Ad-Based Streaming Wins

Ad-Based Streaming Wins. Ad-based streaming is becoming increasingly popular, as leading streaming platforms build up their advertising capabilities. Disney and Netflix, the two largest premium streaming services, have announced they will launch ad-supported tiers by the end of 2022, breaking away from the original promise of no ads in exchange for the viewer's payment.

This new strategy aims to increase the overall number of subscribers and bring in more revenue from advertisers, who are eager to put their messages in Netflix content for the first time. However, with the cost explosion of content, the number of players in the market may shrink in the long term. Streaming platforms are caught in a tough spot, as they try to balance the appeal of ad-funded programming, which promises cheaper subscriptions, with the increasing costs of content licensing and production to offer exclusives.

According to Forrester, the percentage of streaming platforms' revenue from advertising is expected to rise from 21% in 2020 to 38% in 2027. Technology is also opening new opportunities for creativity and targeted advertising in the form of Connected TV (CTV). The growth of CTV allows for more granular targeting and innovative, interactive formats such as shoppable ads.

Amazon is even introducing virtual product placement, using special effects techniques to insert brands into programming post-production. This shift towards AVOD presents new possibilities for brands to reach consumers, and it is important for brands to explore new opportunities in high-profile streaming channels, look beyond traditional advertising, and capitalize on the multi-screen potential..