Know Your Audience: The Value Of Tailored Advertising Models

Today more than ever, media organizations are looking to drive monetization to respond to economic challenges and increasing consumer demands. FAST has been a key revenue generator driving new ad-based business models. The next step for media companies will be to work on maximizing their ROI from advertising revenue.

One of the best ways to optimize ad revenue is to develop advertising models that cater to a range of demographics. Our recent research into preferences among streaming viewers revealed a number of surprising differences between age groups. For instance, older viewers, such as baby boomers (aged 59-77), are more likely to accept three ad breaks an hour (44%) than millennials (32%). With this kind of insight, it is possible to create ad revenue models that put the viewer first, which is the surest long-term strategy to attract and retain an audience. The key is to take a holistic view of the consumer, considering a range of factors that make up their demographic, such as their age group and location, as well as their preferences for the content they watch and how they regard advertising.

No Guarantees For Viewer Retention

In recent months, audience retention has become especially salient for media companies following a widespread crackdown on password sharing, which alienated many viewers. Two-thirds (65%) of subscribers to major streaming services reported that the crackdown on password sharing has driven them to look elsewhere. Moreover, consumer unrest is by no means limited to password policies, as we also discovered that nearly half (46%) of viewers do not believe they are getting good value from major streaming services.

Subscriber churn is a vulnerability for media companies across the board, and since even major players can’t take their audiences for granted, the importance of catering streaming services to specific and well-defined audiences cannot be overstated.

The Best Defense Against Churn

If it’s used strategically, advertising can act as a safeguard against churn. Millennials are especially open to free, ad-supported services, with nearly three-quarters (72%) reporting that FAST offerings would make them more likely to consider subscribing as long as the ads are relevant. Giving consumers alternatives to a standard subscription model as well as using targeted and relevant advertising is, at the very least, insurance against churn.

Many viewers will have a positive view of the content offering of a streaming service, and with the support of FAST channels, the issue of cost is resolved by providing loyal viewers with an alternative model that puts their preferences first.

Don’t Follow The ‘Average’ Viewer

If there’s one takeaway from Bitcentral’s research into streaming viewer preferences, it’s that mass-market business models that cater to a nebulous “average” viewer face a severe opportunity cost, missing out on the benefits of tailoring streaming offerings to specific demographics. Advertising that caters to individual demographics is the win-win outcome that the streaming industry needs in these uncertain times; by delivering ads that are tailored to suit their demographic, the viewers and media companies are given the best of both worlds.

Greg Morrow is GM of ViewNexa at Bitcentral.