The Growth of Ad-Supported Streaming During COVID-19

What is Ad-Supported Streaming?

When most people think of streaming services they think of subscription-based, ad-free services like Netflix. And although it may be the largest streaming service, Netflix is just one of many options in a market made up of ad-supported offerings.

Ad-supported streaming is essentially any streaming video service that serves ads to the viewer. Some of these services are free (like Tubi), while others have a price-tag attached to them (like Hulu’s basic plan). Viewers are willing to watch a few ads in order to save money on their streaming video content, making it an arrangement that benefits both advertisers and consumers.

Viewers can access ad-supported streaming services in a variety of ways, including directly over the internet, through a Smart TV, or by connecting their TV to the internet using a device such as a Roku. In the world of advertising, these methods are referred to as Connected TV (CTV) and Over-The-Top (OTT), which are essentially industry terms for discussing video streaming devices and inventory, respectively. Advertisers who tap into that inventory have access to the rapidly growing streaming audience as well as a wide range of targeting options.

Staying in and streaming

While consumers have been forced to stay home thanks to the pandemic, general interest in ad-supported streaming has grown. According to Deloitte’s 2020 Digital Media Trends survey, price is a key factor in consumer streaming decisions. 65% of consumers want cheaper ad-supported streaming options (up from 62% pre-COVID), and of those who wanted cheaper ad-supported streaming options, over half preferred ad-only streaming. This indicates that consumers are willing to watch more ads per hour if it means paying less, making ad-supported streaming a great option for advertisers looking to reach an engaged audience.

Streaming newcomers

Growing consumer interest in ad-supported streaming is great news for advertisers. As ad-supported streaming becomes more popular, more companies are joining the party, which complicates the media buying space.

NBC’s powerhouse platform, Peacock, launched widely in July 2020 with a strong library of beloved content. While Peacock offers one ad-free plan, the new platform is primarily focused on providing ad-supported streaming – a welcome prospect to consumers who want more content for less. As of Q4 2020, Peacock is performing better than originally predicted, amassing 33 million subscribers since its launch.

Discovery+, another newcomer to the streaming scene, launched in January 2021 and gives viewers the choice between an ad-supported plan and an ad-free plan. Home to content from HGTV, Food Network, Animal Planet, TLC, A&E, BBC, The History Channel, Lifetime, and more, Discovery+ is positioning themselves as the reality TV one-stop-shop.

Along with these new platforms, many existing ad-supported platforms are being acquired by big brands. Tubi, for example, was acquired by Fox in March of 2020, and XUMO was acquired by Comcast in February of 2020. Growing interest in ad-supported streaming – from both consumers and companies – should make advertisers excited about the potential to reach an ever-expanding audience via CTV.

How can advertisers buy inventory?

OTT inventory can be purchased in one of two ways: either programmatically or via direct buys with an individual service. Many established platforms like Hulu, Tubi and Pluto TV already have inventory available programmatically, while newcomers like Peacock and Discovery+ are just now starting to make that inventory available. The answer of which avenue to choose ultimately comes down to the needs of the campaign (goals, audiences, etc.) in question.

What this means for advertisers

Media buying in the TV space may be more complicated now than it was ten years ago, but the growth of ad-supported video is a positive swing for advertisers as they look for new ways to reach an engaged audience.

For most advertisers, however, switching completely from a linear buy to a CTV buy isn’t a logical strategy, as there are still audiences who prefer linear over CTV. Instead, advertisers should plan to buy both traditional linear and CTV/OTT inventory to ensure they are reaching their desired audience no matter how (and where) they consume video content.