If you thought ads on streaming services would become a thing of the past, think again. Studies show users are now not only accepting ads – but in some cases prefer ad-supported services over ad-free subscription services.
According to a recent study by Hub, only a relatively small percentage of consumers say they cannot tolerate any commercials in their TV content. However, even participants included in that “ad-intolerant” group say they’d still sign up for a streaming service with ads in order to save money on a subscription.
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56% of participants said they’d rather watch ads and pay $4-$5 less per month for a streaming service. Preference for less expensive, ad-supported tiers over more expensive, ad-free tiers has remained relatively stable over the past year.
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Another 4 in 10 (42%) subscribe to the ad-supported tier of a streaming on-demand subscription service: Hulu, Discovery, Paramount+, Peacock, or HBO Max. Subscription to those ad-supported tiers is up 4 points since the end of 2021.
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55% of consumers say they use at least one FAST, such Pluto TV, the free version of Peacock, the Roku Channel, Tubi, Freevee, etc. This percentage has increased almost 10 points higher than at the end of 2021.
Remember, most homes have multiple streaming services, so shaving $4-$5 off several monthly plans allows users to add another streaming service or two, while still providing access to the services they already use.
The list of streaming TV platforms with less expensive, ad supported tiers has been growing, with Disney+ set to begin their own version later this year. FAST (free, ad-supported TV streaming services) viewership also continues to increase each year.
Contrary to popular belief, the study reveals strong satisfaction with ad-supported streaming TV platforms. So what has changed since the rise in popularity of ad-free tiers?
It seems the industry has finally figured out how to effectively deliver ads to viewers.
“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,” said Peter Fondulas, principal at Hub and co-author of the study. “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.”
Those who use ad-supported streaming services feel they get just as much value from the service as those who subscribe to ad-free services. The key to keeping viewers satisfied even with a relatively higher ad load seems to be simply providing users with relevant ads.
When it comes to consumers’ perceptions about ads, the most important outcome is the overall value they feel they take from the viewing experience. Many factors influence the experience as a whole – including content load, length of breaks between ads, relevance, the overall service subscription fee, etc.
When ads are delivered effectively, viewers can actually be more satisfied with the overall viewing experience—and feel more loyal to the service than viewers of ad-free content. With the help of consumer data, streaming services are already shaping the user experience.
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