The Next Billion-Dollar Streaming Exit: An interview with Michael Beach, Founder @ Cross Screen Media

If you don't have the consumer's attention, the best ad offering in the world doesn't matter. But if you have the attention and you haven't yet figured out the ad part, the sky's the limit. — Michael Beach

In this conversation, we sat down with Michael Beach, founder of Cross Screen Media and author of Screen Wars. Michael breaks down why local advertising holds the keys to the next billion-dollar streaming exit, what political ad spend teaches us about modern media, why consumer habits have settled the debate on YouTube, and the inventory math pointing toward $100 CPMs.

What The Next Big Exit Looks Like

Tim Rowe: You outlined what the next billion-dollar company in streaming looks like. Where are they coming from, and what do they look like?

Michael Beach: The best exits from ad tech, especially in video, have been companies like Vibe, Simplifi, and Madhive that reached a billion-dollar valuation. They're not the companies that raised the most money, and they're not hyper-focused on high-profile national advertising. A lot of times they're focused on local or niche advertisers, maybe direct-to-consumer.

When we started Cross Screen Media, we only raised $2.3 million; the next smallest company raised $65 million. In the New York big ad business, you deal with a small number of ad buyers and agencies who have tremendous pricing power, so it's hard to build a profitable product. But once private equity looks at the financials, they give the billion-dollar exit to companies focused on local or smaller advertisers. Instead of dealing with 200 brands total, you're dealing with 50,000 brands or more with higher margins. Facebook's highest-margin ad product isn't from Procter & Gamble—it's from 10 million smaller advertisers across the country.

Why Local Advertising Is Underserved

Tim Rowe: TV traditionally depended on 80% of revenue coming from the top 100 advertisers. Why is local such a challenge?

Michael Beach: We came out of the political space. We always assumed companies were out there solving our problem, but with that New York mindset, you couldn't go below the top 20 markets. They looked at Denver as a small city, while we needed to be in Lake Charles, Des Moines, and Dayton.

So we started to build our own tech around what it looks like if you have to go into all 210 media markets. Roughly 190 of the 210 media markets don't get anything—they don't get measurement and are the last to get everything. We built our product for ad agencies focused on the local space.

Defining Convergent TV

Tim Rowe: You covered convergent TV in Screen Wars. What is the definition?

Michael Beach: The simplest cut is the convergence of linear TV and streaming on the big screen, which is the most common use case today.

Long-term, this is really a battle for attention across all devices. Very few media agencies are doing all of those things today—the same person isn't looking at local ABC News, Amazon Prime, and TikTok. But in the consumer's mind, lines are blurring regarding what they consider a substitute good. Long-term, convergent TV is going to include all these things.

Political Ads As A Testing Lab

Tim Rowe: What are you seeing politically as streaming takes hold, and how do you approach measurement?

Michael Beach: Political is an amazing test lab because you can almost live multiple lives in one election cycle. You float an idea and have it in-market the same week. In 50-50 races, anything can give an edge and be the reason for victory or defeat.

Reachability is an old-school metric, but it plays an even more important role now across so many channels. In the 2024 election, about 13% of targeted battleground voters never saw a single streaming or TV ad because they were simply not reachable on those platforms. If 13% didn't see any ads in a 50-50 race, how do you reach them?

You also see performance marketing and brand marketing colliding. If you only value inventory on direct response, you'll shut off media and move money to Facebook. But if you value brand impact and conversion impact together, a lot more inventory looks like a good idea.

Why YouTube Clearly Counts As TV

Tim Rowe: What is your perspective on YouTube's role in this? Is YouTube TV?

Michael Beach: Every time I write about YouTube being TV, people lose their minds. But to the consumer, that argument was settled years ago.

YouTube has tremendous room to grow packaging their product at the local and national level, which is why I'm so bullish on them. If you don't have the consumer's attention, the best ad offering in the world doesn't matter. If you have the attention and haven't figured out the ad part yet, the sky's the limit.

In the old days, NBC, ABC, and CBS each had 33% of the time. That was the ceiling. I can completely see YouTube meeting or slightly exceeding that. A lot of times my wife and I will watch a show for 20 minutes, and after she falls asleep, instead of flipping to Netflix or HBO Max, I'm watching YouTube. Madison Avenue is making the same argument they made 10 years ago, but people's behaviors have changed.

The Math Behind Rising CPMs

Tim Rowe: Can you walk us through the math behind projected $100 CPMs?

Michael Beach: If the market grows 10% in the next five years and ad inventory goes down 11%, CPMs are going to rise much faster than inflation. Linear TV is 85% to 90% ad-supported with 16 minutes per hour of ads. Streaming has a lower ad-supported share, and ad loads are only 4 to 12 minutes. We built a model out to 2035 showing we'll have about 11% fewer impressions than today.

People think $100 CPMs are crazy, but we already see it in political. Advertisers pay a $100 CPM on broadcast to carpet-bomb where only 5% are target voters, resulting in a $1,000 effective CPM. If you offer addressable advertising for $100, they take it every time. In the book, I show that drawing a 20-mile polygon around an Atlanta car dealership and flagging in-market buyers reaches a $1,000 effective CPM. Sell that audience for $100, and they'll buy it every time. Only Facebook is currently doing that because traditional sales forces are stuck chasing the top 200 advertisers.

Want to watch or listen to the entire conversation?

Listen to the full podcast HERE