As the advertising-supported streaming video category gains momentum, it’s tempting to try to pinpoint the rules of business engagement that are driving a rising media category.
Except: There aren’t any. At least as far as commercial insertion practices go. And at least for now.
A review of advertising placements appearing on leading U.S. streaming video services over an eight-month period yields little in the way of consensus about how much advertising time per hour is optimal (sometimes “none,” sometimes close to 10 minutes); how ad positions are populated (let’s just say it varies); and whether there should be differing approaches for movies versus TV shows (yes, and no).
The findings underscore that unlike the arena of traditional television, where there is a fairly uniform approach to commercial loads and commercial break cadences, the advertising-supported video on demand (AVOD) category retains a bit of a “Wild West” flavor, with providers exhibiting a wide range of practices that determine how commercials make their way to viewers, where they appear, and how often they show up.
The findings are drawn from a detailed examination of advertising-insertion practices tied to more than 30 streaming video services, including pure-play AVODs such as Crackle or Pluto TV; “TV Everywhere” variations of familiar television programmers like ABC-TV or HGTV; and hybrid models like discovery+ and HBO Max, which combine subscription- and ad-supported monetization schemes.
We’ve tracked the observations in detail in the latest STREAMTRAK report from One Touch Intelligence (available here for complimentary download). The special report draws from our ongoing ADTRAKER data service that provides an eyes-on-screen perspective around the advertising-supported video streaming arena.
The backdrop here is a growing category. The research firm eMarketer estimates advertisers will inject $13.4 billion this year in the U.S. “connected TV” category that includes AVOD participants. That represents a nearly 48% surge from 2020 ($9 billion). Within the category, services like ViacomCBS’s Pluto TV and Fox Corp.’s Tubi are rising stars, with expectations for serious growth in the near term. Fox CEO Lachlan Murdoch has recently shared with investment analysts projections calling for Tubi to become a $1 billion annual business, and “a core pillar of Fox,” in a few years. Driving the gains across the board are rising audience levels, the steady gravitation to streaming video in general, and attractive viewer-targeting capabilities within the AVOD camp.
What’s intriguing about the AVOD field is the range of experimentation taking place. In the realm of advertising time durations, we see significant divergence, with services such as discovery+, HBO Max and NBCU’s Peacock hewing to prescribed ceilings on hourly advertising volume, while others (Crackle, Pluto TV) represent the upper range of AVOD ad loads, and still others (Hulu, IMDb TV, Roku Channel) exist in a middle range.
Even within this varied mix, there are interesting departures from form. As some AVOD fans already have doubtless discovered, it’s possible (and not so very rare) to encounter the occasional commercial-free viewing session, providing a premium/HBO-like experience without the premium subscription fee. Movies, in particular, sometimes get special treatment within the AVOD category, no more so than on ViacomCBS’s Paramount+, where multiple films we streamed over an eight-month span showed up without commercial interruption entirely.
We also see differences of approach around pre-roll advertising, the commercial messaging that stands between a video viewer and the opening frames of their requested on-demand program. Pre-roll slots are uniformly coveted for delivering robust viewer engagement and attention, but not all providers treat these positions identically. In some instances, a nominal pre-roll spot is the only message occurring within a program stream; elsewhere, pre-rolls are paired with multiple mid-roll breaks. But almost across the board, pre-rolls are treated gingerly in terms of time durations, with the average pre-roll message lasting just 30 seconds before viewers are whisked into their content.
Over time, it’s possible we’ll see some coalescing around practices that touch not just on overall commercial volumes, but related approaches tied to commercial duplication rates, the relationship between 15-second and 30-second messages, and a balance between national and local/regional advertising (all of which are ingredients we track). For now, though, it’s fascinating to watch a fairly wide swatch of approaches prevail as AVOD gravitates from being a sideline participant in the $60 billion per year U.S. television advertising sector (estimate from Zenith Media) to taking on a more mainstream role in a fast-shifting environment.
Stewart Schley is Senior Vice President and Lead Analyst for One Touch Intelligence, which provides market intelligence and industry analysis services for leading companies in the media and telecommunications space. The One Touch Intelligence STREAMTRAK™ series is a complimentary service offering industry professionals insights and context around developments in the digital media sphere.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce Video staff. They do not represent the opinions of Fierce Video.