Amazon joins the ranks of streamers offering ad tiers, and new data shows viewers embrace the format.
Back in June 2023, we discussed Amazon Prime Video's announcement of a forthcoming ad-supported streaming subscription tier, and while we were sipping eggnog and counting down, they rolled it out! Come January 29th, subscribers face a choice: pay an additional $2.99 monthly or embrace intermittent ads during their beloved Prime Originals. This announcement from Amazon mirrors an industry-wide trend: a surge in ad-supported payment tiers across streaming platforms. Surprisingly, user acceptance of this model is soaring.
Embracing the Rise of Ad-Supported Streaming
Contrary to expectations, consumers are showing a growing inclination toward ad-supported streaming. Recent data from Antenna highlights a notable shift. During the first half of 2023, 25% of new sign-ups opted for ad-supported tiers, a substantial leap from the 20% recorded in 2021. This remarkable upswing within a mere two-year span signifies a changing dynamic in viewer preferences.
Platforms in the Spotlight: Ad-Supported Success Stories
In the realm of ad-supported streaming, Hulu stands tall, reigning with the largest user base on these tiers. Nevertheless, competitors like Peacock and Paramount+ are gaining ground swiftly, offering their own ad-supported alternatives. Forecasts suggest that by 2024, almost two-thirds of users on these platforms will gravitate towards ad-supported tiers. Notably, newcomers Netflix and Disney+ are primed for substantial gains, with projected increases of 69.7% and 45.1% in their ad-watching audiences, respectively. We'll see how Prime Video fits into the mix!
"The influx of ad-supported streaming as a whole will give media buyers a big-picture sense of how their CTV ad spend measures up against other channels like retail or social media."
A Lucrative Intersection: CTV and Advertisers
For streamers, the surge in ad-supported subscriptions translates into a dual benefit: a broader avenue to engage audiences and a steady influx of revenue from advertisers. This burgeoning trend means a consistent stream of income for platforms, as users increasingly opt for ad-inclusive tiers. The financial upturn is not only a testament to user acceptance but also a lucrative opportunity for marketers seeking to tap into engaged audiences.
For brands, the proliferation of ad-supported streaming spells favorable news. The expansion of premium, targetable inventory on Connected TV (CTV) heralds a significant breakthrough. The increased ad supply alleviates the long-standing struggle with CPM inflation, offering brand marketers a broader canvas to showcase their offerings to a more receptive audience.
However, as we previously discussed, Amazon is a walled garden, meaning that limited viewership analytics and first-party data will be released to advertisers. But the influx of ad-supported streaming as a whole will give media buyers a big-picture sense of how their CTV ad spend measures up against other channels like retail or social media.
The forthcoming months promise an exciting trajectory for both streaming services and advertisers. It's not just a trend; it's a seismic shift in how viewers engage with content. We're keeping a close eye on all the latest developments in CTV and programmatic advertising, so subscribe to our free, weekly newsletter to know what the experts know.