What’s the Right Amount of Ads to Show Viewers?
As much as ad-supported streaming services want to maximize revenue, their priority lies with endearing their audiences. Each platform needs to find the best way to monetize advertiser demand while also keeping its viewers pleased. The top AVOD dogs discovery+, Peacock, and HBO Max have been in a race to run the lightest ad loads, no more than four to five minutes of ads per hour.
Other services, however, are assessing their optimal ad loads. For instance, Rakuten’s ad-supported streamer Viki, which provides Asian content, is looking to extend the stretch between ads even more by adding an ad format tailored to binge-viewing behaviors, similar to Hulu.
Amber Lockwood, VP of media sales for North America at Rakuten Advertising said that lighter ad loads can help streaming services charge more for ads by creating a shortage in the market. This would also help with managing competitive separation among advertisers who don’t want their products airing alongside a competitor’s.
However, the ad caps can restrict ad revenue as well. So, not only does less inventory limit the number of placements that a streaming platform can sell, but it can also increase prices beyond what advertisers are willing to spend. Some ad-supported services have decided not to ease their ad loads so their customers are happier.
According to an executive at an ad-supported streaming company, they’ve found optimality airing eight minutes of ads per hour of programming. Although this is higher than HBO Max and Peacock, this has allowed the company to charge less for each ad. The executive said, “We tried to model off the [free, ad-supported streaming TV] platforms because we think they’re the ones leading the charge into what creates the best ad experience because their whole business model is predicated on attention and not getting paid if they’re not getting attention.”
Not only do ads help keep services free to use, but they also keep viewers happier and their wallets are a little heavier. A Digital Trends study from Deloitte shows that 60% of consumers are fine with watching a light amount of ads (six minutes or less per hour of programming) for a lower monthly subscription cost.
However, when ads run on for too long, it starts to get irritating. A report from Morning Consult found that 44% of respondents believed there were too many ads on ad-supported TV streaming.
One of the reasons why discovery+, Peacock, and HBO Max keep their viewers happy is their light ad load. However, free streaming services can experiment more with longer ads, since subscribers are far more willing to watch advertising if they aren’t paying a single cent.