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Consumers Are Paying Less to Watch, What Does that Mean to Advertisers?

By Douglas Eldridge

Cable or satellite packages cost on average $70 a month. To a certain crowd, that's the way it's always been, so they don't blink an eye at the monthly fee. Recently, however, to many it has become an unnecessarily expensive cost. Thanks to streaming services, consumers are now able to watch what they want, when they want, and often for very reasonable prices. In fact, according to one statistic that was published by programmatic advertising leader The Trade Desk, 27 percent of cable subscribers said they plan to unsubscribe in 2021, up from 15 percent in 2020 who said they would unsubscribe. To illustrate the starkness of those numbers, the number of pay-TV households peaked in 2010 at 105 million; now it's down to approximately 82.9 million. Compare that number to 204 million, which is roughly the number of people in the US with a connected device to stream content on what is known as Connected TV (CTV)

We could write about the reasoning all day, but what's the point? It's a simple matter of a better, personalized, DIY approach for less money - more enticing to many people than the old school pay per month and annual commitment with little control over programming. Not only are consumers choosing to consume content differently, production companies are now producing content specifically for streaming rather than for broadcast. The consumer has spoken, production is listening, and now it's up to cable and satellite companies to conform.

What's important is not why, but what does this dramatic change in content consumption mean to advertisers. According to another study by The Trade Desk, in early 2020 published by Marketing Dive over half of streamers expressed a willingness to be served ads in exchange for the old subscription model. While this might seem like good news, the old broadcast model doesn't jive with the CTV model. Rethinking of traditional advertising practices needs to be considered due to the following criteria…

  1. Cost - While the cost to advertise on CTV is significantly less, 3 - 5 times less expensive, the investment is only worth it if you understand your audience and are able to target accordingly
  2. Targeting - Advertising across connected devices allows advertisers to hone in to their target audience at a level that traditional media would never be able to
  3. Frequency - While consumers are willing to be served ads, that doesn't mean they want to see the same ad over and over again. Figuring out how often to display your ads is as important as who to advertise to
  4. Ad Funnel - Just as you can target your audience, you can also serve different ads on different devices as consumers drift down the buying journey

While the list is not comprehensive, it is a glimpse of what advertisers need to concern themselves with. While traditionally a commercial for the five o'clock news might have sufficed, now content needs to be specified per target, per time slot, and per where they are in the sales funnel.