With Netflix considering an ad-supported tier, and more consumers taking advantage of AVOD options, a new era of AV advertising beckons, with more choice for viewers, more opportunities for brands, and more chances for great media planners to shine.

Connected TV

This article is part of a series of articles from the WARC Guide to connected TV.

When UK media planners look back at the first half of 2022, they could well remember it as the moment “telly” advertising leaped forward.

Since Christmas, movements toward AVOD (advertising-supported video on-demand) services from Amazon, ITV, Disney and now Netflix paint a picture of an ‘AV’ landscape (as defined by UK planners, incorporating broadcast-quality VOD, linear TV, cinema, CTV and premium YouTube placements) containing many more advertising opportunities for brands.

Until now, SVOD (subscription video on-demand) services, such as Netflix have been offering consumers incredible video content with no ads. This has reduced the number of people watching linear TV, and dented the appeal of ad-funded services such as ITV Hub and All4.

This has been a challenge for brands. AV ads on a big screen, unskippable and unmuted, are generally agreed to be the most effective way to get noticed or reappraised. And these formats work hardest next to studio-quality programming that people across the UK are talking about. SVOD has been throttling the opportunity to deliver ads like this.

But it now appears the future could see many households enjoy cheaper – and in some cases free – access to platforms like Disney Plus (D+) and Netflix thanks to advertising, alongside instant-access to their favourite linear TV shows on free services like ITVX. Netflix’s admission last month that it was open to an ad-supported tier of its service is in itself a game-changer. It is far and away the largest long-form streaming service, reporting 222 million global subscribers by year-end 2021; Disney reported 118 million subscribers.

With advertising a bigger part of the picture, having your pick of the latest must-watch shows, means having an ad-free service will go from being a necessity to a luxury.

A new era for VOD is dawning

You could say we are at the end of the first era of VOD (video-on-demand) in the UK.

This period saw VOD establish itself as a provably effective channel, the introduction of audience-based buying and the development of basic reporting standards.

VOD was usually seen as an add-on to TV, enabling advertisers to deliver incremental reach amongst younger audiences. This view was reinforced by the way it was bought: the best inventory was almost exclusively in the hands of the three main TV sales houses (4Sales, ITV Commercial and Sky Media). Through this period, the planning of linear TV, VOD and online video slowly came together into one department in most media agencies.

The movements towards AVOD we’ve heard about this year signal the start of a new era for VOD in the UK. An era in which eventually most “telly” ads will be streamed, not broadcast, and D+, Netflix, Amazon and others will offer high-quality VOD at a scale that is much closer to what the big UK broadcasters offer.

Because of that, it’s time to stop seeing VOD just as an adjunct to linear TV. Matt Hill at Thinkbox has outlined how we are already seeing that  for some audiences – campaigns need to be planned VOD-first. More players in VOD will also mean audiences are spread further than they are on TV – it won’t be a channel where you can bring millions of people together in one place at one moment.

Whilst VOD will be seen as having a distinct role versus linear TV, planning teams will need to be more integrated as most campaigns will require a mix of linear TV, VOD and online video to achieve good coverage. It’s a good bet the next generation of buying leads may be VOD specialists rather than having come up as TV buyers.

Reconsidering AV measurement

The barriers to entry for advertising on the biggest screen in the house were already crumbling, but in the second era of VOD they will disappear almost entirely.

We’re already seeing that smaller online-only advertisers love the results they get in this environment, so expect to see a lot more performance TV campaigns in daily viewing. Targeting beyond standard demographic audiences will become more commonplace, perhaps even the norm. A watch-out for broadcasters and platforms here will be not allowing the premium position VOD currently occupies in the media landscape to erode.

And shoppable VOD will jump from “media first” territory to being more commonplace. The “scan to find out more” ads we have seen in recent months, such as by Camden Town Brewery, are the start of something much bigger. The rise of quick commerce and retailers as data vendors would appear to make this inevitable.

AV measurement is already moving into this new era. In the UK, with the emergence of combined TV and VOD reporting in CFlight (the UK cross-broadcaster measurement solution) and potentially through Origin (an advertiser-backed cross-media measurement programme, affiliated with the WFA), we will also be able to bring online video into the same picture. This is much-needed as the emergence of VOD has complicated measurement around AV channels.

Calculating frequency and deduplicated reach across VOD buys has been very difficult, as has understanding the percentage of impressions delivered that are on-target, especially outside of standard TV trading audiences. With more ways to hit a decent level of coverage than ever before in AV, advertisers really need this new combined reporting to arrive as soon as possible. 

It’s a fascinating new period for us all. There are so many other areas which will be affected, with greater demand for creative personalisation, better identity graphs, and pricing, which is a whole other area headed for change.

So here’s to a new era in AV advertising – more choice for viewers, more opportunities for advertisers, and more chances for great media planners to shine.