Loading...

The current climate of ad-supported TV

Published: January 10, 2024 by Experian Marketing Services

What is the future of ad-supported TV?

In the early days, streaming services were presented to viewers as convenient alternatives to cable that allowed you to get content whenever you wanted it — without ads. But as standalone streaming platforms have grown in number and prominence, often charging high monthly costs for subscription-based content and continually hiking their rates, many are warming back up to the idea of ads if it means lower monthly fees. Cue free ad-supported TV (FAST) streaming services: free video content with no paid subscription requirement. 

These services generate revenue through advertising and deliver content with periodic commercial breaks to support their free model. This option has become popular as viewers have sought out cost-effective alternatives to traditional scheduled television. Free streaming TV platforms such as the Roku Channel, Tubi, and Pluto TV are growing, with one in three U.S. viewers subscribing to free ad-supported TV streaming services. If premium streaming platforms keep raising their monthly costs, we can predict that FAST will continue to grow. 

In this article, we’ll talk about the current state of the ad-supported TV climate, including the opportunities and challenges it poses for marketers.

A history of ad-supported TV

Historical context is crucial to understanding the current climate of ad-supported TV and its implications for your marketing.

Before the rise of cable TV, television was free for viewers, with advertisers covering the costs. The first TV commercial, a 10-second spot for the Bulova Watch Company, aired in 1941 during a baseball game and cost the company $9. This ad kickstarted the era in which advertisements funded the TV model, which quickly surpassed radio in popularity and led to an explosion of content. From 1956 to 1988, commercials became embedded in culture, giving rise to marketing icons like Ronald McDonald and memorable campaigns like Nike’s “Just Do It.”

From 1989 to 2006, the world saw the rise of online entertainment and advertising with the invention of the World Wide Web — and subsequently, online video broadcasting and advertising emerged. But between 2007 and 2014, over-the-top (OTT) broadcasting and connected television (CTV) innovation disrupted traditional broadcasting, with ad-supported streaming gaining greater prominence. Platforms like Netflix and Hulu allowed viewers new freedom from the confines of scheduled programming.

By 2022, CTV advertising thrived thanks to programmatic advertising, which allowed businesses to reach targeted audiences with relevant campaigns. Ad-supported streaming became widespread as platforms like Netflix and Disney+ incorporated advertising into their models. Free ad-supported TV (FAST) emerged as a form of advanced television that displaced traditional cable and satellite TV. Recent years have witnessed a notable shift back to ad-supported streaming television due to the proliferation of streaming services, subscription fatigue, and the desire for cost-effective content consumption. 

Looking ahead to the future, TV advertising is expected to continue growing with the potential to be influenced by innovations like virtual reality and artificial intelligence

Why did the popularity fade?

Ad-supported TV waned in popularity due to the introduction of cable TV and subscription-based models. Cable TV offered ad-free content for a subscription fee, which reduced the appeal of traditional ad-supported broadcasts. Uninterrupted content became a critical selling point for cable providers, but it created fragmentation for advertisers and made it more challenging for them to reach their target audience. With cable and, later, satellite TV dominating the market, advertisers had to adapt their strategies.

The decline in the popularity of ad-supported TV led to a decreased reliance on traditional advertising methods, and marketers began exploring alternative avenues to connect with consumers effectively. The recent resurgence of ad-supported TV, particularly in streaming services, indicates a shift in viewer preferences. You can utilize targeted advertising cost-effectively, as viewers prefer free, ad-supported content over subscription-based models.

The resurgence of ad-supported TV models 

The resurgence of ad-supported TV models can be partly attributed to the COVID-19 pandemic and changing viewer preferences. In 2020, stay-at-home measures led to a surge in media consumption, and people turned to streaming for entertainment. This shift provided a unique opportunity for ad-supported models to regain popularity. But as viewers explored various streaming options, subscription fatigue set in. Paid streaming proliferation increased costs, and people began reconsidering spending on multiple subscriptions. 

The pandemic triggered a fundamental shift in TV consumption and caused viewers to favor ad-supported streaming models that offered free content with occasional commercial breaks. In fact, LG Ad Solutions research revealed that 80% of American TV viewers use free ad-supported streaming services — and 63% express a preference for this model. This finding challenges assumptions made during the initial stages of the pandemic, where subscription-based consumption seemed dominant. The study suggests that as subscription fees accumulated, viewers sought more content without increasing costs, driving a preference for ad-supported streaming.

Furthermore, the landscape of ad-supported TV saw notable entries from major streaming platforms:

  • HBO launched its ad-supported model in June 2021.
  • Netflix and Disney+ introduced their ad-supported tiers in late 2022.
  • Amazon announced in September 2023 that they would be launching their ad-supported service in 2024.

These developments emphasize the industry’s recognition of the demand for ad-supported content and further contribute to the prominence and endurance of this model.

Most popular platforms

A report from Samba TV showed that one in three U.S. viewers subscribes to free ad-supported TV streaming services, such as Pluto TV, Tubi, or the Roku Channel. The report highlights Amazon’s Freevee as a standout due to its high viewership growth in the first half of 2023 compared to competitors. Here are some details to note about Freevee and its major competitors:

Freevee (Amazon Prime)

With a focus on bringing diverse content to its audience, including thousands of premium TV shows and movies, Freevee has positioned itself as a go-to destination for those looking for quality programming without subscription fees. In early 2022, Freevee had 65 million monthly active users, and their ad prices, similar to competitor costs, range between $13 and $24 per day — around $400 and $720 per month, respectively.

Pluto TV (Paramount)

As a pioneer in the FAST streaming space, Pluto TV, now under Paramount, boasts a diverse range of 250+ channels. According to Statista data from November 2022, 8% of Americans watched TV on Pluto on a daily basis, with men watching more often than women. You can strategically engage with Pluto TV’s varied audience for around $999 a month, with advertising costs influenced by factors like viewership and channel prominence.

Tubi (Fox)

Surpassing many competitors in viewership, Tubi, owned by Fox, offers an extensive collection of free content (200,000 movies and TV episodes) and enjoys 74 million active monthly users. Tubi has experienced the fastest growth among young, diverse audiences and has produced or acquired 200 titles that almost 54 million viewers have watched. You can market to viewers on Tubi for $10 to $45 daily or $300 to $1,350 monthly.

The Roku Channel

With over 350 channels and premium original content, The Roku Channel has become an important player in the FAST space. Approximately 38% of streaming hours in U.S. households are spent on the Roku Channel. With Roku Ads Manager, you can get started with only $500.

New players

The FAST industry is seeing an influx of new players all the time, which is contributing to the industry’s growth and innovation. As traditional subscription-based models adapt to include ad-supported tiers, the competition in the ad streaming sphere has intensified, prompting both established and emerging platforms to explore the FAST model. Statista reports that the number of users in the FAST market is expected to reach 1.1 billion by 2028!

The recent entry of industry giants like Netflix into the ad-supported realm has set the stage for significant shifts. When Netflix announced and launched its ad-supported tier in late 2022, the industry experienced a notable spike in CPMs (cost per mille/cost per thousand impressions). This reflected the initial scarcity of users on this tier. 

As more subscribers embraced the ad-supported offering, CPMs decreased. Subscription video-on-demand (SVOD) platforms, including Disney+, are also incorporating ad-supported tiers into their models to cater to viewers’ preferences for cost-effective streaming options. Industry reports illustrate a decrease in CPMs as more users engage with ad-supported tiers, which creates a vibrant, competitive environment for advertisers like you.

Free ad-supported streaming vs paid ad-supported TV 

The affordability of free ad-supported streaming services is attractive for viewers seeking cost-effective alternatives to traditional cable or non-ad-supported streaming platforms. Platforms like Pluto TV and Tubi provide viewers with a wealth of content without the financial commitment of a subscription. Free ad-supported streaming services like these have gained traction for their cost-effectiveness.

In contrast, paid ad-supported TV models present a unique proposition — pay for the service and enjoy reduced subscription costs by opting for an ad-supported plan. These models provide users with a middle ground between subscription-based and free ad-supported streaming.

The future popularity of free ad-supported streaming versus paid ad-supported streaming is likely to be influenced by a combination of viewer preferences, content strategies, ad experiences, and broader industry dynamics. As both models evolve, streaming services will continue to experiment and adapt to meet the diverse needs of their audiences.

What FAST popularity means for marketers

The shift towards FAST aligns with changing viewer preferences. This makes things easier for your marketing, as you can:

  • Engage a broader audience: Without the barriers of subscription fees, and the ability to place ads in front of diverse demographics, you can customize campaigns for specific audiences and ensure your messages resonate with viewer interests.
  • Convey your message to a captive audience: The rise of FAST also implies an increased viewership of commercials, as these services typically feature ad-supported models with limited options for viewers to skip or fast-forward through ads, creating a more captive and engaged audience. 
  • Expand your brand exposure: The cost-effectiveness of ad-supported models provides a valuable avenue for brand exposure without the hefty price tags associated with traditional TV advertising.

As a marketer, it’s essential for you to understand the dynamics of ad-supported TV platforms so you can recognize unique advertising formats, optimize campaign frequency to prevent ad fatigue, and embrace the potential for localization and personalization. As advertising evolves with the growing popularity of FAST, you have an opportunity to stay ahead of the curve, craft compelling campaigns, and maximize your reach at a time when ad-supported streaming is at the forefront of entertainment.

The future of ad-supported TV

The re-emergence of ad-supported TV, along with recent innovations, indicates that the future of this model is bright. 

Teevee Corporation, a hardware startup led by the co-founder of Pluto TV, is an excellent example. It is set to unveil a groundbreaking ad-supported physical television that won’t cost consumers a single cent — as long as they’re okay with a second integrated screen that displays ads while they watch the main screen. This TV is distinct from streaming services and uses automatic content recognition (ACR) for contextually relevant ad delivery. Teevee’s approach introduces a new dimension to viewer engagement that combines traditional broadcasting with targeted advertising.

Major streaming platforms are actively contributing to the evolution of ad-supported TV as well. Amazon made the strategic move to bring Amazon Original titles and additional ad-supported channels to Freevee to demonstrate its commitment to the ad-supported market. The platform introduced 23 new ad-supported TV channels from major entertainment players such as Warner Bros. Discovery and MGM. As a result, Amazon’s Freevee experienced tremendous growth in viewership in the first half of 2023, up 11% year-over-year

These recent advances illustrate what the future of streaming with ad-supported TV may look like moving forward, where hardware innovation meets strategic content integration, and major platforms compete to enhance their ad-supported offerings. 

How Experian can help

Although the FAST industry is rapidly evolving, Experian stands at the forefront with powerful data-driven solutions that empower you to take advantage of this valuable marketing opportunity. 

Consumer Sync is a robust identity solution that empowers advertisers by facilitating collaboration and offering insights that contribute to more effective and targeted FAST campaigns. Audience segmentation, attribution, and campaign optimization play vital roles in FAST advertising. Our Consumer View solution provides industry-leading data solutions for audience segmentation, which allows marketers to predict buying behaviors and deliver personalized experiences.

Connect with Experian’s TV experts

As you explore the possibilities of ad-supported TV, Experian offers the expertise and solutions you need to elevate your marketing strategies. Connect with our TV experts today to gain a deeper consumer understanding, refine your targeting, and ensure the success of your campaigns. 


Latest posts

Loading…
Identity resolution: A key ingredient for success in data clean rooms

The AdTech industry is buzzing with discussions about cookie deprecation and effective strategies to tackle it. One of the commonly suggested solutions is the utilization of clean rooms alongside responsibly sourced first-party data. Above all else, the industry recognizes the importance of respecting consumer data and complying with all privacy laws. Additionally, the industry acknowledges the need for a change in our historical practices. This shift benefits everyone involved, as consumer data is more secure than ever. Tremendous investments have been made to ensure the utmost security of consumer information. Clean rooms are one of the tools that enable companies to use data securely, ensuring the content that you see is as relevant as possible. Two ways the AdTech industry is addressing cookie deprecation The days of sending data directly to partners for usage or for using only third-party data for marketing efforts are gone. Now, the emphasis is on responsibly collecting first-party data and using clean rooms to enrich first-party data to enhance marketing efforts. First-party data The industry is starting to lean into first-party data gained through transparent means. This valuable information provides organizations with deeper insights into their customers, allowing for more personalized and effective interactions. By embracing the power of first-party data, either on its own or enriched via partner collaboration, you can cultivate stronger relationships, build trust, and deliver tailored experiences that resonate with your customers on a deeper level. Clean rooms Many data lakes and warehouses offer this service, ensuring their clients can not only store their data with them but can connect it with other partners in a secure environment and extract more information through the combined data sets versus their data on its own. Brands and their partners recognize that they need to work together, and a clean room provides a secure environment to share their first-party data without exposing their sensitive data to their partner. So, while we're losing third-party cookies, brands and partners can still get value from first-party data by using a clean room to generate audience insights, segmentation strategies, personalized experiences and offers, media plans, and measurement and attribution. Three ways data clean rooms can improve Data clean rooms are a great way to facilitate data collaboration while ensuring sensitive data is not exposed. Data clean rooms are not yet easy to use nor are they inexpensive. They require investment, both financially and resource allocation-wise, and you are not guaranteed to yield great match results. Let’s dive into three areas for data clean room improvement. High cost According to the IAB's State of Data 2023, nearly two-thirds of data clean room users spent at least $200K on the technology in 2022. In addition, one-third of data clean room users expect the price of data clean rooms to rise in 2023. The high cost of this solution can make it inaccessible to smaller companies in the advertising space. Resource intensive Nearly half of the companies using data clean rooms have a team of six or more dedicated to the technology, according to the IAB’s State of Data 2023, while nearly a third of companies using data clean rooms have 11 or more employees focused on the technology. Data clean rooms are not turnkey solutions. Inefficient matching Even if companies are using clean rooms does not mean that they are automatically going to achieve great success. Identity fragmentation, data hygiene, and differing identifiers can suppress client match rates in clean rooms, leading to significant investment and a lackluster output. How to get the most return on your clean room investment The finish line for data collaboration in clean rooms is not just having a relationship with a clean room. Instead, you should incorporate an identity resolution solution in your clean room. By adding an identity solution to your clean room, you can: Resolve and match all your identity data, regardless of the identity data that you or your partner have, giving you a larger data foundation to analyze. Generate more valuable insights and information, leading to a better experience for your customers. Join data sets to create smarter activation and targeting strategies and produce more holistic measurement. Experian can help you get started with identity resolution and data clean rooms If you are investing in data clean rooms, that means you are committed to the best in data practices. Experian recommends going the extra step and that you also invest in finding an identity resolution solution. By doing this, you can see better match rates. Experian offers this capability and has existing relationships with three clean room partners, Amazon Web Services, InfoSum, and Snowflake. In addition to collaborating in clean rooms, we offer collaboration in two other secure environments. Contact us today to discuss how we enable identity resolution in clean rooms or to chat about our other collaboration capabilities. Get in touch Latest posts

Sep 07,2023 by Dylan Rothenberg

Maximize ad targeting with supply-side advertising

Ongoing signal loss is driving marketers, agencies, and platforms to turn to supply-side advertising. By using first-party data from publishers and platforms, supply-side advertising has the potential to deliver high-quality audience and context for more effective ad targeting. The supply-side refers to the publishers and platforms that sell advertising inventory. These companies have access to first-party data about their users, which can be used to target ads more effectively. By tapping into supply-side advertising, you can overcome the challenges of signal loss and target ads more effectively. To shed light on this topic, we hosted a panel discussion at Cannes, featuring industry leaders from Audigent, Captify, Newsweek, Pubmatic, Truthset, and Experian. In this blog post, we'll explore how partnerships between supply-side channels and publishers are working to enhance advertising opportunities while balancing the need for transparency and control in programmatic ad buying. Shift toward supply-side advertising Traditionally, the demand-side dominated the programmatic media buying chain due to an abundance of supply. However, with the emergence of finite data and its interpretation, collaboration between supply-side technology companies and publishers is required to redefine these economics. It's no longer sufficient for the demand-side to blindly negotiate prices based on limited knowledge. Marketers can still define their target audience, but effective communication is key. This presents an opportunity for premium journalistic outlets to guide the industry's understanding of how data from the supply-side impacts media buying economics in the future. "Supply-side technology partnerships with publishers are now in a position to shape the economics of programmatic media buying as there is a finite amount of data. It’s crucial for supply-side technology companies to collaborate with publishers to shape these new economics. This presents an opportunity for premium journalistic outlets to provide guidance on how data from the supply-side can affect the future of media buying." matthew papa, svp, business & corporate development, captify Democratizing data from the supply-side Cookies haven't brought significant benefits to premium publishers. They mainly serve to retarget users from sites like The Wall Street Journal to advertising sites. This approach primarily serves the purpose of generating revenue. The elimination of third-party cookies presents an opportunity for premium publishers to shift this dynamic. By using their knowledge of first-party audiences, and using identifiers like Experian's LUID, publishers can own and understand their audience data, which can then be modeled. Here’s how publishers can win Establishing a connection with consumers and emphasizing the value exchange is essential to building trust. Determining what incentives and benefits consumers find meaningful will be crucial in gaining their opt-in. With consumers The Apple tracking transparency initiative, specifically the deprecation of IDFA signals, had significant implications for mobile app developers. Overnight, opt-in rates plummeted, causing a drastic decline in iOS ad monetization. To combat this, developers focused on demonstrating the value exchange to consumers—better ad experiences and personalized content. By articulating the benefits over a couple of years, opt-in rates increased from 10-15% to 30-40%. The key takeaway is the need to effectively communicate the value exchange to consumers. With partners Trust plays a crucial role in planning your first-party data strategy. Publishers, advertisers, and data partners highly value their proprietary data. However, there are concerns about how it's used, mishandled, or leaked in the ecosystem. Building trust between partners is essential. It's important to work with trustworthy partners who are agnostic, committed to innovative solutions, and globally oriented. These partners can help navigate the complexities of laws and regulations. Choosing the right partners is crucial in a world where first-party data is a key asset. "Power is shifting toward brands that have strong relationships with customers and possess first-party data. As the ownership of customer data becomes more important, it is crucial to establish a first-party data strategy to better serve customers and adapt to changing market dynamics."chip russo, president, truthset Balance probabilistic and deterministic data Focus on building trust with consumers and collaborating with reliable companies to share data. However, it's important to remember that achieving a 100% opt-in rate is unlikely. The cookie, which has become omnipresent, requires us to shift our strategic thinking. We need to consider both deterministic and probabilistic approaches instead of viewing them as mutually exclusive. The landscape will be fragmented, with some consumers opting in and others not. "Probabilistic and predictive audience data holds immense potential. With the power of AI, we can expect enhanced performance and efficacy in media campaigns. At Audigent, we firmly believe that this data will outperform deterministic data, making it an integral part of our strategy." drew stein, ceo, audigent Premium content Trust plays a crucial role in leading to premium content. By placing trust in the best media brands, data, and technology partners, we can expect to see improvements in media, journalism, and advertising. This shift may have a direct impact on the long tail of free natural resources, making it more challenging for them to thrive. However, this change is ultimately beneficial since it promotes higher-quality media experiences overall. "The homepage surface is making a comeback in the publishing industry, proving its value in establishing a direct connection with readers. While we acknowledge the importance of technology partnerships for addressability and identity, our core competency as a publisher remains outstanding journalism that captures and engages great audiences." kevin gentzel, cco, newsweek Watch our Cannes panel for more on supply-side advertising We hosted a panel in Cannes that covered supply-side advertising. Check out the full recording below to hear what leaders from Audigent, Captify, Newsweek, Pubmatic, Truthset, and Experian had to say. Watch now Check out more Cannes content: Our key takeaways from Cannes Lions 2023 Insights from a first-time attendee Four new marketing strategies for 2023 Exploring the opportunities in streaming TV advertising The future of identity in cookieless advertising Follow us on LinkedIn or sign up for our email newsletter for more informative content on the latest industry insights and data-driven marketing. Latest posts

Aug 22,2023 by Hayley Schneider

Experian now enables addressability in collaboration with Microsoft Advertising

The digital advertising landscape has undergone a seismic shift in recent years. Privacy-conscious consumers, transformative regulations, and emerging technologies are converging to redefine how addressability — the ability to accurately reach a specific audience — functions in this new era. Addressability is a cornerstone of digital advertising, and its evolution presents both challenges and opportunities for publishers and advertisers alike. The need for enhancing addressability is driven by a complex set of factors. More consumers are opting out of data sharing or disabling cookie-tracking, leading to a drastic reduction in the reach of traditional programmatic advertising. Nearly 70 percent of consumers are now unreachable through these conventional methods, creating an 'addressability gap' that publishers and advertisers are eager to bridge. The landscape is further complicated by privacy regulations such as General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA), which mandate solutions that balance user privacy with advertisers' needs. Contributing to this intricate mix is the growing shift toward video and connected TV (CTV). These platforms have long operated in a cookie-less environment and are witnessing rising demand due to their engaging nature and broad reach. However, the attractiveness of these mediums to advertisers hinges on effective addressability, highlighting the urgent need for innovative audience identification and targeting methods. The emergence of data enablers and collaborative initiatives Data enablers like Experian are stepping up to meet this need. These companies are providing robust, privacy-compliant data resources to improve addressability. Experian's unique approach to identification, the Living Unit ID (LUID), is a key tool in bridging the current gap in reach. How Experian and Microsoft Advertising are redefining addressability We recently expanded our collaboration with Microsoft, to make our extensive data resources available through Microsoft Advertising’s data marketplace. This collaborative initiative represents a significant move, offering a compelling model of how data enablers and buy-side and sell-side platforms can work together to redefine addressability. The benefits of this arrangement extend to all stakeholders in the ecosystem. Advertisers using Microsoft Invest can now access Experian's audience data. This not only enhances the granularity of their audience targeting but also broadens the reach of their campaigns. Experian's identity spine also serves as a robust framework to extend the value and reach of advertisers' first-party data. For publishers, the accessibility of Experian data on Microsoft Advertising’s data marketplace opens the door to greater addressability in their inventory, enabling them to offer advertisers more addressable impressions. This then amplifies the value of their inventory, potentially increasing their overall yield. For advertisers, this integration facilitates access to highly relevant audiences while simplifying campaign setup and respecting user privacy. We can help you carve a new path toward addressability In the ever-evolving landscape of digital advertising, such collaborative efforts are becoming critical to ensure that advertising remains effective for brands, profitable for publishers, and respectful of consumer privacy. This model of cooperation and innovation is essential to navigate the challenges of a privacy-centric, cookie-less world and unlock the true potential of every media channel. With collaborative initiatives and innovative solutions, the industry is set to transform these challenges into opportunities, carving a new path toward addressability that respects privacy and delivers value for all stakeholders. Connect with us to learn more about how you can access our data in Microsoft Advertising’s data marketplace. To learn more about our partner Microsoft Advertising, visit their website. Latest posts

Aug 17,2023 by Experian Marketing Services

Subscribe to our newsletter

Enter your name and email for the latest updates

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

About Experian Marketing Services

At Experian Marketing Services, we use data and insights to help brands have more meaningful interactions with people. As leaders in the evolution of the advertising landscape, Experian Marketing Services can help you identify your customers and the right potential customers, uncover the most appropriate communication channels, develop messages that resonate, and measure the effectiveness of marketing activities and campaigns.

Visit our website

Subscribe to our newsletter

Stay up to date on the latest industry news and receive expert tips from our marketing experts.
Subscribe now!