Demand for streaming ads is growing, but customers still treat purchases as a “test”

Media agencies say brands across categories are showing strong interest in testing ads on streaming services, but demand is still at an early stage.

As consumption of ad-supported streaming content grows in Australia, 16.6% of households using video on demand (VOD) now choose ad-supported plans, up from 9.2% a year ago.

The market is forecasted to grow annually (between 2024 and 2027) by 8.21%, which translates into an estimated market value of USD 1.66 billion by 2027.

But media agencies say there are still issues to be resolved as SVOD reach and audience measurement are inconsistent.

As a result, many brands feel that streaming purchases are still in their infancy, as a form of testing and trialling.

Clients are typically adding SVOD to their offerings alongside BVOD, YouTube and linear content because they understand the potential for additional reach. For example, only 7% of recent VOD purchases by clients were for SVOD from independent agency The Media Store.

But purchases also depend on content.

BVOD in particular continues to hold great value for advertisers who target broad audiences through popular live content and events, such as: sports, reality and lifestyle programs, Awaken CEO Veronica Gutierrez said: AdvertisementsNews.

“However, SVOD platforms have an advantage among younger audiences because they offer high-quality original content, which poses a greater challenge for broadcast networks,” Gutierrez said.

“But the real challenge for networks will come when they face budget constraints compared to the vast financial resources of SVOD giants. This could limit their ability to remain relevant in competing for premium content rights or investing in high-quality original programming.”

The complexity and immaturity of the streaming offering means it will take some time for streaming services to reach market levels of total TV investment, said Adrian Cosstick, Half Dome’s head of strategy.

“Investment in linear TV will remain high due to its cost-effectiveness and immediate reach, which is key for mass-market and time-sensitive campaigns,” Cosstick said.

“For campaigns aimed at specific audiences or e-commerce goals, streaming platforms offer effective branding through digital targeting and tracking.”

For now, Foxtel’s offer is the most desirable

Netflix was the first streaming service to enter the ad-supported market, and even then agencies and brands were very interested.

Eighteen months later, the streaming ecosystem has become more complex with the addition of Binge, Kayo, Optus Sport, Paramount+ and most recently Amazon Prime Video.

Michael Mellington, head of media planning at UM Australia, asked himself how many players would be able to succeed in this situation, given that consumer demand looks optimistic.

“Is Disney next to come in? And will this influx of supply put pressure on companies like YouTube, creating an inflationary product? Overall, if the market can sustain more supply, it can only benefit advertisers,” Mellington said. AdvertisementsNews.

For now Nik Doble, national investment director at Mindshare, said: “The combination of elite global content with local sports and news makes Foxtel the leading streaming provider in Australia.

Across the ecosystem, Binge and Kayo receive the highest percentage of investment from media agencies on average due to their product maturity and consistent content delivery to audiences.

“Binge is the most cost-effective,” said Media Store Performance Director Annie Marendaz AdvertisementsNews.

“We have had no inventory scale issues. We can launch programmatic guarantee offers on our selected DSP and help reduce frequency versus buys on other screens like BVOD and YouTube.

“However, BVOD still offers a better value due to overall better rates and audience overlays.”

Ros Allison, Chief Product and Innovation Officer at MAGNA, said the market is now seeing increased buyer confidence in their advertising and audience strategy, as well as greater credibility stemming from the scale of opportunity that has pre-existed.

“In the US, the introduction of advertising on Prime Video helped to increase the percentage of ad-supported viewing to close to 70% of total streaming, and we expect Australians to follow suit,” Allison said.

Kevin Fernandes, national director of partnerships and ad technology at Havas, said there was mixed interest from lifestyle, FMCG and apparel brands in testing Amazon and Paramount+ solutions.

“However, it is important for our clients to first test these (premium) rate levels to ensure that the investment will provide additional returns compared to the current channel investment,” Fernandes said.

The same is true for the UM portfolio. Several brands have already implemented the Prime platform, and many more will do so soon.

Anthony O’Callaghan, director of media solutions and investments at GroupM, said demand is coming mainly from larger advertisers, particularly in the consumer goods, quick service restaurant and banking sectors.

“We’ve been fortunate enough to get a lot of starter packs for Amazon and Paramount+ for our customers, and we’ve found the pricing to be competitive,” O’Callaghan said.

Amazon stands out among e-commerce customers primarily because of its extensive shopping data ecosystem – something that clearly sets it apart from other streaming services.

Prime has also identified sports as a key element of its strategy.

“In the US, we secured exclusivity with the NFL on Thursday and will soon sign an 11-year deal with the NBA, while globally we leverage the recent T20 World Cup to launch a tier of advertising,” Doble said.

“If regulations allow, implementing this strategy locally will undoubtedly make Amazon a key player in any future sports rights talks in Australia and, with its unparalleled bidding ability, has the potential to shake up the landscape.”

However, it is important to note that independent agencies have been the slowest to adopt new platforms due to large upfront investment commitments and DSP exclusivity that prevents most independent agencies from accessing them.

For example, Netflix can only be launched on the Microsoft/Xandr platform, although this is changing as independent content creators attempt to limit the number of viewers across different screens through frequency caps.

“The early stages of Prime are promising, with deliveries delivering as promised, providing a good customer experience. The only exception to this rule is customers with strict regulatory parameters, which has put pressure on supply,” Mellington said.

“I think Amazon can also pioneer a leap forward in ad interactivity with Amazon Echo voice integration and links to Amazon stores. It’s an exciting prospect and I see it quickly gaining share of total TV investment over the next few years,” Cosstick said.

However, due to the high saturation of the market, not everyone can distinguish one platform from another.

Over the years, many digital advertising platforms have used configuration schemes to make them more accessible to advertisers. This means that there doesn’t seem to be much difference between platforms, Said Gavin Chew, head of media for Orange Line.

“Sure, they might have their own exclusive content; or a slight over-index in a certain demographic; or some nuances in measurement or reporting; but after a while, it feels like it’s largely the same thing,” Chew said.

“Our only bias is that if we have a client set up on Amazon Advertising or a DSP, we may lean towards Prime for inventory to streamline planning, buying, and reporting.”

Have something to say about this? Share your views in the comments section below. And if you have news or a tip, email us at [email protected]

Subscribe to the AdNews newsletter, like us on Facebook or follow us on Twitter for current information and campaigns throughout the day.