There is little doubt that the boom in streaming services has spawned a new golden age of television.
Multiple platforms have soared in popularity as they have given viewers a wide range of must-see options. Nielsen reported that streaming accounted for 31.9% of all television watched in May 2022. Broadcast accounted for 24.4%. That month wasn’t an aberration—it was the third consecutive month that streaming reached a record-high portion of the overall TV diet—having hit 30.4% in March and 29.7% in April.
For viewers, the added benefit has been few if any ads to sift through. That means for most companies, streaming has been a loss leader. Giants like Disney could afford to lose money on a streaming service because of their profitability elsewhere. Furthermore, the service promotes the brand’s intellectual property, which translates to sales of things such as toys, park tickets, videogames and clothes.
But viewers and content providers recognize that such a model was not sustainable. Indeed, viewers have been complaining about having an unwieldy amount of subscriptions to manage and pay for while recent belt tightening and job reductions at the likes of Netflix and Disney have underscored their cost pressures.
To that end, streamers have been experimenting with different service tiers—from basic to premium—and gauging the viewership’s tolerance for advertisements.
Just because advertising will continue to flow onto streaming platforms this year, don’t assume they will be presented like they were on traditional television channels.
So, what will they look like? What will be the dominant formats?
“Beyond the :30 on Streaming TV,” a recent study by MAGNA Media Trials, MAGNA’s proprietary research offering, and Roku gives some insights into those questions. Some new video ad formats in streaming TV have shown significant favor with viewers.
Three formats were tested:
- Thematic Tagged Vignette: A 30-second animated ad where a brand celebrates streaming.
- Original Vignette: A 30-second ad where a brand references the Roku Original show being streamed.
- Watch Alongs: Ad breaks where a brand sponsors discussion about the show or movie being streamed.
All three ads posted stronger results than traditional TV ads for top-of-mind brand recall, brand favorability and intent to search.
“In the current advertising environment, it is important to recognize that viewers can easily skip over advertising, but our study found they are less likely to do so if the ads are as entertaining as the programming and present a more enjoyable experience,” said Kara Manatt, EVP, Managing Director, Intelligence Solutions, MAGNA. “One of the most memorable formats for viewers is Watch Alongs, likely because the advertiser is offering the viewer added value to the show they are watching.”