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The importance of ads to successful streaming services

Industry insights: Advertising is an increasingly important component of the streaming ecosystem, with addressable ads in particular now used by 73% of marketers.

importance of ads to streamingAdvertising remains vital for streaming ecosystem

[Rapid TV News]

We start with two stories that highlight the importance of advertising in the constantly evolving streaming ecosystem. Conventional thinking says that viewers flocked to streaming services and willingly paid subscriptions to avoid having to see ads. However, a Hub Entertainment Research study, TV Advertising: Fact Vs Fiction, suggests that this may well not be the case.

The study looked at over 3000 US consumers between the ages of 14 and 74 who watched at least one hour of television a week during May 2023. What it found was that virtually all TV viewers consumed ad-supported content, and almost six in ten expressed a preference for ad-supported subscriptions if it meant a lower monthly fee.

Indeed, very few viewers were intolerant of advertising and even viewers who were would still watch ads under the right conditions. Hub noted that the proportion of viewers who say they cannot tolerate ads on TV is quite small compared to those who say ads are an acceptable aspect of viewing content.

When viewers were asked to choose between paying a premium to avoid ads or accepting advertising to save $4-5 per month on a subscription, most consumers opted for ads. Even a third of those who say they could not tolerate them indicated they would accept ads if it meant a lower cost subscription.

One of the key factors to success in building an ad-supported service seems to lie in ensuring a low ad load. When viewers receive what they consider a reasonable number of ads per hour, it seems that they are not only less resistant to the presence of ads, but they are more engaged with the ones they do see them. This applied both to the overall number of ads, as well as the length of the breaks.

Interestingly, some of the new entrants that have recently launched AVOD supported services were adjudged to be doing it all rather well too; Max, Disney+ and Netflix were all rated more positively than other competitors.


73% of advertisers using addressable ads

[Advanced TV]

There is plenty of data that suggests that viewers react more positively to ad content that chimes with their own interests. So, perhaps it’s not too much of a surprise to see the industry increasingly pivoting to addressable TV advertising.

According to figures collated by Go Addressable, an industry initiative to advance addressable advertising, currently 73% of marketers are using addressable TV, compared to 63% back in 2022; a 16% increase. Meanwhile, 49% had a combined linear and digital team planning addressable TV strategies for marketers.

Crucially there’s been some interesting movement of attitudes behind the scenes too. 

The percentage of respondents citing better measurement/proof of ROI” as a factor to consider when increasing or initiating addressable TV investments dropped from 50% to 43% in this latest study, “suggesting that there has been more industry-wide education and awareness of how the medium works and its benefits over the past year.”

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Curated hubs increasingly key for content discovery

[Stream TV Insider]

Another aspect of the growing streaming ecosystem that cannot be understated is the importance of content discovery to audiences. Horowitz Research has been doing some investigation in this area and found that content hubs — the curated collections of content that feature in the main UI of most streamers — remain important for viewers to find content. 8 out of 10 viewers tend to use them at least occasionally, while culturally relevant collections continue to resonate strongly with specific audiences, especially if there is a language barrier that needs to be surmounted.

Content hubs are, however, not enough on their own. Horowitz also says that “a majority of TV content viewers (61%) would be likely to switch to one provider to bundle all their streaming services if this were available to them,” with universal search across content libraries part of the subtext driving this trend.

Interestingly, consumers also showed a distinct preference for the type of bundler they would want to deal with. 42% want to deal with an internet provider or MVPD (People are used to paying them for these kinds of packages of services,” comments Adriana Waterston, CRO and Insights & Strategy Lead at Horowitz Research) with Amazon charting a distant second at 8%. 

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Andy Stout

Andy Stout is a broadcast and technology journalist, who, over longer than he cares to think about, has written for most of the major publications in the industry. He is fascinated by technology and its evolving impact on society, and enjoys bringing an eclectic viewpoint to the Viaccess-Orca blog. He was awarded a First Class BSc from the Open University and lives with his family in Northern Ireland.