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Online video users prefer ad-funded to subscription-based services

As the online video discourse moves from deployment to monetisation, users are already opting for ad-funded as their preferred business model new research from YuMe and Frank N. Magid Associates has found.

Basically, the research shows that online video represents what the multi-screen video brand advertising software and solution provider calls a “transformative advertising opportunity”.

In the survey, 30% of Internet-connected households were found to have some form of connected TV nearly 90% of users noticed ads on the YouMe ad platform, particularly pre-roll with the majority of those users choosing to interact with the ads. Nearly a fifth of those subsequently purchase the product. Moreover, for streamed short-form content and TV shows, connected TV consumers strongly prefer ad-supported content to paid, ad-free content.

The survey found that professionally-produced full-length and short-form videos not on TV and cable are surging in popularity, with two-thirds of respondents saying they watch these. This rapid rise of this final category, what the research firm called “mid-tail" content, will be one to watch in the coming months and years.

On a multiple times per week basis, users streamed more short-form content (26%) more frequently than they viewed TV shows on networks (24%), and nearly as often as viewing TV streamed from the Internet (29%) and streamed films (31%).

In terms of monetisation, short-form video (59%) and streaming TV show (44%) consumers on connected TVs were said to prefer 15-30 second ads over monthly subscription or the pay-per-view model. However, the survey also found that connected TV users do not want advertisements interfering with their viewing experience once it has begun.

“This study confirms that connected TV represents a tremendous advertising opportunity for brands looking to generate consumer awareness and meaningful interactions," said Ed Haslam, senior vice president of marketing, YuMe. "In particular, the growth of short-form video content, and the willingness, even interest, of consumers to view advertising to view the content, speaks volumes about the opportunity here... For longer-form content, the study helps validate opportunities for ad units such as YuMe's First Impression, which enables brands to engage with their target audience before the user disappears into ad-free content, such as feature-length films from Netflix."

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