In this article…
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
As marketers, we all want to better leverage data to understand our customer and provide them with the best possible experience. It not only better serves our clients, but is ultimately more profitable for the company. But most of us struggle with large volumes of data, with no idea how to best use it. There are many factors that play into this problem. For most organizations, data is spread out across multiple systems with no consistent data management strategy. That means that as marketers, when we get the data, it comes in a wide variety of forms. The standardization could be different, customers could be missing certain record fields, purchase history could be divided into different accounts…you get the picture. This disparity makes it difficult for us to get any sort of insight from the information. How can we leverage data if it is inaccurate, incomplete and not accessible? Experian Data Quality recently completed a survey of over 250 chief information officers (CIOs) and found that they too are struggling to leverage data. Four out of five see data as a valuable asset that is not being fully utilized within the organization. In speaking with the CIOs, some of the biggest challenges aren’t just about technology, but rather organizational structure and company culture. Sixty-eight percent of CIOs struggle to find stakeholders who take anything other than a siloed view of data management. In addition, 70 percent of respondents say they struggle to implement data-driven decision making because no one seems to own the process. To improve data insight, organizations need to improve the structure around data management. This is where the chief data officer (CDO) comes into play. The chief data officer is a growing c-suite position that is getting more and more popular. Most of the CIOs we spoke with that had a CDO said the role had only been created in the last six months. The reasons companies are looking to put a CDO in place are all related to improving access and insight from data. CDOs are there to: Reduce risk around data-driven projects Curb costs from poor quality data Handle increasing data governance pressures As this role continues to grow, it is going to have a big impact not only on marketing, but also the organization as a whole. With that in mind, join us for a webinar on Tuesday, August 18th at 2 PM EST to talk about the emergence of the chief data officer. We’ll discuss data as an untapped resource, how the role is changing organizations and how to ensure your organization is ready for the shift that this new role brings. Register today!
There is much to be said about the differences between college-age consumers (19- to 21-year-olds) today and their counterparts five years ago. As many marketers recognize, young-adult consumers cannot be targeted based solely on generalizations and assumptions. To accurately and respectfully capitalize on this segment’s buying power, marketers need to understand how their spending patterns have changed in recent years and how to earn a slice of the group’s spend. Accounting for inflation, 19- to 21-year-olds are making more money than young adults did five years ago. Their pay has increased by 20 percent, and, interestingly, their spending has increased by 30 percent. So where are they spending this money? 1. Dressing for success According to Census Area Projected Estimates (CAPE) of expenditure data from Experian Marketing Services, both men and women in this age group are filling their closets with about 35 percent more professional attire — shoes included. This has brought 2015’s average spend up to $22,859 per year per household for college-age women and $11,196 per household for college-age men. This rise in spending on professional wardrobe could be attributed to more professional entry-level job expectations or a possible shift in technical trade positions to business professional positions. CAPE data also reveals a 70 percent increase in memberships to networking and recreational clubs. This increasingly professional outlook among college age consumers requires confidence and the right ensemble to proclaim success. Key takeaway: Position products and services to appeal to this career-minded consumer who is aiming to look the part. 2. “Go with the flow” What kinds of messages resonate with these individuals? According to TrueTouchSM data from Experian, college-age consumers can be best engaged when marketers appeal to them using a “Go with the flow” marketing message. “Go with the flow” has consistently ranked as the top motivating marketing message for college-age individuals in the study. The second and third most resonating marketing messages for this market are “Never show up empty handed” and “Work hard, play hard.” “Go with the flow” means this market has a live-and-let-live outlook on life. Brands who employ a similar outlook, don’t take themselves too seriously and extend no-risk offers may have a better chance to engage this cohort. Key takeaway: If marketers tailor messages around these motivating philosophies, they may have a better chance of earning this market’s business. 3. Offline entertainment For marketers in the retail industry, particularly those with clothing or supplies fit for the outdoors, be aware that this cohort of 19-21 year olds are visiting outdoor apparel and supplies sections more often than they did five years ago. In fact, they are spending 37 percent more on luggage and travel than the same age group 5 years ago. According to the same Experian CAPE study, renting RV’s and increasing spend on camping and winter sports equipment are expenditures getting more attention from college-age consumers this year. Key takeaway: Despite being pegged as a technology-first generation, this cohort also enjoys going “off the grid.” Even if you aren’t selling outdoorsy equipment, be aware that there is more to this age group than smartphones and Netflix. Combine the “go with the flow” attitude with their sense of adventure to better cater your messages to these consumers. A lot has changed in five years. Marketers trying to engage college-age consumers need to understand how spending habits (and motivations) are changing in order to provide the most relevant brand experiences and capture this hard-to-pin-down market. To see how Experian Marketing Services’ rich consumer data can help you profile your best customers, visit our website.
Data may not be the most glamorous aspect of marketing but it is at the heart creating meaningful consumer interactions in today’s data-driven world. In our award-winning, annual Digital Marketer Report we asked senior leaders about their top challenges and priorities. They said things like standing out against competitors, creating relevant interactions and customer acquisition. To my surprise, they didn’t say data. However, all the top challenges and priorities are predicated on having accurate, enriched data that is linked together in a central location for a complete customer view. The sobering fact is that most brands are not there yet. Most are not fully utilizing their data assets and maximizing their marketing intelligence. Take a look at these stats from the Digital Marketer Report to get an idea of where most brands are with data management practices. Overall, 45% of companies collect data via mobile – be it a mobile website, app or both TWEET THIS! 97% of companies suffer from common data errors. 61% of companies named human error as a top reason for data inaccuracies. TWEET THIS! On average globally, companies believe that 23% of their budget is wasted annually due to poor data quality. TWEET THIS! Today, only 35% of companies manage their data centrally through a single director. TWEET THIS! 99% of companies believe achieving a single customer view is important to their business. Only 24% of companies say they have a single customer view today. TWEET THIS! 29% of marketers who enrich their data with third-party data only add one type of data. TWEET THIS! One-quarter of marketers don’t enrich their data with any kind of third-party data. TWEET THIS! It’s important for marketing leaders to understand that they first need to focus on data and creating a customer-centric organization to support good data-management practices. Only then will they be able to reach their goals.