spots/d3c412c31b-1721831385/pluto-ad-auction-inflation.jpg)
The process of selling streaming ads is complex. As more and more streaming services begin offering ad-supported plans and free streaming services attempt to boost their inventory to match an influx of new viewers, it would be natural to assume that advertisers are jumping for joy at the opportunity to partner with any streaming platform with a significant reach. However, a new report from Ad Week has laid out significant, detailed accusations that Pluto TV has engaged in ad duplication in order to inflate the amount of money it charges advertisers. If this proves to be true, this could make the streamer harder to sell as oncoming Paramount management decides the best ways to handle the company’s assets.
Key Details:
- Several ad companies are limiting their exposure to Pluto TV because they think the streamer is taking advantage of the auction process.
- Pluto sometimes sends out billions of requests for ad bids in a single day.
- Paramount is merging with Skydance and has already explored one option for selling Pluto TV.
According to Ad Week, six ad firms have said that they will limit their clients’ exposure to Pluto TV because of the way it tries to sell ad space. They say that Pluto is taking advantage of the programmatic auction process used to sell ads, artificially jacking up the price for an ad spot on its platform by submitting multiple requests for bids.
It’s a complicated process, but essentially streaming services like Pluto sell ad space via online auctions. They set a minimum amount they will accept for the space, then send bid requests to ad firms to stimulate competition for these spots. Many times, a streamer will send out multiple bid requests for the same spots in order to ensure that viewers aren’t seeing the same ad multiple times or competing advertisers aren’t featured in the same commercial group.
The problem with Pluto is that, according to firms, the platform sends out huge numbers of bid requests for the same spots as compared to other services. Ad Week cites one source who said that across deal IDs for one day in June, Pluto sent out 9.4 billion bid requests. On that same day, Tubi sent out 133 million bid requests, and even big requesters like VIZIO WatchFree+ only sent out 1.3 billion. A deal ID is simply a means for ad sellers to automate the buying process with specific buyers.
Increasing the number of bids can drive prices for ads very high, which is why firms are so leery of Pluto’s practices. One buyer source told AdWeek that when it started purchasing more ads in 2022, Pluto was soon winning 50% of its clients’ budgets, even though it represented just 5% to 10% of the unique audience those clients were reaching via their ad buys. Another source said that on average, Pluto’s winning bid for one client was usually 55% above the floor set at auction, whereas other streamers peak at around 10%-30% above the floor.
If Pluto were drawing an audience commensurate with the prices it tries to secure for its ads, that would be one thing, but recent data from Nielsen found that in June 2024, Pluto accounted for 0.8% of all TV watched. By comparison, Tubi accounted for 2% and The Roku Channel garnered 1.5% of all viewing hours, showing that Pluto doesn’t draw as large an audience as the other top free streamers.
Do Pluto TV’s Ad Practices Hurt its Sale Chances?
![Pluto TV could be up for sale, and its relationships with advertisers will be important to prospective buyers.](https://thestreamable.com/media/pages/news/is-pluto-tv-tricking-ad-companies-into-overpaying-for-spots/e2049f4b55-1721829843/deal-making-negotiations-pluto-648x432.jpg)
To the average watcher, Pluto TV’s attempts to drive ad prices higher have essentially no bearing on how they interact with the service. But for prospective buyers, the reluctance of ad agencies to do business with Pluto might be a large red flag as parent company Paramount Global considers what to do with the service.
Paramount is currently in the preliminary stages of merging with Skydance Media, and the new owners have already pledged to cut $2 billion in spending. They’ve also promised that any deals made by current Paramount executives will be honored so long as they make sense financially, and a sale of Pluto TV may be one of those transactions. Earlier in July, it was reported that the company was in talks to potentially sell the streamer back to its co-founder and current chief of Paramount streaming Tom Ryan.
A streamer like Pluto TV relies on advertising revenue to make money, since it does not have a paid subscription option. Its relationships with ad firms are crucial, and if it tries to take advantage of the system as many agencies have suggested, it could jeopardize those relationships and end up hurting its own bottom line. That would certainly make it less palatable to prospective buyers.
Pluto TV is hardly the only streaming service using practices that advertisers look askance at, and there’s nothing illegal about bid duplication. But the reporting makes clear that Pluto is using the tactic quite heavily, and it may want to consider pulling back as potential buyers circle the streamer.