For many years, consumers avoided watching advertisements by paying for ad-free subscription-video-on-demand services. However, this trend has shifted. Research from the Video Advertising Bureau reveals that 66% of Americans that are between the ages of 18 to 34 now prefer streaming video content with commercials over ad-free subscriptions. The primary reasons cited are the cost benefits and the perceived value exchange.
Targeted advertising is reshaping the video streaming industry, enhancing viewer engagement and increasing revenue for video service providers. Advancements in video streaming platforms, server-side ad insertion (SSAI) and server-guided ad insertion (SGAI) technology, and data analysis are driving this shift, enabling the integration of ad content tailored to individual viewer interests.
The Shift to Personalized Ad Campaigns
The free ad-supported streaming TV (FAST) and advertising video on demand (AVOD) markets are growing rapidly, with global FAST revenues expected to reach $18 billion by 2028. There are a few key reasons for the transformation to video streaming services with personalized advertising.
Viewer demands are evolving. According to Adweek, 71% of consumers expect companies to deliver personalized interactions, and 76% get frustrated when this doesn’t happen. Customizing ads to match user interests enhances the overall experience, making ads feel more engaging and less obtrusive.
For streaming service providers, incorporating targeted ads can significantly boost revenue. Ad-supported tiers have been shown to capture higher ARPU than subscription-based models. In today’s ultra-competitive video streaming landscape, any opportunity for service providers to differentiate their offering and boost revenue is a significant advantage. This additional income can be used to invest in better content, thus increasing demand and driving up CPMs, further improving the monetization and quality of service.
Furthermore, improvements in server-side ad insertion and data analysis have made it easier to seamlessly integrate relevant ads into streaming content without disrupting the viewing experience. A common challenge with FAST and AVOD services is that each platform individually collects data, consolidates it and then shares it with ad tech platforms on a daily basis.
In the era where instant satisfaction and fan engagement are the expected norm, the need for actionable data in near real time is crucial."
This data is uploaded into data lakes and analyzed to generate actionable insights through an omnichannel approach. The resulting insights can then be used to optimize the user experience and journey. This might involve updating campaign-related metrics such as pacing, frequency caps or spacing rules. In some cases, additional programmatic purchases are needed to acquire more inventory on adjacent platforms.
In the era where instant satisfaction and fan engagement are the expected norm, the need for actionable data in near real time is crucial. By deploying a combination of technologies for streaming, such as SSAI and more traditional approaches based on SCTE, data can be provided in a matter of seconds.
Universal Approaches to Targeted Advertising
SSAI technology seamlessly incorporates personalized ads into live stream content, stitching ads directly into the stream. By utilizing user data such as preferences, demographics, and behavior, relevant ads can be inserted in real time – enhancing viewer satisfaction, reducing ad fatigue, and increasing ad effectiveness and revenue for service providers.
SGAI is an ad insertion method that uses predefined markers called resolution points, such as HLS interstitials and DASH media presentation insertion events, in primary content such as video streams. These markers serve as placeholders for seamless ad insertion. With this approach, the content provider’s service oversees ad insertion, ensuring ads are delivered consistently and reliably across different devices and platforms.
When a viewer starts playback, the streaming manifest includes info about the resolution points. The video player requests additional content from the provider as needed, allowing for dynamic, personalized ad insertion without interruptions. SGAI balances personalized ad experiences with efficient resource usage, centralizing ad control to enhance performance, reduce latency, and support content caching. While SGAI is a more advanced and scalable solution for delivering personalized ads, there are drawbacks with this approach, namely that it requires more complex client player features, processing and development. This makes the roll out of SGAI difficult with legacy players, as many client players have insufficient processing to support SGAI.
Frequency capping is an ad management strategy that prevents viewers from being overwhelmed by repetitive ads. By customizing ad exposure based on user interactions, service providers can maintain a balanced and enjoyable viewing experience. This technique prevents ad oversaturation, keeps viewers engaged, and fosters a positive perception of personalized ads, ultimately leading to higher ad retention rates.
Advertising storytelling uses asset rotation rules and enhances the effectiveness of targeted ads by presenting them in a specific sequence. The goal is to create a cohesive narrative or message about a brand or product, resulting in a memorable and personalized ad experience. This approach improves viewer recall and strengthens connections with the advertised products or services.
The Next Frontier: In-Stream Advertising
Given the popularity of AVOD and FAST services, there is a pressing demand for innovative monetization approaches. A new targeted ad technique called in-stream advertising is revolutionizing video streaming monetization, especially for live use cases. In-stream advertising with new split-screen ad formats creates a new premium inventory during live programming events, enabling advertisers to reach viewers without disrupting the viewing experience and brands, agencies and publishers to achieve better monetization.
With in-stream advertising, service providers can leverage SSAI to offer new addressable ad formats such as double-box and dynamic L-bars. These split-screen ads can be strategically placed at high- and low-action moments of live events, either through manual operation or by automated triggering from external data feeds. Dynamically integrating split-screen inventory within live programming not only amplifies brand awareness but also maximizes monetization opportunities for live events, including sports.
The introduction of fresh ad formats and in-content advertising are driving a rise in CPMs of around 25% for some format inventory types.
Conclusion
To stay competitive in the rapidly growing video streaming market, targeted advertising is more crucial than ever. Video service providers need technology providers to support more than just SSAI and less intrusive ad formats with in-stream advertising to maximize their revenues.
With a SaaS solution for targeted advertising, video service providers can achieve unparalleled scalability, take advantage of real-time data processing and leverage advanced machine learning to tailor advertising messages with unprecedented precision.
