Five years ago, there were just 84 million AVOD viewers. Today, there are more than 180 million according to eMarketer.
A massive reason for this shift is there are simply more options for watching ad-supported streaming. While platforms like Hulu have always offered ad tiers, SVOD was the default for most streaming services for years. But Max rolled out an AVOD tier in 2020. Netflix and Disney launched ad-tiers at the end of 2022.
And now Amazon, one of the last big holdouts, has joined the club, showing ‘limited advertising’ on Prime Video since late January. Especially notable is news that starting CPMs will be just over $30. That’s compared to CPMs north of $60 when Netflix launched their ad tier and which are now reported around $40.
Pure SVOD platforms are suddenly few and far between, and it's hardly a surprising development. AVOD and FAST trends have made streaming news for the last few years. In many ways, AVOD is a win-win-win.
For consumers, AVOD solves a growing concern around streaming—that by the time you pay for your third monthly subscription, the costs are as high or higher than a traditional pay TV bill. A 2023 survey found nearly two-thirds of Americans say they’d select ad-supported streaming over SVOD if it saved them even $5 a month.
Streaming providers can now charge more for ad-free tiers while enticing less committed subscribers to the cheaper ad-supported options. Plus, they reap the benefits of ad revenue, of course.
But it might be the best news for advertisers. More ad-supported viewing options means more inventory. More inventory will likely lead to reduced buying challenges and, eventually, lower prices.
But it’s not just that there’s more inventory. That inventory, including media from premium platforms, is also more accessible than ever before.
Streaming has been an eden for walled gardens. But more and more, those walls are being actively torn down. Or at least merging with others to provide advertisers access across multiple platforms through fewer sources.
This spring, Disney inked a partnership with The Trade Desk to open Disney+ and Hulu inventory to a broader group of advertisers. NBCU announced a similar deal making Peacock inventory during the 2024 Olympic Games in Paris available for programmatic purchase. Deals like this mean advertisers can finally access premium buys without going direct.
It’s a natural evolution, and one I’d argue is overdue. Advertisers are finding the draw of "premium” platforms’ grade-A inventory isn’t always enough to justify the work and limitations of direct relationships. Not to mention the headache of managing frequency capping across platforms and making sure you hit truly fresh audiences with each campaign. Walled gardens’ siloed reporting has also made reliable streaming measurement challenging. Being unable to bring in a neutral third-party measurement vendor means your only view of results is a biased one—they're grading their own homework.
Managing dozens of direct relationships makes even less sense when you consider that most people watch content on multiple platforms—the average user pays for 2.9 streaming services. So chances are it’s not a problem if you don't buy Netflix inventory. Because your target customer probably also watches Roku. Or Tubi. Or any of the other dozens of small and mid-sized platforms boasting impressive viewership among key demographics.
Just because inventory from premium publishers is increasingly accessible doesn't mean advertisers should suddenly flock to purchase it. The shift away from walled gardens’ lack of transparency and support is a step forward, certainly, but it doesn’t address another glaring issue—price.
Amazon’s starting CPMs at rates half of Netflix’s are a great example of a maturing ecosystem starting to course-correct years of shockingly high prices. But for many brands, $30 CPMs might still be too high to drive performance results.
Incremental reach for each additional platform is low. So with multiple options for engaging most of your target, why not choose an option that’s both accessible and inexpensive?
Increasing competition will likely lead to lower prices from premium players in the future, but for now, stay the course. Take the time to clearly define your target audience and purchase media based on their viewership habits and your ability to reach them efficiently. Don’t worry too much about paying for only the biggest platforms. Your customer certainly doesn’t.
Learn how to identify which media buys will drive the greatest return with this article all about creating cost-effective CTV campaigns.