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Roku hails AVOD as a premium advertising environment and predicts 100% streaming by 2030

Mike Shaw, Director of International Ad Sales at Roku, believes we’ve reached a tipping point for streaming and that it will completely usurp linear broadcasting within a decade. He bases his analysis on the rate of uptake and changing attitudes towards AVOD services, the evolution of AVOD content, and new opportunities for advertisers in the streaming world. Roku’s own survey data from the U.K. shows that 90% of Brits are now streaming, as well as three-quarters of “Boomers” – over half of respondents said they stream sports now.

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Roku – the connected TV device manufacturer and streaming service provider – recently commissioned a survey of 934 adults ages between 18-70 years-old in the U.K, who watch at least five hours of TV per week (via traditional Pay TV or a streaming service), and its findings challenge many of the assumptions surrounding AVOD services, such as whether they represent a premium advertising environment for brands (in terms of both content and viewer tolerance of ads). Last month, during the Future of Media event in London, the Director of International Ad Sales at Roku, Mike Shaw, discussed the significance of the survey results, as well as the increased penetration of streaming and AVOD services, the evolution of AVOD content, and emerging data which reveals significant opportunities for advertisers in the streaming world.

A key theme was the growing uptake of streaming services – accelerated by the pandemic – which Mike Shaw believes represents a “tipping point” towards TV consumption becoming all-streaming-based over the coming decade. Referencing a BARB report published earlier this year, which shows that two-thirds of UK households have access to at least one SVOD service, Shaw noted that Roku’s own data – based on the survey results – shows that 90% of Brits are now streaming. He also emphasised the significant demographic shift in viewer behaviour revealed by Roku’s survey data, with three-quarters of those aged 57-70 now incorporating streaming into their video consumption diet in some form. The pandemic has been a key driver in the growth of streaming, Shaw remarked: “There are various analyst estimates as to how far [the pandemic] has kicked the progression of streaming forward, but somewhere between two to five years is not a bad estimate.”

The uptake in streaming services is reflected in the evolution of content available on these platforms; over half of the survey respondents stated that they watched sports content through streaming services. In the same vein, half of streaming households are watching premium movies at the point of release on streaming services rather than at the cinema.

Shaw moved on to discussing AVOD services specifically, the evolution of AVOD content and the implications of Roku’s research for media buyers. He challenged a traditional view that there are core services (like Netflix and Amazon Prime Video) that have premium content and very large production budgets, and then there are ad-supported services with “random shows people have never heard of”. This view assumes the latter group is not a premium environment that advertisers want to support. Shaw warned that this view could be misguided.

He explained the price appeal of AVOD services for consumers, saying: “There’s an assumption that [household] budgets are limitless, and every time someone launches a new service it’ll get this amazing take-up, because we’ve been conditioned to think that, because of what happened with Amazon Prime Video, Netflix and Disney+. But that’s not the case. We know there’s subscription fatigue and household budgets have a limit of various levels.” At the same time, the higher engagement levels and growth that streaming services are experiencing has meant that Roku’s ad-supported service has been able to add original premium content (instead of just licensed content sets), while ensuring the AVOD remains free to consumers.

Shaw also outlined some of the benefits and opportunities for media buyers advertising on streaming services. Firstly, it’s clear that advertisers pursuing incremental reach beyond linear broadcasting will need to invest in CTV. As we report elsewhere, TVSquared released a report last month that suggests advertisers need to commit 10% of TV ad impressions to OTT/CTV to gain at least 15% in incremental reach for campaigns, regardless of budget. (Its analysis was based on data from billions of ad impressions, collected across 20 converged TV ad campaigns through its ADvantage platform).

Shaw referenced the 2021 Ofcom Media Nations report that reveals that only 57% of adults aged 16-34 are reachable by linear TV on any given week, and the Internet Advertising Bureau’s 2021 Real Living Study, showing that only 40% of the same age group are reachable via linear on any given day. For companies that have traditionally relied on the enormous brand building power of linear TV “that causes a really big problem, but it’s not insurmountable.” He went on to say, “Audiences are still watching TV – more than ever before – you just have to plan for it differently and this is where the real challenge is, especially when you think about tools and the trading systems in place. Old ones are not fit for purpose”.

An important takeaway from the discussion is that advertisers need to appreciate the differences when it comes to advertising on AVOD services versus traditional Pay TV. Shaw emphasised that AVOD represents a world where ad loads are a little lower, but engagement levels are greater, creative formats are more plentiful, and more data can be overlayed. In contrast to the “lean back” mode of linear TV consumption, where viewers switch onto a channel and pay attention to the programming inconsistently, the same content will receive higher engagement when sought after and played through streaming services, giving advertisers a creative canvass more geared to capturing their attention, he argues.

Shaw also remarked on the ad microtargeting benefits of AVOD services. With the evolving content within these ad-funded streaming services, advertisers can still ensure their campaigns appear within premium programming, and in Shaw’s opinion they have a greater capacity to adjust their messaging for different groups of consumers, rather than the less specific messaging which might be directed towards “people who watch Coronation Street or like sports”. Better measurement is also a key factor in the appeal of AVOD for advertisers. “It might seem that it’s tough, and it’s definitely a journey, but you’re able to get a lot more measurement out of the systems that are being developed for this data-enabled streaming TV environment than you can get out of an analogue world.”

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