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New Report Shows Only 13% of Consumers are Opposed to Ad Tiers in Streaming

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A new report from CX platform DISQO examines how consumers presently feel about ad-supported streaming tiers. Their findings offer an insightful backdrop for the unexpected growth of Netflix subscriptions in tandem with Amazon Prime’s limited advertising launch, and it includes the surprising finding that only 13% of consumers oppose ad tiers in streaming, which is down from 36% in 2022.

The report investigates how consumers prefer to stream (bundles, MVPDs, vMVPDs, etc.), how open they are to using ad tiers, what they like and dislike about them, their spending expectations, and an examination of core generational demographic differences.

I spoke with David Grabert, DISQO's VP of Brand and Communications, about specific elements of the report and its revealings about where consumers stand today in a climate of increasing advertiser competition for consumers’ attention.

Tyler Nesler: What were some findings from the DISQO report that showed unanticipated results regarding how consumers feel about ad-supported streaming tiers?

David Grabert: The streaming industry is at a turning point. Recessionary pressures and production costs have pushed more streaming platforms toward advertising revenue models. At the same time, competition for consumers’ attention and advertisers’ dollars is hotter than ever. One might expect the movement toward more ads in streaming to deter consumer enthusiasm, but DISQO’s study shows that receptivity to ad-supported streaming TV has grown. Only 13% of consumers are opposed to ad tiers in streaming, down from 36% in 2022.

Additionally, many people have yet to try ad-supported tiers. There is a large swath of “fence-sitting” consumers (37%) who are unsure whether they would subscribe to an ad tier for a discounted price. Amazon’s opt-out approach may push some off the fence, given their scale. Streaming brands have an opportunity to encourage consumers to the ad-supported side with the right messaging and experiences, especially as consumers remain cost-conscious in the current economic climate.

What are some of the primary demographic differences highlighted in the report?

The greatest demographic differences are in age. Older consumers are more skeptical about ad-supported tiers than younger ones. This likely speaks to streaming being the norm for younger consumers while it remains a newer option for some older consumers. There’s work to be done to convince older consumers of the value of ad-supported streaming. Steamers and their advertising brands must cater to consumers with relevance and/or ad formats that meet their brand experience expectations.

Gen Z is twice as likely as the general public to share streaming accounts, which is unsurprising given their lower incomes. They’re also least likely to report not having a bundled subscription to linear channels - but not by much. It’s possible that the rise of vMVPDs will further change the game for linear TV, swaying cohorts that have held out from cord-cutting.

Are there any new insights into what consumers dislike the most about new ad-supported tiers, and how can these concerns be adequately addressed?

Consumers are most worried about ad-supported tiers disrupting their streaming experience. 55% of respondents said they dislike ads overall, which is up ten points since we first surveyed consumers in 2022 on the same topic. Another 48% said they feel that streaming TV ads hinder their enjoyment of the shows they love.

Streamers and their advertisers should prioritize ad formats and content that complement or enhance the viewing experience. Another is balancing ad loads and controlling the frequency of ad exposure. Our qualitative insights offer color as to how streamers can optimize streaming experiences: align ad and product content with the entertainment, prioritize ad placement before the show rather than in the middle, and allow viewers to share feedback about which ads resonate (or not) with them.

Staying ahead of the curve with ongoing testing and measurement is critical for the streaming space right now. Failing to adopt an agile strategy and content approach may turn off consumers.

What elements do consumers like the most about ad-supported tiers, and how can these preferences be optimized moving forward?

The cost savings of ad tiers is what’s most appealing to consumers. Our Consumer Trends 2024 report found that the economy tops people’s lists of concerns. Additionally, a third of consumers said they planned to spend less this year on TV and streaming overall. Discounts speak volumes to cost-conscious consumers. Highlighting the value of ad-supported tiers and bundled options is a good messaging strategy in 2024.

A quarter of consumers are also used to ads being everywhere in entertainment. While this doesn’t mean that they like ads or ad-supported streaming tiers, it does mean that brands focusing on smart targeting strategies and relevant creative experiences can have an outsized impact.

Is there any insight into what particular types of programming work best on ad tiers versus subscription tiers?

Consumers feel strongly that the ads they’re exposed to should align with the shows or movies they stream. They’re turned off by content that brings a different energy than what they signed up to watch - so much so that they may even stop buying from a misaligned brand. 

When asked which factors make streaming advertising more tolerable, consumers said fewer ads than traditional TV, frequency limits on ad content, and personalization. People want content and ads, when necessary, that are catered to their interests. A robust ad effectiveness measurement framework is necessary to understand what’s working and with whom.

Are there any emerging trends in how consumers prefer to stream (bundles, MVPDs, vMVPDs, etc.)?

Overall, consumers preferred smaller, category-specific bundles, such as Disney+ and ESPN+, over individual channels or larger bundled packages. They want content that aligns with their interests versus having access to everything. However, a good portion of consumers (41%) did report having a multichannel linear TV subscription, whether through a traditional provider or a virtual carrier.

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