We’re currently seeing the biggest shift in TV audiences since the launch of Netflix. Brands need to take note, or risk being left behind.
Yes, I’m talking about the growing popularity of free-to-view connected TV (CTV) among consumers: advertising-led video on demand (AVOD) and free-to-access streaming (FAST) platforms.
With the deepening cost-of-living crisis making subscription-based video on demand (SVOD) platforms – Netflix, Disney+, Paramount, etc – unaffordable to an increasing proportion of the British population, 71% of viewers have already switched to watching free-to-view CTV, 40% on a daily basis.
Could this be merely a temporary shift? It’s highly unlikely, and here’s why…
First, the current tough economic times aren’t going away any time soon. To tackle soaring inflation, interest rates have risen in 12 consecutive months. Now standing at 4.5%, they are widely predicted to increase in this month’s announcement and possibly even higher again before the end of the year. Why? Because despite the inflation rate easing slightly in recent months, it remains above 10%, according to Trading Economics, higher than market expectations of 9.8%, and has been significantly above the Bank of England’s 2% target now for almost two years.
Second, the content on ad-funded connected TV is getting better and better. Many of the big SVOD shows are now available, and some platforms are starting to create their own content. Plus, both trends will be boosted by the increasing global spend on AVOD series and movies, which is expected to reach $70bn in 2027, according to Digital TV Research.
Third, better quality free content = more viewers = more advertising = more ad revenue to reinvest. And that’s the chain reaction that’s driving SVOD platforms to launch their own ad-driven editions, because they know that it will keep viewers locked on free connected TV.
Outside of the affordability argument, why on earth would viewers move back to the expense and annoyance of having to pay for multiple SVOD platforms to watch their favourite shows? Something that on average can take up to 6% of their disposable income. Would you?
So, brands. It’s time to start testing the CTV water. There’s a whole new world of inventory growing in front of your eyes. And it’s feeding an audience you’ve not been able to reach in the past.
By the end of 2023, 80% of ads on AVOD and FAST will be served programmatically. Even better, emerging programmatic technology now enables brands to coordinate the planning and execution of TV advertising campaigns seamlessly and simultaneously across all linear and CTV channels, regardless of platform. This means brands can have their cake and eat it.
Where previously campaigns had to be run separately across different linear TV and CTV, now marketers can reach highly targeted audiences across the whole landscape. Critically, a campaign run across CTV will bring incrementality to its linear TV reach, ensuring brands are not duplicating reach across different platforms.
Of course, brands are also affected by the cost-of-living crisis, facing falling sales and revenues. This means reaching a bigger audience has rarely been so important.
The way audiences are consuming their content is continually changing and those brands making the leap early will be able to jump further and higher than those that don’t, do you want to be left behind?
Clare Beddow is head of commercial strategy at MiQ
Originally published Decision Marketing | June 2023
Photo by Glenn Carstens-Peters on Unsplash