written by: Leung Lok Lam, Tracy

Three tech giants, Facebook, Apple and Google, have just announced that they are serious about entering the online video streaming industry and investing on original programming [1]. About 60% of US young adults say online streaming services are their primary source for television [2]. Nearly half of US Millennials and Gen Xers no longer watch traditional TV [3]. Advertisers need to find a way to reach these fragmented users who are migrating online to watch television. But how?

Pre-roll and non-skippable ads are certainly not good choices. Viewers have long disliked the ad formats with which they are forced to watch the ad content. Still, there is a way for advertisers to sell their brands without annoying the viewers – consensual advertising, which abandons the practice of force-feeding ads. Under this concept, explicit consent from viewers is obtained before ads are shown. Viewers are therefore given the power to choose what ads they want to watch, or if they want any ads at all. Here are some suggestions as to how consensual advertising works with different online streaming business models.

SVoD (Subscription Video on Demand): Advertisers Pay for Your Subscription
Take Netflix as an example. Viewers pay a subscription fee and enjoy Netflix’s ad-free services. With consensual advertising, viewers are given the choice to select their preferred ads to watch, in return earn credits on their bill to be paid by advertisers. The concept is simple: if you want to sell me a message, pay me directly for my time. This is a hybrid loyalty bonus redemption program using other people’s money, for tripartite collaboration (Video platform owner, viewers and advertisers). Viewers can enjoy paying less by watching commercials that interest them, or if they value their time greatly, they may never watch a commercial at all.

AVoD (Advertising Video on Demand): Choose Your Preferred Ad
Even when viewers are forced to watch ads in exchange for free video streaming services, the concept of consensual advertising can still be applied. For instance, Hulu, which offers a lower price for a limited-ad package, provides the “Ad Selector” where viewers can choose to watch one of three ads before their video is being played. That is not full control, but at least viewers are given an option.

Why Consensual Advertising?
Most people use ad blockers because they hate ads that disrupt their Internet experiences which they want to be in control of. Viewers can, however, accept ads to support the costs of websites only if they are not annoying [4]. Consensual advertising, essentially, solves these two problems. It empowers viewers to take control and participate in ad selection, providing them a smooth and undisturbed Internet experience. Moreover, it collects data when preferences are made, so next time more customized ads can be suggested. Most importantly, with a positive brand experience, relationship and trust can be built between the viewer, the online streaming platform and the brand, which is a three-way win for all parties.

At the end of the day, to attract viewers, quality matters even more than ever. Consensual advertising puts brands under keener competition, but undoubtedly is a promising way to reach brands’ target audience without irritating them.

[1] https://www.nytimes.com/2017/08/20/business/media/tv-marketplace-apple-facebook-google.html
[2] http://www.pewresearch.org/fact-tank/2017/09/13/about-6-in-10-young-adults-in-u-s-primarily-use-online-streaming-to-watch-tv/
[3] http://adage.com/article/media/half-young-consumers-watching-content-traditional-tv-study/310564/
[4] https://research.hubspot.com/reports/why-people-block-ads-and-what-it-means-for-marketers-and-advertisers

References:
About 6 in 10 young adults in U.S. primarily use online streaming to watch TV
http://www.pewresearch.org/fact-tan…

Crowded TV Marketplace Gets Ready for Three Tech Giants
https://www.nytimes.com/2017/08/20/…

Nearly Half of Millennials and Gen Xers Don’t Watch Any Traditional TV: Study
http://adage.com/article/media/half…

Why People Block Ads (And What It Means for Marketers and Advertisers)
https://research.hubspot.com/report…

Will streaming television transform the TV advertising industry?
https://wernerantweiler.ca/blog.php?item=2017-01-31