The War on watching – and how TV ads have changed forever

More and more people are turning to ‘streaming TV’, which allows us to watch what we want, when we want.

28/11/2021

More and more people are turning to ‘streaming TV’, which allows us to watch what we want, when we want.

Figures for the last year show explosive growth across a number of platforms, as most of us were spending a lot more time at home than we anticipated, and turning to home entertainment in droves.

With increased demand comes increased competition, and I’ve witnessed a streaming ‘war’ taking place across the world. While Netflix dominates with some 209 million global paying subscribers, Disney+ (including Hotstar) seems to be hot on the streaming Godfather’s coattails, reporting 116 million subscribers, and an increase of 12.4 million subscribers from Q1 2021 to Q2.

While the joy of streaming services for many is the lack of advertising, there’s a new breed of streaming service that includes carefully targeted ads.

Streaming services supported by advertisements means lower cost subscriptions. In streaming provider Roku’s recent 2021 Streaming Report, 7 out of 10 people surveyed said they didn’t mind advertising (referred to as Advertising Video on Demand, or AVOD) if that means a reduction in subscription costs.

80% of those questioned revealed that one of the biggest factors in choosing a new streaming service is whether it offers free and paid subscription tiers.

These ‘Connected TV’ ads will be served via increasingly common internet-enabled devices connected to your TV set. Think Roku, Chromecast, Amazon Fire Stick and Apple TV, for example.

This carefully curated Connected TV advertising has hit the digital advertising sector like a storm, with big advertisers bidding for the chance to push their messages to highly engaged, relevant, targeted audiences.

Advertising via Connected TV brings a certain set of advantages over more traditional TV advertising.

Firstly, data-driven targeting means advertisers can reach the most valuable audiences.

Next, because it is internet-connected, both digital and traditional metrics can be gathered, such as the advert’s true impact (measured by gross ratings points), alongside on and offline sales.

The nature of streaming means adverts can run alongside premium content, a boon for brands keen to associate with major networks and globally popular content.

Finally, there’s also a higher degree of precision in the frequency of how often adverts are served, allowing for a good audience experience.

The trends as I see them are as follows:

Streaming services may increasingly turn to advertising to boost revenues

While those signing up for streaming TV services seems to be continuing at breakneck speed, as subscriptions tail off, it makes business sense for streaming content providers to seek advertisers, and offer ad-supported content for free or at a reduced subscription rate.

As the Roku survey suggests above, a majority of people seem amenable to this.

Consumers will be happy to be fed relevant, targeted advertising – but will we see lower subscription fees?

There has to be a pay-off – and people are happy to see targeted, relevant ads in return for a reduced subscription fee.

Given that 100% of subscribers have come from traditional TV viewing, we are all used to programming interspersed with advertising. Some streaming services are already offering free subscriptions, supported by ads.

Consumer viewing data will become the vital currency of this new era in advertising

Data is king in the new world of Connected TV advertising. I don’t think it will be too long before we see hyperlocal advertising, like in local cinemas.

Link up internet surfing data and purchases to advertising, and we will have a new era of highly personalised adverts. Data from the streaming service providers and from third-party data analysis providers will be invaluable to advertisers.

Connected TV advertising also extends to any TV-connected device, so you will see ads pushed to your gaming console, for example

While I don’t think many would tolerate advertising which invades a crucial moment in a gaming experience, younger gamers surely won’t mind targeted ads driven to their consoles if it means lower subscriptions and game purchase discounts, for example.

Connected TV allows for enhanced targeting options and inventory selection to create better cost efficiencies for advertisers

As I mentioned above, the new era in advertising is squarely data-driven, so advertisers can choose exactly who, where and when to serve their messaging.

More targeted advertising is always the goal, and with tangible results available, Connected TV advertising looks like a sector to carefully watch over the next few years.

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