i3 | November 07, 2017

Develop an Advertising Strategy for Streaming Video

Steve Koenig

Content is king, but for ad-supported streaming video services the right advertising strategy can be the prince of profitability.

Content is king, but for ad-supported streaming video services the right advertising strategy can be the prince of profitability. Content attracts audiences and audiences attract advertisers, but the ad-supported streaming video business model is much more complex. Setting aside the calculus of content creation and curation, streaming services must be strategic in their approach to ad-supported video by understanding viewers’ tolerance and preferences for advertising. New research from CTA explores these qualities in detail in order to understand the optimal ad-supported video approach from the viewer’s perspective. It’s a study any business engaged in ad-supported streaming video won’t want to skip.

To drill into the effectiveness and engagement of ads tied to streaming video, CTA market research employed the cuttingedge quantitative research technique of choice-based conjoint (CBC) analysis in its Exploring Preferences for Personalized Content Consumption Experiences study (August 2017). Mirroring the marketplace, conjoint research requires survey respondents to make trade-offs in choosing their preferred experience.

Despite viewers’ predilection to skip ads altogether, the study reveals ads tied to streaming video are remarkably effective— for both new shows and products and services. Some 71 percent of U.S. online adults who watch ad-supported streaming video report investigating a different show at some point after watching an ad for it. And 69 percent of online adult viewers said the same about a product or service.

Two-thirds (66 percent) of viewers watch ads up to the point where they can skip the ad “most of the time” or “all of the time.” But interestingly, nearly four-in-ten (38 percent) viewers watch the entire ad without being required to do so with the same frequency. Only 15 percent of viewers claim they never watch an ad tied to streaming video without being required. Can the stickiness of ads be improved?

What Makes a Compelling Ad?

Understanding the characteristics that influence ad tolerance is the first step. CTA’s analysis found the type of ad is the biggest factor in fostering tolerance. Naturally, viewers are more likely to watch an ad for something they are interested in versus something they’re not. Next, the length of the ad comes into play. Viewers tend to expect the length of an ad to generally conform to the length of the content they’re watching. For example, shorter spots for short-form video and longer ads with long-form content. To a lesser extent, the number and placement of ads tied to streaming video also influence ad tolerance.

Formulating the optimal ad experience for streaming video involved the choice-based conjoint analysis, where respondents picked their preferred adsupported streaming video experience from multiple “real world” scenarios. Based on the choices and trade-offs made in the conjoint exercise, the analysis clearly shows a preference for ads that can be skipped or played prior to the content. It also shows the ads should be no more than 15 seconds in length, but viewers will tolerate up to two ads tied to a piece of video content. While this ad strategy is ideal, the research offers suggestions for advertising models that operate outside the ideal scenario.

For example, for ads that cannot be skipped, the length should be very brief; no more than eight seconds and they should play before the content begins. In business models where ads are 30 seconds or longer, a skip feature is paramount to boost viewer engagement. For more analysis and perspective on ad effectiveness for streaming video, download the full report on the CTA member site.

September/October 2017 i3 Cover Issue

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