As streaming behaviors have matured, so too have attitudes towards streaming services and ad tolerance. Consumers love the flexibility connected TV (CTV) and streaming services provide, and the a la carte nature is a reality that many don’t want to give up.
Consumers quickly became accustomed to choosing what they want to watch, when they want to watch, and how they want to pay for it. As the streaming wars heated up, new services presented near limitless choices, but the subscription costs quickly started to climb toward those of traditional cable packages.
SpotX’s recent “CTV Is for Everyone” report found that viewers are looking for ways to increase access to content without increasing cost. This opens the door for free or lower-cost ad-supported video on demand (AVOD) programming to grow.
There is a limit to the number of subscriptions consumers will pay for
Our research shows that 85% of CTV consumers in the US own a paid subscription to a streaming service. Many own multiple subscriptions, also known as a “subscription stack,” though most say the maximum amount of subscriptions they would be interested in owning at any given time is four. Across all the major European markets, households owned an average of one to two subscriptions.
Most US subscribers spend between $4 and $29 a month on their subscriptions, others pay up to $69 a month in total, and very few are spending beyond that threshold. Most consumers (80%) reported they did not intend to increase their spending on subscriptions in the next 12 months. This trend extends across Europe, where 3 in 4 respondents said that they do not plan to change the number of subscription services they pay for or how much they spent on subscription services.
CTV audiences are receptive to ads
Because consumers’ willingness to pay for content is limited to a select few subscription services, ad-supported content provides a wider choice of options, and CTV viewers are enthusiastically embracing it.
We found that 4 out of 5 streamers in the US watch ad-supported programming and 60% would prefer to watch free content over a paid ad-free service. In Europe, 69% of CTV viewers reported they watch ad-supported content and more than half (58%) said that they prefer to watch free programming versus paying for an ad-free experience. Only 22% of European respondents said that seeing ads within programming bothers them.
CTV ad spend is primed for dramatic growth
MAGNA reports that over-the-top (OTT) video accounts for 12% of a user’s time spent with media, yet only receives 3% of total ad spend — though that is growing quickly. SpotX platform data shows overall OTT/CTV ad spending this year is up by more than 60% in the seven days ending August 5 compared to the seven days ending April 8.
Data from Samsung Ads Europe, the leading connected audience platform, shows it’s clear that customers want the choice to access both free TV as much as subscription services. What’s more, 57% of Samsung TV Plus viewers (Samsung’s ad-supported OTT service) in the UK are heavy streamers or light linear TV viewers – audiences that might be beyond reach for brands that do not have CTV as part of their media plan.
Advertisers recognize the opportunity and are eagerly following audiences to CTV. Doug Zarkin, VP and CMO of Pearle Vision, says, “As a neighborhood-based brand, especially as we head into the clutter and chaos of election time, the role of CTV to enable Pearle Vision to engage, educate, and motivate our neighbors to take action has become increasingly more important. We’ve tested CTV and found it to be a strong medium both nationally and, critically, at the local level to ensure we put our brand on the brain of our target consumer efficiently and effectively.”
François-Xavier Le Ray, General Manager France & Belgium at The Trade Desk, agrees, saying, “Whilst the past few months have fast-tracked TV’s shift to digital, this trend has been a long time in the making. There is an increasing appetite from advertisers to use this shift in media consumption and access CTV inventory, especially to complement online video strategies.”
Our research indicates that not only is there a general acceptance towards ads being shown, especially in order to provide free-to-view content, but consumers also find value in and act on entertaining and personally relevant ads. Of US respondents, 29% either considered or made a purchase because of an ad they were exposed to.
“As innovation and technology breakthroughs accelerate the transformation of content consumption, the end user becomes ever more in control of their own content discovery journey,” said Nik Dewar, European Sales Director at Samsung Ads. “This creates huge opportunities for advertisers to reach viewers in creative and new ways, reaching targeted audiences intelligently when they are most responsive.”
Though CTV viewership has surged in 2020, consumers’ investment in subscription services will level out. The spotlight will be on AVOD viewership as it increases, making CTV an invaluable opportunity for advertisers with the efficiency and effectiveness it provides in front of an engaged audience.
Rachel Sullivan is the Senior Content Marketing Manager at SpotX, where she leads content strategy. She helps shape the stories, insights, and news that leaders across the advertising ecosystem need to advance the industry. Rachel previously managed B2B content and digital marketing for a range of emerging technology companies and has both agency and in-house experience. Outside of work, you can find her traveling the world or exploring her home of New York City.