Advertising has become an increasingly vital component within the streaming ecosystem, with a particular emphasis on addressable ads, now being embraced by 73% of marketers.

The Importance of Advertising in the Streaming services Ecosystem

Two narratives underscore the pivotal role of advertising in the constantly evolving streaming landscape. While the traditional notion suggests that viewers migrated to streaming platforms and subscribed to avoid encountering advertisements, a study by Hub Entertainment Research titled “TV Advertising: Fact Vs Fiction” challenges this assumption.

The study surveyed over 3,000 US consumers aged 14 to 74, who watched at least one hour of television per week in May 2023. The findings revealed that virtually all TV viewers engaged with ad-supported content, with nearly six in ten expressing a preference for ad-supported subscriptions, even if it meant a lower monthly cost.

Surprisingly, very few viewers exhibited an aversion to advertising, and even those who did would still tolerate ads under specific conditions. Hub noted that the proportion of viewers unable to tolerate TV ads is relatively small compared to those who consider ads an acceptable part of their content consumption.

When asked to choose between paying a premium to eliminate ads or accepting advertising in exchange for a $4-5 reduction in monthly subscription fees, the majority of consumers opted for the latter. Remarkably, a third of those who claimed they couldn’t tolerate ads indicated a willingness to accept ads for a more budget-friendly subscription.

One critical factor in establishing a successful ad-supported service appears to be maintaining a low ad load. When viewers are exposed to what they perceive as a reasonable number of ads per hour, they not only become less resistant to ads but also engage more with the ads they do see. This applies to both the overall number of ads and the length of ad breaks.

Interestingly, some of the recent entrants that launched ad-supported video-on-demand (AVOD) services, such as Max, Disney+, and Netflix, received more favorable ratings than their competitors.

73% of Advertisers Utilizing Addressable Ads

Data indicates that viewers respond more positively to ad content that aligns with their interests. Consequently, the industry is increasingly shifting its focus to addressable TV advertising.

According to statistics compiled by Go Addressable, an industry initiative dedicated to advancing addressable advertising, 73% of marketers are currently employing addressable TV, a 16% increase from the 63% reported in 2022. Moreover, 49% of these marketers have a combined linear and digital team developing strategies for addressable TV.

Notably, there has been a shift in attitudes behind the scenes as well. The percentage of respondents citing “better measurement/proof of ROI” as a consideration for increasing or initiating addressable TV investments has decreased from 50% to 43% in the latest study. This suggests that there has been more widespread education and awareness within the industry about how addressable TV functions and its associated benefits over the past year.”