An increasing number of TV viewers are accepting advertising in streaming video and they are readily able to discern the differences in how various services deliver the ad experience.

Hub Entertainment Research has released the latest wave of its semi-annual TV Advertising: Fact vs Fiction survey indicating that ad-supported streaming services are on the rise, and consumers have firm ideas on how advertising should be presented.

Key findings include:

Two-thirds of TV viewers would prefer watching ads if it saves on subscription costs, as ad intolerance wanes.

In just three years, the percentage of consumers expressing a preference for ad-supported subscriptions if it saves them money has increased by eight points to 66 per cent in the most recent survey.

At the same time, the number of consumers saying they can’t tolerate ads has declined from 17 per cent three years ago to 12 per cent in June 2024.

Most viewers can differentiate among TV services in how advertising is presented.

Nearly eight in ten viewers agree there are “big differences” in the amount of advertising presented on competing TV services. And by far, AVoDs are providing better ad experiences than FASTs and multichannel subscribers.

The ad experience significantly affects viewers’ enjoyment and attention levels.

The number of ads, as well as the length of the breaks contribute to how reasonable viewers rate the experience. And both factor into evaluations of the viewing experience.

Reasonable ad loads are also instrumental in driving better outcomes for advertisers. When the breaks are shorter and contain fewer ads, viewers are significantly more likely to pay attention to the messages.

The launch of Prime Video with ads has had an immediate and substantial impact on ad viewing.

The proportion of consumers saying they watch an ad-free SVoD tumbled since December from 84 per cent to 58 per cent, coinciding with the launch of advertising as the default on Prime Video.

There is still potential for streamers to grow their ad-supported offerings by generating greater consumer awareness.

Although most of the major streaming services launched lower-cost ad-supported plans more than a year ago, substantial numbers of viewers remain unaware.  A third or more of consumers say they don’t know about ad-supported offerings on Disney+, Paramount+, Max, and Discovery+, and a substantial minority incorrectly believe those services are strictly ad-free.

There is an obvious opening to grow the ad-supported tiers with marketing messages targeted to budget-conscious non-subscribers of these services.

Consumers are expressing a clear preference for watching ads if it saves on subscription costs.

Over the past three years, the Hub TV Advertising: Fact vs Fiction study has shown an inexorable movement among consumers toward greater acceptance of advertising in streaming video. The most recent study wave shows no sign the trend is ending.

In fact, the rollout of Prime Video’s ad offering provides further and stronger evidence that consumers prefer watching ads to price increases to stay ad-free, even when the price increase is a modest $2.99 per month.

Even more noteworthy is the number of viewers who say they cannot tolerate ads on TV has been shrinking steadily over the past three years. 

However, even the majority of viewers who are open to advertising recognize when the ad loads become unreasonable, and they respond by diverting their attention away from the ad breaks.

“Over the past few years, the video ecosystem has seen fundamental change, with nearly all of the formerly ad-free streamers adding a lower cost ad-supported tier,” said Mark Loughney, Hub Senior Consultant. “Consumers have responded not by rejecting advertising or canceling subscriptions, but embracing the opportunity to save on their monthly subscriptions. By putting forth an overt offer of lower fees in exchange for watching a reasonable number of ads, the streaming services have given consumers a better value proposition. As a result, the future of the streaming advertising marketplace looks very bright.”

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Categories: Advertising, Articles, Consumer Behaviour, Premium, Research, VOD

Tags: advertising, Disney, Hub, netflix, Prime Video