Video on demand (VOD) advertising is viewed as a revenue growth opportunity for pay-TV providers. Approximately $65 billion is spent annually on linear ads, compared with about $1 billion for VOD. However, operators are beefing up their VOD offerings and are boosting their VOD infrastructure to compete with such OTT providers as Netflix and Hulu. Comcast even created a content delivery system (CDN) specially designed for better delivery of its VOD content. (For more, see Why Cable Should Care About CDNs). But are subscribers staying tuned for a word from the sponsors?
A recent study conducted by the Advanced Advertising Media Project (AAMP) found consumers will tolerate the same amount of advertising on VOD programming as they do on linear TV content.
AAMP — a research initiative that brings together such media stakeholders as Comcast, BlackArrow, Discovery, ABC, NBC and CBS to test, measure and analyze the effectiveness of advertising within free VOD TV programming — conducted its tests in September with 1,000 consumers who watched 30 minutes of television within media labs in New York City and Los Angeles. A custom-built VOD platform offered a choice of 19 television shows across the comedy, drama and reality genres from 11 networks. The study tested different ad loads in the 30-minute segments: light (3 minutes), moderate (5.5 minutes) or heavy (8 minutes).
In analyzing the consumer tests, AAMP found the ad load on VOD does not affect such key measures as viewer enjoyment of the show, engagement with the advertising, brand recall, interest and purchase intent. In addition, VOD ads are equally effective and viewer engagement is equally strong across light, moderate and heavy (linear-style) ad loads.
Does this mean consumers like advertising? Nick Troiano, president of BlackArrow, says they may not love ads, but there is no degradation in advertising effectiveness between linear and on-demand viewing. Even though consumers in the video lab tests could fast-forward through commercials, only about 20 percent of them did, although the lab environment could have had an effect on that.
According to Troiano, the fundamental question is: How close can VOD advertisers get to the linear experience? Test results said advertisers can match the linear experience even with high ad loads, and the study concluded that consumers feel more in control while watching VOD. That translates to more willingness to watch the ads.