Over the last few months, there has been a lot of buzz surrounding some major streaming services adding lower priced subscription options with advertisements. Along with opening up the service to more consumers at a more affordable price, this now offers a major opportunity for advertisers in the space. 

Starting back on November 3rd, Netflix started to offer a plan for under $7 that includes commercials built into the platform for the first time. The “basic with ads” tier will include an average of four to five minutes of advertisements each hour of watch time either during or before content with 15- to 30-second advertisement slots. 

One of the advertiser-friendly features is the ability to prevent ads from appearing on content they deem unsavory or unsuitable. Advertisers will also benefit from Netflix’s new partnership with Microsoft and its support services, which allow for stronger tracking and implementation directly at launch. 

One of the more difficult aspects for companies and agencies to navigate is how to effectively advertise on the platform. For consumers, this will be the first time they will be seeing ads on this platform so they could seem out of place. Experts urge advertisers at first to stick with quick branding messages in ads to get viewers used to the new format of the platform. 

Having this new opportunity to reach consumers will not come at a cheap price for advertisers. The average CPM (cost per thousand views) will be around $65. That is almost $10 more than the average for last year's Super Bowl ($56). Even at this extremely high asking price, it has not deterred advertisers from coming to the platform as Netflix says they are almost completely sold out on inventory.

Disney Plus is also moving in the direction of having a subscription option with ads at $7.99. Up until this point, this was the standard price for the service, which is now increasing to $10.99 for the ad free version.

Unlike Netflix, Disney is already in the ad streaming game with their acquisition of Hulu. They also have been preparing for this change as they have been working on an advertising technology platform for over a year, which allows ad buys for as little as $500 to accommodate all budgets. Even with the development of the new platform to make the transition easier, Disney has partnered with The Trade Desk to make it possible for brands to target automated ads across Disney’s linear and streaming properties. This helps Disney get closer to its goal of having over 50% of its business  be completely automated and changes them to a more audience-first targeted ad buying approach. Even with the partnership, Disney has said that it is likely that inventory will be limited at first as they are starting with four minutes of advertisements an hour, unlike most competitors who are at five minutes. Disney is reported to be charging over $80 for their CPM, which is much higher than competitive Netflix at $65 for their advertisement spots.

Streaming services are just beginning to leverage ad-tier subscriptions in order to bring advertisers onto their platforms, but also to offer lower priced subscriptions to help cut down on password sharing. For advertisers, streaming services offer another medium to reach consumers’ in the competitive digital ads space. 

Do you need help navigating digital advertising? Contact the SparkShoppe team today!