Connected TV viewers prefer ads to PPV or subscription models for short form video
Connected TV consumers prefer ad-supported content to paid, ad-free content according to new research conducted by Frank N. Magid Associates, commissioned by digital advertising company YuMe.
With 30% of Internet-connected households in the US already having some form of connected TV, and these numbers growing all the time, connected TVs will be a big opportunity for TV advertisers.
The research found that 60% of respondents prefer 15- to 30-second ads over a monthly subscription or the pay-per-view model for short-form video, and 44% feel the same way when it comes to streaming TV shows.
“The basis for the study was that connected TV has become hot topic in industry but like any nascent medium it is difficult to find baseline information that would help advertisers make informed decisions,” noted Travis Hockersmith, senior director of client strategy at YuMe in an interview.
One key finding, Hockersmith noted was the opportunities for advertisers on the platforms. Almost 90% of connected TV users reported that they noticed ads on the platform, particularly pre-roll ads, with 60% noticing pre-rolls.
The majority of those users also interacted with ads and nearly one-fifth of users (19%) subsequently purchased a product as a result of an ad they had seen on connected TV.
“It reminds me very much of the early days of the Internet, when users weren’t yet bombarded with ads and engagement and ad recall were much higher,” he said.
Viewers’ openness to connected TV ads has to do with the area still being young.
“The biggest reason by far is that right now it’s a very uncluttered ad environment,” says Hockersmith, calling this moment a “first-mover opportunity.” “As ads loads increase, consumers will start to tune out ads more.” When streaming ad breaks get longer to match the length of TV ad breaks, consumers will tune out as they currently do with TV commercials, he says.
The survey includes interesting data about how people view connected TV. The largest group, 77%, uses game consoles, 34% uses Blu-ray players, 28% use smart TVs, and only 25% use set-top boxes. Note that many households connect in multiple ways.
Apps drive connected TV viewing, with Netflix, YouTube and Hulu being the most popular apps.
“We now have tremendous insight into consumer behaviours and preferences as they relate to connected TV at an unprecedented level of detail,” noted Mike Vorhaus, president of Magid Advisors. “Advertisers and major brands will appreciate the rich findings for what is arguably the most explosive platform for video distribution and video advertising over the next several years.”
The survey questioned 736 connected TV viewers ages 18 to 54, between May 24 and June 4, 2012. The full white paper “The Who, What, When, Where, Why, and How of Connected TV & Advertising — is available from YuMe.