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Remember when Netflix conducted business via snail mail? The younger generations will never know the thrill of picking what to watch, waiting weeks for the titles to arrive, finding that at least one was unwatchable because it was scratched, sending the DVDs back and then starting the whole process over again. From DVDs in paper sleeves to the current state of streaming wars—things have certainly changed.
The major streaming players have worked to make their respective platforms most desirable to viewers through buzzworthy shows, added features (whoever created “autoplay next episode” deserves a Nobel Prize), a seemingly endless array of content and more. Each platform is clearly doing everything in its power to reign supreme, but what might go unnoticed is the delicate balance needed to keep everything moving forward.
No longer can streamers rely solely on popular content to stay successful, especially with the addition of ad-supported offerings. They now have to understand how to drive business while keeping viewers and advertisers happy. The continued success of each streaming service may come down to how well they can juggle customer needs in conjunction with their own.
The Much Needed Balance Between Profitability and Customer Satisfaction
Advertiser and viewer satisfaction is an obvious concern of streaming services, but at the end of the day these are businesses that need to be profitable. And, it’s become clear that both aspects need to be maintained in order for streamers to achieve long term success. As Elle Woods said, “What, like it’s hard?”. We kid.
Keeping this balance is certainly a tricky task, but Disney+ has figured it out (for now at least). Last year the platform was ranked the top streaming service consumers were most satisfied with. And, it appears that viewers are still content with Disney+. Users were unperturbed when subscription prices were raised by 38% in December 2022—the vast majority of subscribers (94%) kept the service despite the price increase of $3 per month. So, consumers are happy with the platform, but Disney+ is also driving business.
In addition to subscription price hikes, ad-supported offerings have become another essential tactic for streaming services to stay profitable. While Hulu was early to the ad-supported game, streaming heavy hitters like Netflix and Disney+ waited to join in. These offerings brought a noted change to the space—now, instead of simply marketing to potential subscribers, streaming services have to consider advertisers as customers as well.
Ad-supported streaming has opened up a plethora of opportunities for brands of all shapes and sizes. And recently, advertisers have found value in an unlikely place.
Family-Friendly Programming Presents an Opportunity for Advertisers
Family-friendly media might not immediately jump out as a desirable space for many advertisers—kids don’t exactly have a ton of purchasing power. However, because this type of programming has historically been overlooked by brands, there is plenty of advertising space to go around, particularly on Connected TV (CTV).
“Inventory on streaming kids-themed content is plentiful and growing in scale,” Digiday reported. “And the ways in which buying works in this environment provide the kind of campaign insights advertisers don’t always get from connected TV.”
Kids aren’t the only ones seeing these ads, either. A recent study found that 94% of parents co-view content with children. That’s an important fact for advertisers.
“There is a misperception that the explosion in screens has created siloed TV viewing, with families watching from different devices and rooms,” said Vikrant Mathur, Co-Founder, Future Today. “In reality, parents with younger children, in particular, are co-viewing more than ever.”
Child/parent co-viewing has unlocked new ways for advertisers to reach families—while the streaming material may be meant for kids, brands have the chance to engage with household decision makers.
All of this said, advertisers need the right tools and capabilities from streaming ad tech to be able to reach those specific decision makers, among other groups. At this point in major streaming networks’ ad evolution however, some are still working out the kinks when it comes to targeted advertising.
User Experience Can Be Inconsistent
While ad targeting capabilities have become increasingly more sophisticated, there are still some pain points. Research done by contextual intelligence company Gum Gum found that 20% of ads served on family-friendly programming contained at least one inappropriate advertisement.
Associate Editor at AdExchanger, Alyssa Boyle, experienced this first hand when she reviewed Disney+’s new ad-supported tier.
“Whether I was watching “Hannah Montana” or the National Geographic show “Airport Security” about cocaine smuggling, the ad experience was pretty much the same,” Boyle reported.
However, an improved user experience may be on the horizon. Some of the biggest players in streaming are taking action to make advertising a safer space for brands and consumers alike.
Streaming Services Are Looking for Solutions to Better Support Advertisers and Viewers
Netflix understands the challenges of offering ad solutions that hit the mark for brands. As you might remember, shortly after launching its ad-supported tier in fall of 2022 the streaming giant offered to pay back some of its advertisers due to missed performance goals. Netflix has been closely monitoring the situation, even going so far as to review its adtech partnership with Microsoft.
As its latest solution to build up its ad offering, the streaming service announced that it is integrating with DoubleVerify (DV) and IAS. According to a press release from Netflix, the DV integration will help with the following:
- Fraud Protection: DV identifies and protects advertisers against fraud and IVT from hijacked devices to bot manipulation.
- Viewability Measurement: DV provides comprehensive viewability authentication, offering clarity into whether an ad has the opportunity to be seen.
IAS ad verification, on the other hand, supplies third-party reporting, campaign optimizations and detailed measurement across media buys.
Disney+ is hoping to follow suit.
“For now, Disney+ advertisers can only target their audiences based on age,” Boyle of AdExchanger wrote. “But Disney says better ad targeting is next on its to-do list, with plans to add Disney data into its graph and make targeting on par with Hulu by the summer.”
These platform changes will not only support advertiser needs, but they will also help to create a better experience for viewers—research shows that consumers prefer ads that are contextually relevant to them or support their purchasing needs. So, more accurate ad targeting will hopefully lead to satisfied viewers who are willing to spend.
Streamers Still Have Work to do, But Brands Have Options When it Comes to Targeted Advertising
In order to keep advertisers and consumers happy, streaming services need to continue to work on balancing customer needs with their own. A big part of this comes in further developing their ad targeting capabilities, creating a safer and more desirable experience for viewers and advertisers alike.
The ad-supported streaming space is evolving, and as streamers develop their solutions, they’ll only become a better option for advertisers. Case in point—established ad tech solutions like Performance TV have developed comprehensive capabilities that enable advertisers to accurately target specialized consumer segments across top streaming networks.