Streaming TV Advertising: What Marketers Should Know About It
The number of cord-cutters is continuing to grow – by 2026 it is expected that more than 80 million households in the US will cancel their subscriptions to multichannel TV services. But nowadays, we can even meet the cord-nevers – video content consumers who have never watched traditional TV. This is because services offering videos on demand are becoming more popular. Streaming TV services continually develop and provide more benefits, making viewers abandon their cable and satellite subscriptions.
One of the main features that attracts new users to streaming services is the ability to access any video content on-demand even free of charge just in return for watching ads. And this is a good chance for the advertisers to attract the attention of wider audiences, and increase brand awareness. How does streaming TV advertising work and how can you use it effectively? Let’s find out.
What Are Streaming TV Ads?
These are the commercials that viewers can see while watching TV using a device connected to the Internet. Ads appear mainly within videos available free of charge and they are usually relevant and so not too disruptive to the audience. That is why viewers prefer to watch a couple of ads instead of signing up. Some subscription streaming channels may insert ad breaks in premium content, but in this case, the price for the subscription will be lower than for the paid content with no ads at all.
If we are talking about streaming TV advertising, we have to dig deeper into CTV and OTT, so let’s get to know more.
OTT vs. CTV
Very often these two services are regarded as the same or as interchangeable. Although they have several similarities, they do have some differences.
OTT stands for “over-the-top” and refers to video content accessed over the Internet with no cable or satellite connection needed. CTV (connected TV) relates to videos delivered via a TV device (any device connected to the Internet and the TV, e.g. streaming device, game console, or smart TV). These devices include Roku, Amazon Fire, Apple TV, and Chromecast, among others.
The difference between OTT and CTV is as follows: OTT is the way to deliver content across various devices, and connected TV refers to the device that is used to watch OTT content.
Benefits of CTV/OTT advertising
Why is it much more efficient to serve ads for OTT/CTV content than for linear TV? There are many benefits for marketers, and these include:
- Targeting. Streaming ads are delivered to a specific audience depending on their viewing interests and habits, demographics, geography, age, etc. Such precise targeting allows advertisers to show relevant commercials during breaks to the right audience at an appropriate time.
- Viewability. As streaming ads can’t be skipped, they are characterized by high viewability with up to 90% uptake. The audience is waiting for the playback to be continued, so they usually watch these commercials. And, as CTV ads are well-targeted, viewers often get interested in them and watch them right through (and even act on their message).
- Lower costs. Advertisers only pay for commercials that reach their target audience, which helps them cut costs on their campaigns. CTV ads are measured based on CPM (cost per mile) basis and promoters usually do extra research before investing further capital in the campaign.
- Higher engagement. Streaming commercials are highly relevant and tend to be more engaging. They also typically give a better user experience and sometimes interactivity, making viewers more interested in the content within the ad breaks as well. This well-thought-out targeting and relevance play an important part in their success.
- Measurable results. What is excellent about CTV/OTT commercials is that they can be measured, so advertisers can track their performance, which allows them to optimize ad campaigns and make decisions driven by precise data with little need for guesswork.
- Better reach. Free CTV/OTT services with ad breaks are gaining more and more popularity and have become a good place for businesses to grab the attention of new audiences. Among them are younger viewers actively using streaming services and cord-cutters switching from linear TV to digital services.
Besides this, CTV/OTT advertising is relatively flexible regarding ad placement, commercial customization, and adjustment to different devices and platforms.
Talking about advertising on streaming TV, we also need to mention SVOD & AVOD – the revenue models used by streaming services:
- SVOD is based on a subscription, meaning the audience pays for access to premium content for a certain period and the capacity to watch without ads.
- AVOD is about free access to content but in this case, viewers will have to watch ads during breaks.
Though more and more new SVOD channels are launched regularly, audiences often prefer to choose AVOD services because it is a chance to cut costs on video content consumption, getting almost all the benefits of paid subscriptions. The fact that viewers have to watch ads in breaks during the playback does not scare them away because these commercials tend to be relevant without being too irritating, so they can even bring value to consumers of videos on demand.
Some platforms use a hybrid model combining SVOD and AVOD – they reduce the subscription price that offers premium content with ads. This means that viewers are not limited to premium content consumption and can save money in return for just watching short ads during breaks.
How Much Does Streaming TV Advertising Cost?
Spending on streaming TV advertising may differ because it depends on several factors, such as audience, the format of the commercials, the genre of the content, and the type of streaming service and device. Let’s have a closer look at these elements.
- Audience. When advertisers want to reach younger viewers, who tend to be more affluent, they will have to invest more in advertising than if they were targeting older audiences where there are usually lower profits.
- Ad format. There are many different formats for streaming ads (e.g. interactive, video, and overlays). Usually, interactive commercial breaks and overlays are cheaper but those for video require greater financial outlay.
- The length of the ad. This factor will also predetermine its cost – for instance, a 15-second ad will cost less than a 2-minute one.
- The length of the campaign. campaigns that run for a couple of days or several weeks are cheaper than campaigns that run for months. Moreover, the cost will depend on the time of the year. For example, campaigns that run during vacations invariably cost more.
- Pricing models. An ad campaign budget depends on advertisers’ pricing model. There is a CPM (cost per thousand) model that is based on the number of impressions (times of ad display), a CPA (cost per acquisition) model that indicates the conversions number, and a CPCV (cost per completed view) model that shows how many times a commercial was watched till the end.
- The platform. Advertising costs also depend on the platform advertisers use to place their commercials. For instance, running streaming ads on Netflix is more expensive than on Amazon or Hulu because Netflix’s audience is larger and more engaged.
In addition, if advertisers want to boost their ad campaign performance, they can choose more options to get the desired result. Streaming services may offer sponsorships, branded content, and product placement options that will provide better visibility and increase viewer engagement but this will also mean more expense for the advertisers.
Now let’s talk about the prices. The cost for OTT commercials can vary from $25 to $75 on average but the more popular the streaming service, the higher the prices. For instance, platforms like Hulu tend not to charge less than $50 CPM.
Examples of ad-supported streaming services
There are several platforms that allow advertisers to run ad campaigns, each of which has its own particular features. Let’s review some of the popular services and find out what they offer regarding advertising.
1. Roku
Roku allows advertisers to use its service to reach wider audiences and boost sales with creative streaming advertising that 80 million viewers might see. The platform states that 91% of its users aged between 18 and 49 years old had yet to see commercials they were shown on Roku on linear TV. This means that advertisers can reach out to these audiences exclusively. The service has its own ad platform called OneView, where marketers can win the hearts and minds of new viewers across various platforms and devices.
2. Netflix
Advertisers who want to run their campaigns on Netflix also have to deal with the demand-side platform of Microsoft because these two giants have partnered. This new union allows advertisers to reach relevant viewers with greater buying power and a higher level of engagement, in other words – audiences that are likely to accept the offers. Advertisers are charged only for the number of clicks and are able to set bids and timing as well as the daily budget. Netflix launched an ad-supported Basic plan in November 2022 for 12 countries.
3. Peacock
Advertisers need to buy ad inventory directly from the publisher to place ads on Peacock. In 2022, Peacock Ad Manager (a self-serve platform) was launched by NBCUniversal. Advertisers can use advanced ad measurement features, set their budget and targeting, determine KPIs, etc. Previously, Peacock used an audience management platform called Peacock AX. The new ad manager will combine the scale of the older platform with new, improved targeting and measurement options.
4. Hulu
As you may already know, Disney owns Hulu, so advertisers must conduct all discussions concerning future OTT ad campaigns with Disney Advertising Sales. However, Disney has introduced Hulu Ad Manager which advertisers can use for ad campaign planning. They can target audiences by interests, location, genres, etc., schedule campaigns and set a budget, upload ads for review, and measure the campaign’s performance in real-time after they are approved and launched.
5. Disney+
In July 2022, more than 150 million viewers subscribed to Disney+. It offers two types of subscriptions – Disney Plus Premium with no ads and Disney Plus Basic with commercials, which is cheaper. The Basic subscription can be accessed on several platforms including major ones like Apple TV and Amazon Fire TV, as well as games consoles like Xbox and Playstation. Disney+ with ad breaks offers any content provided by such brands as Disney, Star Wars, Pixar, Marvel, and National Geographic. There should be at most 5 minutes of these breaks per hour. As Disney+ is family-friendly, the kind of commercials shown to the viewers are tightly controlled to avoid adult content.
To choose the right platform for your goals, you need to find out the features of every service first because each is for a different audience with different habits and interests. That is why the same household may have multiple subscriptions – younger viewers prefer one platform while their parents may choose another service because it is more relevant to them.
Also, don’t forget to check the platform regulations before you start the ad creation process. Every service has specific guidelines for advertisers to meet the expectations of the viewers and deliver ads that will be engaging.
Conclusion
Streaming TV advertising is not a new phenomenon but it keeps on developing, offering digital advertisers more and more opportunities to reach wider audiences and boost sales with many benefits. Advertising on streaming services is about knowing more than just what viewers tend to watch, it’s about precise targeting and programmatic buys, ad campaign optimization, and forethought but not guesswork.
The way viewers consume content is changing all the time, so advertisers must do their best to keep up with these shifts and trends and be one step ahead with their offerings and the way they engage audiences. Streaming TV advertising has the potential to keep up with this, and popular ad-supported services provide all the tools to enable advertisers to plan and optimize campaigns effectively.
