How SVODs Work Around Their Ad-Free Proposition
Subscription video on demand (SVOD) services have an unwritten promise: If you pay for this service at the highest tier, then you don’t need to worry about ads.
But what is an ad? Today streamers are conditioned to associate an “ad” with a commercial, or an “ad break,” which is a group of commercials that play back-to-back between content. Hulu’s ad-supported tier has ad experiences ranging from a single 15-second ad during a 22-minute show to 540 seconds (9 minutes) of ads during a one-hour show, such as Saturday Night Live. For context, prime time cable includes 14-17 minutes of ads per hour of content. All of this has driven consumers back to the premium tiers that are ad-free.
Over the past year and into 2021, major media companies have enhanced their streaming offerings and ad strategies to remain competitive and profitable in today’s market. The following illustrate three ways media companies are using ads in their subscription streaming services:
Content promotion— ad or something less harmless?
Fire up Netflix this evening and begin streaming your favorite show. Are you almost to the end? You’ll know you’ve gotten there when Netflix starts automatically playing recommended content. You’ll notice these previews are always for Netflix shows.
Netflix combines your viewing behavior, recently watched content and hours of content consumed plus artificial intelligence to determine what you might want to see next. Ad titans Google, Facebook and Amazon are using the very same data to target advertisements to consumers. In essence, Netflix is using this promotional advertising opportunity to increase content consumption, which in turn drives up the lifetime value of a subscriber.
Static ‘Sponsored By’ Series Selection Screen
If a traditional TV ad is a commercial inside of an ad break, is a static sponsorship of a series an ad? In this creative unit unique to streaming apps, your next binge-worthy series might be brought to you by your favorite consumer packaged goods company. Streaming apps create new canvases during the navigation and content selection process.
Opportunities to manipulate these canvases with ads, or potentially influencing what content is positioned when you log in to a streaming service creates new monetization options for SVOD apps. Does this violate the concept of ad free? Only the consumer can decide.
Dynamic Product Placement
The most interesting opportunity for brands to enter into an ad-free SVOD environment is through dynamic product placement, whereby computer vision identifies time markers within content where a product could be placed, such as a marker identifying that for the next 15-seconds a kitchen countertop has empty space on which to place a Coca-Cola can. As the content is playing, the marker signals to the dynamic insertion vendor to replace the original content with the empty countertop with an edited countertop including a Coca-Cola can. The streamer watches the content in an uninterrupted fashion, never knowing the countertop existed without the product placement. Does this constitute an ad or ad-free environment?
As the race for SVOD offerings peaks, services will look for new ways to monetize their audience and ad formats will creep into the content viewing experience whether consumers consent or not.
Joe Hirsch is CEO of SpringServe.