How will streaming ads change TV advertisting?

With major players like Disney+ and Netflix preparing to welcome brands to their platforms, get ready for a ripple effect throughout the industry.
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Streaming services have the potential to redefine the future of TV advertising and provide advertisers with an edge in a crowded market.

Last week, Disney+ announced that its ad-based membership tier would be launching in the U.S. in December, with international markets expected to follow in 2023. Netflix’s imminent dive into the world of advertising will mark the biggest event for the video advertising industry since the rise of TikTok. These both provide a massive opportunity to experiment with new ad formats at scale – and from that scale, potentially push new ad formats into the ecosystem.

Simon Ross, VP of strategy and insights at Horizon Media Canada, says that, overall, streamers have already redefined the way we watch and consume video. “As advertisers, we know that consumers spend more time on digital platforms than TV, and streaming is a huge part of this. For many years, the media market has been heading toward an entirely digitized version of itself, with on-demand content, at the time and on the device of your choosing.”

One of the next changes we may see through streaming, Ross says, is the ability to watch video content and shop at the same time on the same device, something the industry has been anticipating for quite a while. “The ability to conveniently purchase something through the TV while watching video content will keep eyeballs on the content or coming back to it, not drive them away. This will be a tremendous opportunity for advertisers in the near future.”

While it’s difficult to say definitely whether streaming advertising opportunities will make TV “better,” per se, Ross says digitization will continue to bring mountains of useful data and the ability to better target and measure – and not only bring viewers content they’ll enjoy but also advertising that will theoretically be more relevant.

Devon MacDonald, president of Cairns Oneil, believes Netflix and the other streaming platforms have a chance to re-create the magic of long form video and storytelling in advertising. “Similar to a cinema environment, the viewer is settling in for an immersive experience and is anxious for quality content. Social platforms have excellent targeting ability and effectively drive performance through video, but typically through shorter formats.”

MacDonald says expanding competition for advertising dollars should drive innovation across the industry and having access to streaming platform data will enhance video planning and change the discussion around measurement.

“The splitting of a consumer’s time across content options requires advertisers to do more across more partners. Having streaming options available is a great opportunity to reach consumers who wouldn’t be accessible via broadcast advertising.”

He adds that minimizing ad load will be critical first to support the tiered pricing model that Netflix and Disney+ are proposing, but also to differentiate and elevate the experience from broadcast. “This should create a premium market for advertising that, even in a time when advertisers are looking to increase spend, could reduce investments in broadcast TV.”

Kevin Kivi, EVP and general manager of Horizon Media Canada, says competition is a good thing and fortunately it’s been driving the shift away from legacy methods of buying and activating linear TV campaigns – whether we’re ready for it or not. “As an industry, we’ve lagged too far behind and it’s forcing everyone to catch up. I’m excited to see these moves accelerate in the next 12 months, as we begin to realize the vision of trading on common currency and thinking in terms of a complete video experience versus simply linear, online video and OTT platforms.”

Cost of streaming services is a big factor in the drive to introduce ad-supported pricing models. Magnus Nisbeth, VP of investments and operations at Initiative Media, says consumers who were trying to escape traditional cable bills are now spending those dollars on streaming platforms. “This has put the consumer back where they were, again deciding on where to allocate their subscriber dollars. With the growing number of streaming choices and escalating costs, many services are beginning to introduce AVOD versions for their content in an effort to protect their subscriber base. This emerging trend takes us back to the television of old but with fewer commercial interruptions and with greatly improved delivery of targeted messaging. Advertisers will now be able to access some of this new extended reach and transition seamlessly with streamer viewing.”

Innovations in the past couple of years have made great progress when it comes to enhancing interactions consumers have with ads. For example, QR codes allow consumers to engage when they’re interested in a brand or product, and they bridge the critical TV-to-phone divide.

Curt Larson, chief product officer at Sharethrough, says other technologies need to focus more on the TV-to-phone divide for interactivity. “One possible step to breaking that divide would be to push an alert to a user’s phone if the user clicks OK for a particular ad with their TV remote. Most streaming services, like Netflix, have a phone app to stream their programs already, so the app could be utilized to push alerts after ads come up.”

In addition, by ensuring ads are relevant to the content being viewed and displaying ads on a small portion of the screen while a show or movie is playing, Larson says Netflix and other streamers will be able to keep users engaged during a time when they’d typically become distracted and stop paying attention. “There’s an opportunity to take advantage of secondary experiences, such as channel guides, pause screens and screen savers, which are mostly untapped for ad inventory and are also non-interruptive. Innovations that bridge the TV-to-phone divide like QR codes and phone alerts can make inroads to TV becoming more of a performance channel in the future. However, it will take time to shift the consumer mindset away from the traditional lean-back, passive experience.”