The Future of Streaming Ads

Streaming services have established a wide reach when it comes to personalized entertainment, giving viewers the ability to watch what they want when they want. Streaming viewership is strong, with 88% of adults saying they subscribe to at least one streaming service. In an interesting turn, the number of people opposed to ad tiers on streaming has seen a telling decrease, at only 13% compared to last year’s 36%. More people are now open to ad options giving streaming services the go-ahead to expand those tiers.

When streamers started, the pitch was to pay for the service to have an ad-free experience, and many viewers bought into that value proposition. Some services offered lower prices for ad-supported tiers. Now, several streaming services have incorporated or are working to include some form of ad support.

So, what’s going on now and what do marketers need to know about the future of ads in streaming? Let’s take a look!

Is an ad-supported streaming war coming?
With platforms embracing ad-supported tier options there could be a subsequent battle amongst streamers to capture the largest subscriber base specifically for ad tiers. Right now, Digiday reports that Hulu is in the lead, with Netflix and Paramount+ duking it out for second place. We can’t forget Disney+ and Amazon Prime Video, which both have healthy subscription bases.

Connected TV platforms such as Roku and Samsung would then be in the mix, as they offer free services but are ad-supported. Will the free price point entice more viewership once ads are prevalent in other streaming options? Time will tell how this all shakes out and exactly how ad-supported options are embraced by viewers.

Recent changes in ad-supported streaming
There have been some big moves by streaming services which affect both viewers and advertisers.

Here are a few important developments for viewers:

• Pricing changes/increases have been implemented by Netflix, Disney+, NBCUniversal and Paramount+, which might make a lower-priced, ad-supported option more appealing.
• Netflix completely discontinued its basic no ads plan, replacing it with a lower-priced, ad-supported option.
• Amazon is bringing ads to Prime Video this year and automatically opting in all Prime subscribers. Those with a Prime membership will need to pay an additional $2.99 a month for an ad-free version.

Here’s what advertisers should note:

• As an industry trend maker, Netflix making the leap to ad-supported options is a sign pointing to the longevity of this structure.
• More services offering various ad-supported tiers will increase choices for advertisers when it comes to target audience, programming genres, daypart selections and more.
• As streamers create their own original programming, advertisers will have the ability to select new programming for ad placements.
• In a survey, streaming viewers reported preferring shorter form advertisements, under 30 seconds. Marketers should note this when developing creative and planning media buys to have the best chance of maintaining viewer engagement.
• Streaming industry reports are showing a decrease in CPM (cost per thousand impressions), as more ad-supported tiers are fostering a competitive environment for advertisers.

Previewing the future
Investment in technology advancement is often seen when an industry makes a big shift—as streaming is doing with ads. With the adoption of ad-supported streaming likely will come a rush of technology updates and innovations.

This is great news for advertisers as it could mean better targeting capabilities, better performance tracking and even AI-powered placements. Utilizing AI for programmatic buys could help advertisers contribute to a totally personalized experience, where the viewer not only is selecting what they watch, but the ads are also customized and highly relevant.

Shoppable ads might also be impending. Imagine watching an ad on Amazon Prime Video and being able to click a button and add that item to your cart. It’s not far-fetched to think we might see in-service purchasing innovations down the line for ad streaming.

Press play on ad-supported streaming
Streaming services are embracing an ad-supported format, and most viewers seem to be on board. We might see a continuation of the streaming wars with ad-supported tiers being the next battleground. Changes being made by platforms are being felt by both viewers and advertisers alike. For advertisers, this seems to be a positive turn as not only is CPM being driven down by competition, but investment in creating ad-supported technology updates and innovations is likely on the way. Advertisers should make moves now and start strategizing how to include these expanded offerings into the marketing mix.