AI-Driven Audience Segmentation Is Reshaping Ad-Supported Streaming and Unlocking New Revenue Opportunities
The video streaming market is evolving and intensifying at a rapid pace. With hundreds of streaming services now competing for viewers’ attention, it has become increasingly saturated. To stand out and drive sustainable, long-term revenue, adopting an ad-supported streaming model is now essential. In an ad-supported model, broadcasters and video service providers use data and programmatic infrastructure to deliver targeted or “addressable” advertising to viewers across all forms of streaming — VOD (video on demand), live TV, timeshifted TV, and FAST. A key part of this endeavor is audience segmentation.
Audience segmentation is the process of dividing viewers into groups based on shared characteristics, such as demographics, location, interests, and viewing behaviors. Video service providers use their own data (i.e., first-party data) to create precise audience segments, allowing for targeted advertising, personalized content recommendations, and tailored marketing strategies. This approach not only increases the relevance and effectiveness of ads for viewers and advertisers, it also helps reduce viewer resistance, generate higher acceptance, boost engagement, reduce churn, deliver more valuable advertising opportunities, and unlock new revenue streams.
The Power of AI-Driven Segmentation
By harnessing AI and various data sources, video service providers can maximize the benefits of segmentation — for both revenue generation and customer retention. AI and machine learning technology can now analyze a vast amount of data and context from across the video ecosystem to identify highly granular audience segments — such as sports fans in a capital city who only watch matches at the weekend. This ensures that ads are matched to viewers most likely to interact with them, boosting recall and effectiveness while reducing ad fatigue and maximizing ad inventory.
AI can also predict user behavior and preferences, enabling expansion through lookalike audiences (groups of new users identified by algorithms as sharing similar characteristics with an existing audience segment). Likewise, it can generate personalized ads in real time based on individual user interests.
With these capabilities alone, audience segmentation can improve campaign performance and increase CPM rates for video service providers and advertisers.
The approach also enables service providers to deliver a superior, personalized viewer experience. The upshot? Long-term viewer engagement and satisfaction — both of which are equally important for standing out in the rapidly growing FAST channel space.
Opening the Door to New Revenue Streams
Advanced audience segmentation unlocks new advertising models that bring new revenue potential in ad-supported streaming. For example, with the ability to group specific viewers together, service providers can introduce shoppable ads that merge e-commerce with video — allowing viewers to purchase items directly from their screens through clickable banners or QR codes.
In addition, it helps track segmented users across TV, social media, and other digital touchpoints for deeper insights and broader reach, enabling truly cross-platform ad campaigns.
AI-driven segmentation can also trigger interactive ad formats, such as event-driven ads that appear when viewers pause or resume content, or banners within electronic program guides, boosting attraction among premium advertisers as well as measurable revenue increases.
Balancing Personalization, Privacy, and Compliance
While personalization is highly effective at driving audience engagement, service providers must do so without compromising user trust or violating regulations. This careful balance is critical.
For example, in the post-GDPR era, only first-party data that is collected directly from viewers with their consent can be used for segmentation, ensuring legal compliance and the protection of user privacy. Data should be anonymized and processed in ways that do not expose personal details to external systems. These requirements underscore the need for robust consent management and data governance practices. That way, service providers can deliver tailored experiences while safeguarding user information and maintaining compliance with laws such as GDPR and CCPA.
What To Expect in 2025 and Beyond
Competition in the streaming market continues to grow, with no signs of slowing down. We can expect audience segmentation and addressable advertising to remain a crucial fixture among streaming platforms. In the foreseeable future, we anticipate:
- AI-driven granular segmentation will dominate the industry, with advanced machine learning models enabling hyperspecific audience categories to maximize ad relevance and CPM.
- Addressable advertising will become a must-have, driven by demand for measurable ROI and reduced ad loads.
- Expansion across video ecosystems (VOD, live, FAST, time-shifted) will enable dynamic ad insertion in nontraditional contexts, such as event-driven ads during pauses or EPG interactions.
- The demand for Shoppable TV and cross-platform campaigns will increase. According to recent research, 70% of connected TV viewers save products to a wishlist on their TVs to check out later on another device, and 62% use their voice to add products through a smart home device — demonstrating strong consumer demand for shoppable TV and cross-platform campaign features.
Conclusion
It is clear that advanced audience segmentation is transforming addressable TV advertising. By taking actionable insights from vast, invaluable data inventories, broadcasters and video service providers can prioritize end-user experiences in order to drive revenues. With this approach, audiences are less likely to be fatigued with ads and more likely to stay loyal to the platforms they subscribe to. This customer loyalty and stability is critical for broadcasters and service providers to thrive in an evolving and hyper-competitive streaming landscape.
[Editor's note: This is a contributed article from Viaccess Orca. Streaming Media accepts vendor bylines based solely on their value to our readers.]
Related Articles
Going into 2025, advertiser conversations around addressable TV are different than they have been in past years. Considered an "add-on" by many just a few years ago, addressable TV is now considered a "must-buy" among the majority of advertisers today. Sona Pehlivanian of New York Interconnect writes that this shift represents a new level of maturity in how the advertising industry views addressable and how it is an important milestone in bringing TV advertising in line with shifts in consumer viewing behaviors.
27 Mar 2025
If you're looking to add or upgrade your data-driven recommendations, should you go for Recommended For You, Because You Watched, or Trending to bring the greatest increase in engagement? 24i's SVP of Data Products, Damien Read, argues the choice of section names and the data models behind them should be tuned to your user base and your specific business goals.
16 Aug 2022