Should marketers be worried about the rise of ad-free streaming services?

Apple TV+ and Disney+ don't plan to show ads.

Apple TV+: Aniston and Witherspoon with Apple CEO Tim Cook at launch event
Apple TV+: Aniston and Witherspoon with Apple CEO Tim Cook at launch event

It is a good bet that a lot of people will be receiving a streaming subscription for Christmas this year, as a clutch of services are launching in the coming weeks.

Apple TV+ debuts on 1 November in more than 100 countries, including the UK, where it will cost £4.99 a month, and the US, where it will retail for $5.

Disney+ launches on 12 November with a $6.99 price tag in the US, with the UK likely to follow early next year.

And BritBox, the joint venture between ITV and BBC, is set to launch before Christmas in the UK.

All of them are expected to spend heavily on advertising as they enter an increasingly crowded field, which already includes Netflix and Amazon Prime Video.

Jennifer Aniston, Steve Carell and Reese Witherspoon, stars of The Morning Show, one of the launch series on Apple TV+, attended the glitzy launch of the iPhone giant’s streaming service in New York this week.

Other US broadcasters are joining the streaming bandwagon in 2020. Sky’s owner, Comcast, is planning Peacock as a spin-off of NBCUniversal and AT&T’s Warner Media is to launch HBO Max.

Viewers are being spoilt, because programme budgets have gone through the roof in this war for subscribers.

However, streaming may not be such good news for marketers, because many of these new services, including Apple TV+ and Disney+, will not carry advertising spots.

That’s partly in response to changing viewing habits as some consumers, particularly the young, have been conditioned by Netflix and Amazon Prime Video not to expect ads.

This shift from scheduled, linear TV viewing – much of it on ad-funded, free-to-air broadcast channels – to on-demand consumption could pose a serious threat to brands if they will find it harder to reach audiences.

How much should marketers be worried about the rise of ad-free streaming services? 

Bobi Carley

Head of TV, ISBA

Marketers are rightly concerned about where and how their customers are consuming content. As linear TV audiences move to streaming services, the impact of less supply can lead to rising TV prices. There are opportunities for brands on streaming platforms, for example with product placement, although currently this does not conform to the same regulatory guidelines and measurement. Marketers should also consider the importance of the quality of their advertising. When ads are entertaining, relevant and provide useful content, advertisers are less likely to seek ad-free platforms.

Steven Ballinger

Managing director – commercial, Dentsu Aegis Network

Ad-free streaming services still represent a relatively small proportion of daily TV viewing habits at around 19% of 16-34 adult viewing in the last Ofcom report. What’s more, traditional broadcasters still regularly deliver significant volumes of audiences in peak programmes and there are plenty of opportunities for advertisers to reach and engage during these times. However, the continued rise in popularity of subscriptions services, particularly from US-based businesses, is inevitable. 

If the likes of Netflix and Amazon Prime continue to steal share from ad-funded models, then marketeers will definitely have to focus on utilising the full breath of advertising opportunities that are available across the market and in other media channels. 

Mark Evans

Managing director of marketing and digital, Direct Line Group

Kantar’s Dimension report found that 73% of UK audiences see the same ads on repeat. Hence it shouldn’t come as a surprise that ad-free streaming services are attractive. However, the business models are not fully proven, as Netflix’s debt attests. The sky is not falling just yet.

While new services may be launching ad-free, whether or not they thrive remains to be seen. It seems more likely that new launches will cannibalise Netflix’s business rather than dramatically changing linear viewing, providing traditional channels keep investing in content. Marketers must focus on driving effectiveness and ROI, long-term brand-building and crafting stunning creative.

Lindsey Clay

Chief executive, Thinkbox

Even Netflix’s heaviest users watch plenty of commercial TV; they love TV and, if it is good enough, they’re fine with ads. 

The most conservative forecasts say broadcaster TV will account for most of the UK’s video viewing for the foreseeable future, not least because of broadcasters’ expertise in the British content that British audiences treasure. Global tech companies remain overwhelmingly American imports that don’t satisfy every viewer need. If they did, it would be all people watched.

But the future is also in marketers’ hands. There’s nothing waiting to replace TV advertising. Their wise TV investment works for them while simultaneously enabling broadcasters to maintain the most effective advertising environment there is, so they can keep using it.

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