Streaming Wars: The Case For Advertising On SVOD Services

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The ‘streaming wars’ are well and truly here, with Apple TV+ launched last week and Disney+ just weeks away.

And with the market growing increasingly crowded, discussion around potentially advertising on these platforms won’t go away.

As it stands now, on-demand streaming services Netflix, Amazon Prime Video, hayu, Apple TV+ and Stan all serve their content advertising free.

This means the prices range from around $7 to $20 per month, depending on the package.

But according to Criteo commercial director Colin Barnard, the market is in need of an ad-supported model.

“I don’t see why you wouldn’t have a combination of free, lower-price and full-price models with the level of advertising shown relating to the price that you pay,” he told B&T.

He pointed to Netflix’s audio-based cousin Spotify, which has enjoyed success through deploying an ad-supported model.

“Wherever you have users’ attention you can expect that an ad-funded model could exist,” he said.

“For instance a basic Spotify membership is free, supported by ads. For an ad-free experience, you pay for that. At the cinema, you pay to see the film but you will still see ads. YouTube has a free and paid service, so why wouldn’t this extend to SVOD providers.”

The case for advertising on SVOD platforms was recently given a boost, with Deloitte releasing new figures which showed 54 per cent of those aged 15 to 29 and half of those aged 30 to 35 would be willing to watch ads on a streaming service if they got a large discount on the subscription cost.

“What we must remember is that younger generations like Millennials, who grew up during a time of technological disruption, and Gen Z, who have never lived in a non-digital world, have become increasingly desensitised to advertisements,” Barnard commented.

“For instance, Criteo’s study found that 48 per cent of consumers value ads that help them discover new products. On the other hand, a further 55 per cent said that they turn off when they see ads of products they’re not interested in.

“What this tells us is that while the younger generations are willing to watch ads, streaming services must ensure that these ads are hyper-relevant to create cut-through.”

If a service like Netflix is to go down the advertising path, it is important that it gets it right, argued Barnard.

“Introducing ads on streaming services would open a whole new world of opportunities for digital media and marketing professionals, not to mention a healthy stream of revenue considering the amount of streaming services available today,” he said.

“On the other hand, consumers, particularly Millennials and Gen Z, are demanding more from ads. They’re looking for relevant, non-intrusive ads and a seamless user experience, and are no longer accepting ads that don’t fit these demands.”

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