Findings from Hub’s new “TV Advertising: Fact vs. Fiction” report reveal that consumers love their streaming content enough to stay tuned through—and even occasionally enjoy—ads that punctuate their content experiences.
FAST Channels Like Pluto TV, TubiTV And Others Are Winning SVOD Subscribers’ Attention
Hub’s report shows a 10 percent increase in consumers using free, ad-supported streaming TV (FAST) channels like Paramount’s Pluto TV. Currently, 55% of consumers report that they get at least some of their video content this way. The rise of FAST channels isn’t due to a lack of paid ad-free alternatives, or even “free” alternatives included with many consumers’ basic internet service. FAST channels may offer consumers the kind of neatly segmented thematic content that doesn’t require fiddling with a queue or relying on an algorithm for suggestions or hunting for options by name. FAST channels are often arranged by theme and provide channels dedicated to single niche-but-popular shows, like Pluto TV’s Midsomer Murders and Narcos channels. Last year, Pluto TV, with 64 million monthly users, managed to top $1 billion in ad revenue. This was a feat that underscores advertisers’ willingness to place their bets on cord-cutters and prestige network subscribers are heading to free alternatives to access content that includes their ads.
But why are FAST channels so appealing to consumers who are now awash in content choices and channels offering a range of ad-free paid experiences? The Hub report shows that 56% of consumers would rather watch ads and pay $4-$5 less per month to enjoy streaming content, but consumer interest may be driven by more than a desire to save a few dollars on their monthly budget.
First, there’s the element of content choice. Take children’s programming. Pluto TV has one of the only free channel dedicated exclusively to kid-friendly movies out of the 82 channels focused on kids’ programming that previously appeared on TV or platforms like YouTube. With consumers cutting costs due to the specter of inflation, an always-on channel featuring long-play kid’s content can be an enticing alternative to paid services.
FAST And Paid SVOD With Ads Can Coexist—And Marketers Should Take Note
FAST channels also serve as an enhancement for SVOD services, allowing consumers to prune their subscriptions and keep the ones that deliver the most value or that provide content they can’t find on their favorite FAST channel. For example, 70 percent of FAST channel Xumo’s viewers use streaming services exclusively for video content, with 80 percent of these subscribing to Hulu and 77 percent to Netflix.
According to Amanda Garcia, Senior Director of Partnerships at Paramount+ in a recent report produced by Comcast, “As customers find more ways to watch the content they love across a mix of services, FAST channels have become a key part of our media mix for acquisition and awareness, as well as targeted campaigns to super-serve key audiences.” That’s important, as consumer willingness to stay engaged with paid streaming services is now becoming tenuous due to inflation concerns—and budget-minded viewers are now canceling services at meaningful rates. Even at the height of the pandemic, when millions of Americans were home with more time to stream, consumers were prone to prune their subscriptions in search of better deals or better experiences.
Between July 2020 and February 2021, the number of TV viewers saying they had added a new SVOD service grew from 28 percent to 44 percent, but the share of consumers stating that they canceled a service rose from 18 percent to 25 percent during the same period.
That means consumers’ attention can go either way—more towards FAST channels when SVOD content feels stale (or costs become prohibitive) or back to paid SVOD when engaging original content draws them back.
Consumers Don’t Mind Ads, Just Make Them Worthwhile
The big takeaway here is that ads are not the problem when it comes to consumer engagement and satisfaction. The Hub report states that in its survey, subscribers to the ad-supported tiers of streaming services are, for the most part, “equally likely to feel they get “excellent” or “good” value from the service as those who subscribe to the ad-free versions.” In addition, subscribers to Discovery+ and Paramount+ with ads are “actually five points more likely than ad-free subscribers to feel those services offer excellent or good value.”
According to the Hub report, viewers of content on an ad-supported streaming platform reported distinct differences in their enjoyment of their viewing experience based on the relevance of the ads they remembered. For viewers who remembered ads relevant to their interests, 69 percent said they enjoyed the entire experience of watching programming. For those who didn’t see relevant ads, only 48 percent reported enjoying their experience. Consumers are also paying attention to ads on paid services. The report states that two streamers, Discovery+ and Hulu, led in the amount of attention their users paid to ads during commercial breaks (8-10 on a 0-10 scale).
“Flashback to the late 2000s: take the rapid success of ad-free streaming services like Netflix, add in the gradual erosion of traditional pay TV subscribers, and many industry experts began to predict that ad-supported TV would go the way of the dinosaur,” said Peter Fondulas, principal at Hub and co-author of the study.
“It turns out the issue consumers had with ad-supported platforms was not the fact that they included ads at all, but how the ads were delivered. With reasonable ad loads, more relevant targeting, and a quid-pro-quo agreement (watch ads, pay less), the industry seems finally to have an answer to the question that has dogged it for years: how to get consumers to accept TV advertising.”