VOD Ad-Supported Adoption Predicted by Kantar – 2023
While YouTube argues that fewer ads equal greater ROI for advertisers, other video platforms are moving in a different direction. Market penetration for ad-based video-on-demand (VOD) grew from 20% to 23% in the past 12 months, and consumers are growing more comfortable seeing ads on their favorite streaming shows. That’s giving media forecasters reason to believe the time is right for streaming services and VOD platforms to adopt the ad-supported model.
According to the Media Trends and Predictions 2023 report, released Wednesday by the media analytics and brand consulting firm Kantar, ad-supported models may be the solution to inflation concerns within the media industry.
Kantar’s report is an annual forecast designed to help brands and media companies navigate the year ahead and plan for the future.
Despite an overall positive outlook for VOD, Kantar’s forecast shows inflation impacting the video market. Nearly one-third of all users who canceled their streaming services in the second quarter of 2022 cited the need to save money as the reason. That’s up 6% from last year.
Demand for television advertising remains exceptionally high. Eighty-nine percent of advertisers say they would consider investing in advertising on a streaming video subscription player.
As agencies, and the advertisers they represent, see greater value for their marketing investments, and as audiences splinter across even more devices and platforms, Kantar predicts there will be more investment in digital skills, with an emphasis on technology, data, analytics, and math. There’s also evidence that media agencies are beginning to restructure their teams to remove TV and digital silos.
“What surprised me most is how rapidly technology continues to advance and how this propels the media and marketing landscape to new heights,” says Kantar Chief Growth Officer Manish Bhatia. “If your business isn’t moving as fast as these advances and planning what they mean for you, then you’re behind.”
Pricing at the Forefront
With cost considerations top of mind, Kantar found that brands are diversifying their media plans. This has led to a move to incorporate more VOD, as linear TV audiences continue to migrate and the cost of advertising on linear TV continues to rise.
Less price-sensitive media, including radio, outdoor, and sponsorships, will be viewed as a more cost-efficient solution for brands in the coming year.
Contextualize or Fail
It’s no surprise that Kantar cited data as a fuel for today’s strategic digital campaigns, however the way brands are using data is evolving. In a post-cookie landscape, brands will still be able to access consented first-party data that’s available within closed ecosystems, however Kantar’s research shows that wider cross-platform targeting has hit a barrier. With consumer privacy at the forefront, brands will need to pivot away from the hyper-targeted strategies they once believed were possible.
“Adaptability and creativity in the way data is collected and used will be key moving forward,” Bhatia says. “With privacy regulations increasing, first-party data will become increasingly more important.”
Bhatia believes the future of data involves strategically integrating insights from large-scale data sets from multiple sources, alongside ground-truth panel assets.
“Like most things, preparation is key to success. Those who delay investing in skills, knowledge or technology for a post-cookie world will fall behind,” Bhatia says. “Winning brands will be those that adopt holistic campaign planning with precise data-driven strategy at the heart of decision making.”