Long ago in a galaxy far away the television industry limited the amount of advertising shown to viewers. In 1982 the industry was forced to abandon the “Television Code” that self-regulated Primetime commercial time to 9-1/2 minutes per hour. The Washington Post explained then that “the Justice Department had charged that these limits are anticompetitive because they restrict the supply of commercial television time, thereby driving up advertising prices to the ultimate detriment of consumers.”
Oh, how the concept of “ultimate detriment of consumers” has fallen out of the frying pan and into the fire these many years later.
First came infomercials (100% ad content programming), then the Cable TV industry arrived with lower unit pricing based on more commercials–quickly matched by the broadcast networks. Then came VHS and later Digital Video Recording devices where viewers could record then replay programs and fast forward through commercials. The 2000s brought streaming video services at scale that offered specially priced subscriptions for unlimited viewing of ad-free TV and movies on demand—led by Netflix. Today we see the expansion of AVOD or Advertising-supported Video on Demand services and a plethora of new ad-free subscription-only streaming services like Disney+ and AppleTV+.
A MediaPost analysis of a late 2018 UBS study states, “Except for NBCU’s cable networks, all of the major cable groups are at or near their all-time clutter highs.” (Charts show 11-15 minutes per hour which doesn’t include other non-program promotional ads). Fast Company calls the practice of adding more commercial time to compensate for reduced ratings and unit costs “a bubble that’s about to burst.”
When Cable TV Networks offered Video on Demand channels and Streaming Services like Hulu started offering ad-supported VOD in the early 2000s, the commercial loads went way down from live TV. Then the idea of disabling fast-forwarding was conceived to supposedly force viewers to watch commercials again. One might ask, how has being “forced to consume” anything, created consumer value? It’s like telling a kid they can’t leave the table until they finish their vegetables.
The New York Times recently summed it up in a headline reminiscent of the boy pointing at the unclothed Emperor parading his “new clothes” in public: “The Advertising Industry Has A Problem: People Hate Ads.” Perhaps it’s not ads that people hate, but the incessant interruption of content that ads represent today.
There are many business models emerging to enable media consumers and/or advertisers to pay for content in many ways, and some of them offer clutter reduction. This AdMonsters Article on Streaming Wars includes a chart showing a matrix of how various streaming services compare in terms of different revenue models (subscription, ad-supported, hybrid etc.) and live TV/VOD offerings.
Digital TV Research said global revenue from AVOD distribution will nearly triple from $21.9 billion in 2018 to around $56 billion by 2024. The big question: as sea-levels of ads rise and flood the media ecosystem, will anyone actually view or give their attention to ads?
Here are some models that advertising operations people and revenue optimization people should keep an eye on.
Monetization Model / Companies (e.g.) / Relevant tech platforms
- Ad-free / Netflix, Amazon Prime, Disney+, Apple TV+ / Mobile Apps, OTT, Computer Apps, Browsers, Media Players & Gaming Systems (e.g. Xbox, Sony PS,) Content servers, Subscription Servers
- Ad or No Ads option / Hulu, CBS All Access / Above Ad-free platforms, Ad Servers, DAI (Dynamic Ad Insertion)
- Live TV/SVOD subscription bundles w. ads / Hulu, AT&T TV, Sling TV / Above Ad-free platforms, Ad Servers, DAI
- (Ad-Supported) AVOD / Roku Channel, PLUTO TV, YouTube / Above Ad-free platforms, Ad Servers, DAI
- Subscription/revenue optimization platforms / Disney-Fox TrueX, Piano, Get Admiral / Above Ad-free platforms, Ad Servers, Subscription servers, DAI, CDPs (Customer Data Platforms)
- Rewarded Video – Gaming Apps / Zynga, Fingersoft / Above Ad-free platforms, Ad Servers, Connected Gaming platforms like Xbox, Sony PS, Ad Servers, DAI (Dynamic Ad Insertion)
The idea of putting the media consumer first is one that Hulu has pursued as it explores several different models, including watching a long-form commercial in exchange for an uninterrupted program with no ads or offering ad-free episodes for binge-watchers. After all, it is the consumer, with remote control or keyboard in hand, who decides and votes on what consumer experience is acceptable and what isn’t. In advertising, their actual attention is the only thing that matters.