20 OCT 2023

What can consumers expect from advertising on streaming services?

BB Media conducted a comprehensive analysis of the leading streaming services in the United States and provided insights into emerging trends regarding advertising techniques, dominant brands, ad volume, and average ad duration.

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In the United States, ad-supported plans are widely used. That is why BB Media conducted a comprehensive analysis of the leading streaming services in the United States that use AVOD (Advertising VOD) and ASVOD (Ad-Supported Subscription VOD) revenue models. The results provide insights into emerging trends regarding advertising techniques, dominant brands, ad volume, and average ad duration.

After comparing third-party paid ads with in-house promotional ads on these platforms, it was observed that Netflix and Pluto TV choose not to use promotional advertising. In contrast, Max stands out for its self-promotion approach, frequently showcasing its own content in its ads. Furthermore, in the category of paid ads, Discovery+ is in the lead, surpassing other streaming services in this aspect. 

One of the most notable aspects relates to the partnerships between these platforms, where they promote content from others on their own interfaces. For example, Peacock has a strong advertising presence on five different streaming services, such as Freevee, Discovery, Max, Netflix, and even on its own platform, despite being perceived as competitors.

On the other hand, The Walt Disney Company, the parent company of Disney+ and Hulu, showcases its advertising strategy on 6 out of the 10 analyzed platforms, promoting its own content, such as the movie “Elemental.” In contrast, Paramount+ chooses an exclusive policy of not displaying ads from its competitors on its own platform.

The most used methods for advertising content are pre-roll (ads inserted at the beginning of the content) and mid-roll (ads during the content). These strategies have become fundamental pillars of streaming platforms, where the user viewing experience is meticulously cared for. By maintaining a seamless experience, both advertisers and platforms benefit, as less intrusive advertising contributes to increased user retention and engagement.

In 2023, streaming platforms abandoned post-roll ads, which were less effective, in favor of ads before or during the content, which increased audience retention. They also introduced pause ads, which are static images displayed when content is paused, capturing attention without disrupting viewers. These strategies provide platforms with effective options for promotion, BB Media noted.

Only 2% of Netflix and Disney+ subscribers in the United States have opted for the new, more affordable options with advertising. Meanwhile, services like Hulu, Peacock, and Paramount+, which had already introduced advertising options, have a higher proportion of subscribers on these plans. Over 90% of Hulu subscribers use the ad-supported tier, highlighting a clear difference in subscriber preferences between services that initially offered advertising options and those that added them later.

This strategy is more advanced in the United States, but in Latin America, it is still emerging. According to studies conducted by BB Media, 46.2% of people in Latin America prefer a more affordable plan to save money, even if it means having commercial interruptions during the content. Peru and Colombia are the two countries with the highest percentage in favor of the ad-supported option. BB Media clarified that these plans, while more affordable, come with lower-quality features and functions and offer a more limited selection of content.

“In the realm of streaming services, there is an expectation for advancements towards personalized ads, non-intrusive creative formats, reduced ad repetition, interactive advertising, and optimized strategies to maintain a balance between revenue and user experience. However, there is also a need to put efforts into audience measurement on online platforms to understand and validate the effectiveness of advertising and the revenue it can generate for advertisers. Finally, an expansion into international markets, such as Latin America, is anticipated,”  said Paula Strubolini, Platform Essentials & Ads Monitoring Leader at BB Media, and the author of the report.

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