All of the major streaming companies have an ad-supported streaming option. Disney+ is the latest streaming service to make the transition, a month after Netflix debuted its ad-supported membership tier on November 3rd. Advertisers will likely flock to these companies to have their products displayed by such popular services.
The problem is consumers don't like the ads. Both advertising companies and the streaming services playing the ads will need to devise a plan to make the ads interesting and persuasive because, right now, Americans aren't impressed.
The Harris Poll published a survey on AdAge that was designed to determine Americans' sentiment toward ads on streaming services. The general consensus was the same: the ads displayed on streaming services are “boring, repetitive, and unpersuasive.”
According to Ashwin Navin, CEO of Samba TV, “It's going to be the most new inventory for TV content ever introduced at one time. These companies collectively represent a massive amount of premium video that until now has been off the market [for advertisers]. It's a watershed moment.”
Netflix and Disney+ will have the unique opportunity to help revolutionize the advertisement experience on their services. Netflix debuted its “basic with ads” tier, which costs just $6.99 monthly. With this plan, consumers would have access to almost all of Netflix's library (a few titles will be excluded because Netflix doesn't have the rights to stream certain content with ads) and would only have to deal with four to five minutes of ads per hour.
Earlier this month, Disney+ unveiled its version of ad-supported service with its “Disney+ Basic” plan. This membership tier costs just $7.99, and consumers will still have full access to Disney+'s catalog. The current “Basic” plan will become “Disney+ Premium” and will increase in cost to $10.99 monthly.
Netflix has been losing subscribers steadily for the past year, prompting it to add an ad-supported membership tier. The lower price should help them gain new customers and retain current ones. 63% of Americans reported that cost is the most significant factor they consider when looking at streaming services to sign up for.
Americans have proven that they are willing to tolerate ads. Only 28% of respondents said that having an ad-free service was a must for them to sign up. Just because Americans tolerate the ads, however, doesn't mean that they like them.
73% of respondents say that there are too many ads on streaming services, and another 70% said they're not even remotely interested in the advertised product (s). 81% said they keep seeing the same ads repeatedly, making them lose interest even more quickly. The combination of repetition and boredom in viewers won't help the advertisement companies make any money from these large streaming services.
And if Americans' sentiment wasn't already insulting enough, 55% say that the ads they see on streaming services are even more boring than the ones they would see on live TV. This figure is high with Gen Z and younger millennials (ages 18-29) and even higher among older millennials (ages 30-41), who are the most likely to use streaming services.
Out With The Old
Streaming services seem to be trying what has worked elsewhere (on live TV) and have gotten negative results. Now, it's time for them to innovate. “Streamers should create new ways for advertisers to talk to their consumers. They need to create engaging ad opportunities, as opposed to just simple intrusive 15 and 30-second ads,” GroupM's Adam Gerber told the Wall Street Journal. “Streamers need to rethink the ad model.”
According to the survey, 51% of Americans say they would interact with an advertisement, whether it be scanning a QR code or taking a survey if they could watch the remainder of their program uninterrupted.
Hulu offers a similar advertising model, where they will ask viewers at the beginning of a program if they would prefer to watch a more extended “trailer” instead of regular ads and, in return, be able to watch the entirety of their show/movie ad-free.
49% of Americans said they still would not interact with the ad, even if it meant they could watch their program ad-free. However, there are significant discrepancies in age regarding the responses.
Gen Z and younger millennials (60%), older millennials (64%), and Gen Xers (54%) are the most likely to stream content and are the target audience for advertisers. All of these categories responded to the poll saying they liked the idea of interacting with one ad to watch their show/movie ad-free. A significant majority of Baby Boomers, on the other hand, opposed the idea (66% vs. 34%).
There was similar generational disagreement when respondents were asked whether or not they supported tailored ads that followed the same theme as the program they were watching. Gen Zers/younger millennials (66%) and older millennials (64%) support the idea of themed, tailored ads. Gen Xers aren't crazy about the idea, with only 48% liking it, and the majority of Baby Boomers are against it (73%).
Only one idea had cross-generational appeal. 77% of respondents agreed that they would much rather watch ads at the beginning of their show/movie than have their program constantly interrupted. This idea has been dubbed the “movie theater model.”