Why is advertising in streaming video a vital part of the ecosystem?

A long-standing myth in the TV industry has been the idea that viewers strongly dislike ads, and will go out of their way to avoid them. However, Hub Entertainment Research's semi-annual “TV Advertising: Fact vs. Fiction” survey refutes that notion, and provides clear evidence that advertising in streaming video is a vital part of the ecosystem, and brings tangible benefits to consumers.

According to the report, nearly all consumers watch ad-supported TV, more than those that watch ad-free. Moreover, almost six in ten have a preference for ad-supported subscriptions if it means a lower monthly fee. Furthermore, the proportion of viewers who say they cannot tolerate ads on TV is quite small compared to those who say ads are an acceptable aspect of viewing content.

Even viewers who are intolerant of advertising will watch ads under the right conditions. When given a choice between paying a premium to avoid ads, or accepting advertising to save US$4-5 per month on a subscription, most consumers opt for ads. Even a third of those who say they cannot tolerate them will accept ads if it means a lower cost subscription.

The proportion of viewers who cite a preference for choosing their subscription tier is growing. Nearly four in ten would like providers to offer them a choice between a premium ad-free experience, and a lower-cost option with ads. Services that offer such options can appeal to all consumer segments.

At the same time, the good news for the streamers that have been the latest to launch ad-supported tiers is that their subscribers see them as delivering a better ad experience. Max, Disney+, and Netflix in particular are rated more positively than other competitors. Consumers have not reacted negatively to the introduction of ads in these formerly ad-free services.

Delivering a better experience for viewers means a better environment for advertisers, Hub assured in its report. When viewers receive what they consider a reasonable amount of advertising in content, they pay more attention. This goes for the overall number of ads, as well as the length of the breaks.

According to the study, in an environment in which consumers are availing themselves of a multitude of viewing sources, ad-supported subscriptions are filling an important role. Subscribers want the ability to choose how much they spend on subscriptions, and how much advertising they will watch in exchange. Providing both ad-supported and ad-free tiers is an obvious way for streamers to deliver value to their customers.

“Consumers do not just tolerate advertising in video content, in most cases they actually see benefits from it. It allows them to choose their preferred video tiers at lower cost, and when presented right, advertising results in a more engaging viewing experience,”  said Mark Loughney, Senior Consultant to Hub Entertainment Research.

These findings are from Hub’s 2023 “TV Advertising: Fact vs. Fiction” report, based on a survey conducted among 3.063 US consumers age 14-74, who watch at least one hour of TV per week. Interviews were conducted in May, 2023 and explored consumers’ attitudes toward advertising, how it differs across video platforms, and how ad strategy affects viewer engagement.