AVOD services emerge as a great alternative as consumers look to reduce costs

Connected TV (CTV) ad spend is on the rise, and ad-supported video on demand (AVOD) services lead the streaming pack as consumers look to cut subscription costs in the year ahead, according to new findings from “The Stream 2023: Actionable Audience Insights for Brands,” an annual audience report from Fox Corporation's ad-supported video-on-demand service Tubi.

According to the study, 3 out of 4 consumers agree that AVODs are a practical alternative to cable and satellite TV. As CTV advertising continues to grow, funding is not just coming from linear budgets: this year significant digital video, social media, OOH, and traditional media dollars shifted to CTV.

Meanwhile, the report revealed that 35% of streamers access other people's digital video streaming services, and 45% of streamers want to stream without having an account. SVOD platforms aim to curb these losses by charging accounts shared across multiple households, which is expected to increase churn.

Tubi identified five types of streamers in its research. From "recommendation seekers" to "genre-focused browsers," they all share the same three drivers of satisfaction: "a good mix" of content, effective recommendations, and seamless navigation. When it comes to ease of use, the bar is higher for AVOD: 34% of streamers expect ease of use in SVODs while it jumps to 59% for FAST/AVOD.

Regarding ad loads, 51% of streamers are satisfied with six minutes of ads per hour. While streaming services experiment with new ad formats, Tubi found that standard video ads are currently preferred by streamers over other formats such as split screen, interactive, or QR code ads.

As advertisers evaluate the state of streaming TV, more ad dollars are being dedicated to streaming buys than ever before: 4 out of 5 advertisers now regard advertising on streaming television as highly valuable. Growth in monthly active users, the presence of otherwise hard to reach young and multicultural streamers, and the ability to reach hard to find audiences were cited as key drivers for AVOD ad spend.

In the particular case of Tubi, the platform's Total Viewing Time was up 44% year-over-year (2022 calendar year vs 2021), with more than 5 billion hours streamed in 2022, and its audience has grown surpassing 64 million monthly active users. Tubi's audience continues to be young and increasingly diverse: African American and LGBT audiences grew over 50% in 2022, and audience growth exceeded 25% in each major level of household income and the Hispanic demo, according to MRI. Additionally, Tubi's core younger demographic remains strong: more than 1 in 3 (36%) Tubi streamers are between the ages of 18 and 34. Tubi offers consumers free access to more than 50.000 titles from 455 content partners as well as a growing curated FAST offering watched by 1 in 5 AVOD streamers in the past 12 months.

"As subscription costs continue to rise, nearly 1 in 3 streamers plan to reduce spending on streaming services this year. With consumers turning to AVOD to complement the select SVOD services they choose to keep, Tubi offers a brand-safe environment for advertisers looking to tap into an incremental, young, diverse, and highly engaged streaming audience,"  said Mark Rotblat, Chief Revenue Officer at Tubi.