Ad based subscriptions (AVOD) are making their way across services in the VOD world. How is this going to change the landscape for both audiences and marketers?
In the past, if you asked us if we’d ever see ads before binge-watching our SVOD (Subscription Video on Demand) channels, we would scoff at the idea. But now, it looks as if old-school marketing from the age of traditional TV marketing may be making a return.
The mouse in our house
Recently, Disney announced that they plan to integrate an ad-based subscription for their streaming platform, Disney+, by the end of 2022.
Disney has decided on this new strategy as an attempt to reach 260 million users by the end of 2024.
Of course, increasing user traffic for Disney+ is the priority, but it does come with the additional benefit of allowing more audiences to experience Disney’s SVOD content. For advertisers, this opens up a Disneyland level of opportunities; their products could be seen by a massive 129.8 million worldwide!
Kareem Daniel, chairman of Disney Media and Entertainment Distribution, states:
“Expanding access to Disney Plus to a broader audience at a lower price point is a win for everyone – consumers, advertisers and our storytellers.”
A win for all indeed – the more people watching The Mandalorian, the better!
Everybody likes ads now?
It’s not just Disney; tons of SVOD platforms have begun integrating cheaper AVOD subscriptions into their platforms.
Paramount (now known as ViacomCBS) uses a multi-tier system for pricing. And clearly, the strategy has shown swift success. By 2021, Paramount + Showtime collectively gained a whopping 9.4 million subscribers!
Never did we expect to see the day ad-based SVOD would actually be the preference for streaming. However, according to Comcast, 80% of consumers prefer ad-supported services over higher-priced SVOD.
Don’t just take our word for it; let’s look at (and pour one out) for ITV. After introducing ITVX (their higher-priced SVOD service) – shares for the company saw a plummet of 30%.
Clearly, people are willing to see some ads before their favourite show if it means spending less.
This isn’t all too surprising when you count how many SVOD services there are, alongside the ongoing battle of exclusive content. Audiences want to watch it all, and offering cheaper subscriptions allows for just that.
However, not everyone is jumping on the ad-wagon trend…
It’s a no from Netflix
The king of chill, Netflix isn’t entirely sold on the idea of an AVOD service for the platform.
Netflix’s chief financial officer, Spencer Neumann, states:
“It’s not like we have religion against advertising…It’s hard for us to ignore that others are doing it, but for now it doesn’t make sense for us.”
Netflix is on a crazy content win right now, with Squid Game still raking in the awards, alongside its exclusive feature, The Power of the Dog, nominated for several academy awards.
Perhaps Netflix wants to continue presenting itself as the OG premium service? They may see adverts on the platform as harmful to its identity – swaggering exclusive and high-quality content.
However, their brand identity may have already chipped when Netflix immediately raised its pricing for the second time in 18 months for the UK and Ireland. Thanks for that, by the way!
Almost as a middle-finger flick to AVOD, Netflix raised its basic plan by £1 to £6.99. With nearly every other SVOD service offering lower prices, Netflix might lose both traffic and audience trust if it continues to exclude and avoid the eCommerce tactics of others.
AVOD Advantages?
So what positives can AVOD bring to your marketing tactics? Of course, increased user numbers is a biggy, but your creative can also get in on the action.
Opening up advertising to VOD isn’t totally new. Channel 4, for example, has been experimenting with dynamic ads through its service for quite some time. Dynamic TV offers marketing partners an insight into first-party data from audiences.
These insights allow advertisers to create unique, specific inbound adverts catered to audiences. For example, dynamic ads can factor in the location, weather, time of day, or even a name.
Imagine the possibilities dynamic ads could have on SVOD services that carry the biggest franchises in entertainment. Darth Vader, calling your name to the dark side, or Thor, casting a thunderous cloud onto your screen – fitting in with the delightful British weather.
Ads on SVOD don’t have to be intrusive – they can be insanely immersive. We’re hoping to see some creative ads coming to the small screen in a big way soon!
Dis-avod-tages
More marketing opportunities means more money – that’s great! However, you’ve got to keep the audience engaged for it to work.
It’s too early to tell if these new ad-tier subscriptions are here to stay. Ad fatigue is very real, and without a good UX in place, it could lead to less traffic or negative PR.
Ryan Gould, WarnerMedia’s head of digital ad sales and client partnerships, states:
“Our research tells us that 65 percent of consumers think more favourably of a brand when they provide less commercial interruptions during programming.”
You could avoid these issues with in-service packages (such as Warner’s Brand Block InFront) that reward consumers with no interruptions. However, if you want to avoid charging audiences, the essential factor you need to consider is where ads are popping up.
You don’t want ads appearing halfway through an action-packed fight scene, nor do you want a break in a show before it abruptly ends a minute after – Sopranos style.
Make your ads feel native (or at least as native as can be). If the audience is watching a film, align with cinema standards and place your ads at the beginning of the movie. The same goes for TV; try to find the episode’s midpoint where the break feels natural.
So, what’s next?
WarnerMedia now says 40% of HBO Max’s daily signups are on its ad-supported tier. AVOD is clearly making an impact, with audiences preferring cost-efficient services rather than premium options.
However, if ads are placed incorrectly, become repetitious or don’t engage audiences, the ad-fad might crumble quickly.
The takeaway? Get creative with your ads and keep them in line with the content that pops up next. We hope to see more dynamic ads in the future spice up the ad space for film and entertainment just as they have with other platforms such as TikTok.
Until then, would you like help in maximising your creative campaign, or simply interested in gaining further insights into SVOD services? Contact our team of professionals now.
