Why do people pay for streaming services? An article published by the New York Times put it bluntly: “People hate ads.” Ads, in their most known form, are inconvenient. They break immersion. In fact, a CatapultX blog from last month shared that 84% of consumers will disengage from content due to interruptive advertising. Streaming services provide award-winning content with the convenience of little-to-no in-video ads. Therein lies another issue - streaming wars. How will all of these players make money?
It has been long speculated that a time would come when streaming services would overtake cable use. Since 2010, the year pay-for-cable households peaked, the number of people willing to choose cable has declined by over 20 million. Experts are predicting that number will fall another 10 million by 2023. Cable’s days are numbered, if they aren’t out already.
The major SVOD (subscription video on demand) services like Netflix, Hulu, Amazon, and HBO will likely attract the bulk of that base. These services charge a monthly fee for access to their content. As these top services compete against each other, they will likely start to turn to an Advertising on demand (AVOD) strategy to cut costs to their users in order to stay competitive: like how Hulu offers two subscription models - one with and without ads.
That will likely leave others to pursue a strictly AVOD strategy. Think folks like Sling, Fubo TV and Crackle who looking for more ways to monetize their minority share of the audience; an audience that is statistically loyal enough to keep their subscription for five or more years. The best way to monetize is to force the users to watch advertisements in order to video the content which is a catch-22 due to the fact that it’s already known that viewers are so put off by advertisements they are willing to pay to avoid them.
See the problem?
In 2019, the research firm Forrester said in order to maintain any kind of relevancy, advertising agencies faced an “existential need for change.” The firm said “Agencies must disassemble what remains of their outmoded model or risk falling further into irrelevance.” If streaming services looking to monetize use traditional methods of video advertising, they risk losing their current subscribers or pushing away new ones.
The outmoded model is interruptive, intrusive cookie-based advertising (tracked by historical activities). A substantial majority of video viewers feel that the ads they are exposed to are more intrusive now than 3 years ago and are turned off by the fact that the ads are being targeted directly to them. For advertisers, the recent Facebook Pixel update (only allowing certain events to be tracked) and future changes in cookie-operation, will make it increasingly harder to create fully-built out advertising funnels.
What if there was a way for streaming services to monetize and advertisers to get results without cookies, upcharging or affecting the user-experience? CatapultX has set out to provide a solution that will be beneficial to streaming services, but provide essentially the same experience to the end-user. Enter: CatapultX’s On-Stream™ Video Advertising.
CatapultX’s On-Stream™ quells both concerns by producing non-interruptive ads that are generated with contextual relevance to the content being streamed. They only take up about ⅛ of the screen, disappear after a few seconds, and generate at or above industry-standard CTR for pre-roll ads. Therefore, the user will experience ads that enhance immersion instead of break the integrative experience. Think of it as a la carte up-sell at the buffet. The streaming service can still provide an unlimited supply of on-demand non-interruptive experiences, while still making money and lowering the cost to the user.
You can provide this experience to your video viewers as well. Interested? Drop us a line.
Cover Image via www.vpnsrus.com
AI is evolving from a nice-to-have capability, to an everyday staple, especially in advertising. Learn everything you need to know about the future of AI as it applies to advertising.
In this FREE 15-page whitepaper, you'll learn:
- What AI is
- How AI applies to advertising
- Top uses of AI
- How contextual ads work
- How AI will impact your strategies tomorrow
- New forms of AI advertising