The Benefits of Ad-Supported Streaming TV
As more and more people cancel their cable TV subscriptions in favor of streaming services, many marketers may wonder what kind of position they are put in. Some streaming services like Netflix offer their entire library on a subscription basis, which means that Netflix users do not get exposed to ads.
This seemingly presents a large problem for advertisers since TV advertising is still an incredibly effective way of marketing a brand or a product. Lucky for marketers, there are many other streaming services that are ad supported.
We will go deeper into the distinction between subscription streaming and ad-supported streaming later in this article, but suffice it to say at present that ad-supported TV streaming has an incredible amount of benefits for marketers and businesses over advertising on cable TV.
In this article, we will give you the full low down on all the biggest benefits of ad-supported TV streaming (and as you will see, these benefits are quite consequential). Ad-supported streaming TV simply cannot be ignored.
What are Streaming TV Ads?
Streaming TV advertising is advertising that runs within TV content watched through an internet-connected device rather than ads you may see on traditional linear television. These streaming service ads will appear either before or during streaming TV content found on ad-supported networks and apps.
While Netflix may be the first streaming channel that comes to mind, which does not feature ads within its content, ad-supported channels are continuing to grow in popularity. Two-thirds of viewers said that they would prefer to watch ads rather than pay for a subscription to watch content, as long as those ads are relevant and not too burdensome.
Many cord-cutters originally ditched cable to avoid the big monthly bill, so they are selective in how many subscription streaming channels they sign up for – those monthly fees add up quickly.
The demand for inexpensive streaming experiences is so clear that even subscription-based services are taking note; HBO Max recently introduced a new, cheaper subscription model that included ads to help make up the price difference. With a bevy of channels for consumers to pick from, many viewers are willing to sit through a few ad breaks in exchange for free, or less expensive, premium content.
What is Advertising Video On Demand (AVOD) vs Subscription Video On Demand (SVOD)?
There are many ways to deliver video content to users today. Innovative streaming platforms like YouTube, Amazon Prime, and more, have amassed an immense following. We’ve touched on several examples of Subscription Video on Demand (SVOD) above, but what is the difference between these two on-demand video services?
SVOD platforms are similar to traditional TV packages, allowing users to access the content at a flat rate per month. This can encapsulate both ad-supported and non-ad-based platforms from Netflix to HBO, Hulu, Apple, and Disney+. Customers are not tied to a long-term contract and can opt-out at will.
On the other hand, Advertising Video on Demand (AVOD) is entirely free to customers; however, advertisements tend to be more frequent and users have fewer options to skip through – think YouTube and Peacock.
What is Connected Television (CTV) and Over the Top (OTT)?
Connected Television (CTV) refers to the devices that allow users to connect their television to the internet. These devices include XBox, FireTV Stick, Roku, and other smart TVs.
Oftentimes, CTV and OTT are used interchangeably; however, they are not one in the same. Over the Top (OTT) refers to the streaming services that provide content to be viewed through the user’s connected device of choice. These services include Apple TV, Netflix, Amazon Prime, and other streaming TV services mentioned above.
Therefore, it is more accurate to say that OTT and streaming TV are in fact interchangeable by definition. The major difference between the two is that while one requires the ad to be viewed through a particular device, a connected TV, the other does not.
OTT allows a business to reach streamers through a variety of devices. It also allows for extended reach of premium, enhanced, sequential content across all of their devices.
Ad-Supported Streaming TV Benefits
Not only can you reach a variety of audiences and devices as opposed to your ads living in one outlet, but the hands-on capabilities of streaming TV advertising are endless. Advertising on video streaming platforms allows brands to track, measure, and optimize advertisements in real-time.
Messaging can easily be adjusted, videos can be altered, and campaigns can be tailored quickly, yielding preferred results and expediting a business’s return on investment.
Not only can these updates be done in real-time, but an experienced agency can track metrics like conversion rates, click-through rates, and view-through rates to identify how that change altered your campaign. Traditional TV ads can not be adjusted as easily and the results are too difficult to measure.
Streaming TV Advertising Targets a Specific Demographic
Streaming TV serves as an amazing way to reach millions of viewers, not just millennials, but across generations who are searching for convenient ways to consume entertainment or education-based content.
Traditional TV advertising limits geographic targeting to specific zones and does not take into account the interest, income, or device preferences of the audience. Streaming TV advertising allows viewers to receive relevant content in the form of advertisements, the goal of which is to create a seamless experience for the device user.
It allows brands to choose the audience they want to target based on much more than a zip code, including segments like viewer habits and even data collected through their browsing history.
Ad-Supported Streaming TV Makes Audience Segmentation Easier
Streaming TV advertising collects the data provided by the device user and gives businesses a buy-in to messaging that connects their interest with your brand. It allows for greater personalization based on a more refined targeting capability never before seen in traditional television broadcasting.
Offers Customer-Centric Content
Streaming TV advertising allows a business to have more control over their content and messaging. When a viewer visits an OTT service, it is by choice. Whether it contains ads or not, the viewer is opting out of interest.
This should be taken into consideration when crafting messaging to the particular audience you would like to reach and resonate with. Let’s say your ad is showcased on YouTube as a pre roll video. Pre-roll ads are sometimes skippable and sometimes not.
There is no conversion method on the video; however, businesses can receive a surge in brand searches and brand recall which can result in conversion over time, regardless of these limitations. Customer-centric content is preferred by viewers and is all-around more beneficial for businesses.
Streaming Advertising is Cheaper than Traditional Advertising
Advertising on streaming TV not only reaches an audience migrating from traditional linear TV, but it is also more cost-efficient than previous TV advertising options.
Linear advertising requires big budget commitments upfront, limiting which businesses can take advantage of the inventory, as opposed to CTV advertising which can be purchased on a month-by-month basis and be spread out across various campaigns.
Not only is the commitment less, but streaming advertising dollars go much further in reaching the right audience. Linear TV ads are bought on Gross Rating Points (GRP), essentially hoping that a percentage of viewers are within the target audience.
Instead, streaming service ads can be specifically targeted to the correct audience, whether that is a specific demographic or an interest (ex. streamers who are currently looking to purchase an automobile). This ensures that everyone who sees the ad within the campaign has a high potential to convert.
Speaking of conversions, this is yet another area that makes CTV advertising even more efficient than linear TV advertising. With MNTN Performance TV, TV ads are no longer just an upper-level marketing tactic.
Advertisers can track lower-funnel metrics, such as return on ad spend (ROAS) and site visits. This added level of transparency allows for all ad dollars to be spent efficiently, ultimately making CTV ad campaigns more cost-efficient than linear campaigns.
Ad-Supported Streaming Versus Subscription-Based Streaming
1. Large, Easily Accessible Content Libraries
AVOD services offer large libraries of live and on-demand content containing hundreds or even thousands of TV shows, movies, documentaries and more—all accessible from any smart device. Most don't even require a log-in or credit card to get started. In as little time as it takes to download an app, viewers can begin browsing and making viewing choices.
They've also blurred the line in some ways between ad-supported services and paid ones: Many AVOD platforms allow viewers to pause, rewind, and fast-forward content, create custom watchlists, and surface relevant content recommendations based on past viewing habits.
2. Improved Ad Experiences
Consumers' tolerance for interrupted viewing is waning, so OTT platforms and aggregators have begun flexing to their preferences.
Therefore, AVOD services have begun introducing more relevant and less intrusive ad experience and formats, from targeted and addressable ads that show messages for specific geographic areas, to PIP-style ads that juxtapose spots in split screen with programming.
Smart platforms and aggregators will continue using new technology to minimize disruption and strive for the best user experience—within on demand and even live content.
3. More Monetization Opportunities
Vast content libraries cost money. Subscription platforms can only profit off their investments by growing subscribers or increasing costs. However, each of those strategies have limits. SVOD services will either reach the end of their total addressable market or of what consumers are willing to pay.
Ad supported models represent a sustainable business model for the future of streaming. We know consumers are willing to watch a reasonable number of ads in return for free content. New technologies are allowing ad-supported OTT services to unlock additional advertising real estate. This brings in incremental revenue for the platforms, and also new ways for brands to reach consumers as viewing continues to shift away from linear TV.
Consumers are growing more cost-conscious when it comes to how many paid subscription platforms they have, and increasingly willing to view ads in exchange for access to robust libraries of free content. However, AVOD streaming services must successfully walk a tightrope between consumers' tolerance for ads and their willingness to pay for a service that doesn't include them.
Ever-improving technology is allowing OTT platforms to serve more relevant ads to viewers in ways that won't alienate their audience. These conditions taken together point to a bright future for ad-supported streaming services.
Loop: Digital Signage, TV, and Ad Revenue
So far, we have only touched on the benefits of ad-supported TV for marketers. But there is another way that ad-supported TV can be highly beneficial. Loop offers to businesses a media player loaded with highly entertaining content interspersed with ads.
Businesses like restaurants, bars, cafes, gyms, and much more get the benefit of showing entertaining content to their members or customers, and the best part is that these businesses can actually get paid for the ads that play between the content.
Did we mention that loop was free? It sounds almost too good to be true, but loop really is free, and by using their ad-supported streaming service in your business, you can generate a healthy alternative source of revenue.
Making the Best Out of Ad-Supported Streaming TV
Streaming services might have at first seemed like a doomsday situation for marketers using television ads to promote brands and products. Instead, it turns out to be a godsend.
Of course, there are subscription services like Netflix, but ad-supported streaming TV is certainly here to stay. Marketers can make use of this medium to better target and personalize ads at a much lower cost and a greater rate of return.
Additionally, the consumer benefits because they have at their fingertips vast libraries of content, and in general, they will view fewer advertisements. However, viewing fewer advertisements means that if your company gets an advertising slot, then it will be much more likely to have a greater impact on the buying decisions of the consumer since they will not be oversaturated with ads.
Finally, businesses can make use of streaming services like loop and actually make money from the advertisements they show in their store.