Dive Brief:

• Fifty-three percent of American consumers said they would be open to watching ads when streaming video in exchange for a lower subscription price, according to a new study from The Trade Desk shared with Marketing Dive. Additionally, 46% of consumers said the most frustrating thing about ads on streaming services is seeing the same commercial over and over.
• The report found that 68% of viewers would be willing to watch relevant ads, if it meant watching less ads, and that 36% of consumers want fewer ad breaks.
• Most Americans surveyed (59%) said they were unwilling to pay more than $20 a month for streaming services and 75% won't pay more than $30 a month. The research found that 53% of U.S. households subscribe to Netflix, 43% to Amazon Prime and 29% to Hulu.

Dive Insight:

The streaming wars between big players like Netflix, Amazon, Hulu and Disney+ continue to push the cord-cutting trend to new heights as consumers' appetite for digital video consumption shows no sign of slowing. However, there may be a limit to how much people are willing to pay for subscriptions, creating an opportunity for advertisers to absorb some of the cost of subscription fees in exchange for eyeballs on ads, which is one of the key takeaways from The Trade Desk's survey of 2,613 U.S. adults, which was conducted by YouGov in November 2019.

The challenge for advertisers, the Trade Desk report suggests, is that they will have to deliver more relevant ads with less frequency than on television. The opportunity is in providing an ad-supported experience that doesn't leave viewers frustrated with the frequency of ads. According to the report, watching an ad every second episode would be acceptable.

Other studies have pointed to the growth opportunity for video ads. Ad-supported video on demand (AVOD) impressions are projected to grow and revenues for online video advertising is expected to reach $27 billion in 2023, a compound annual growth rate of 11% from 2018 to 2023, according to a recent report from Informa Tech's IHS Markit Technology. Additionally, video ad impressions on connected TVs grew to 50% of the total in Q2, up 31% from the same period a year before, per Extreme Reach.

"Consumers are willing to view ads if it means their subscription costs go down, even more so if those ads are relevant to their interests and are just not the same ads over and over again," said Brian Stempeck, chief strategy officer, The Trade Desk, in a press release. "At the same time, this indicates that ads will fund the future of streaming TV, and that broadcasters and advertisers have an opportunity to improve the advertising experience in a way that simply is not possible with traditional, linear TV."