Understanding Consumer Ad Choice Segments

NOTE: This post includes Antenna data first reported by The Wall Street Journal on June 19, 2023.

Ad-supported plans have rapidly become an important part of the streaming video market, currently accounting for 25% of all Premium SVOD subscriptions. And they are especially critical to acquisition: ad-supported plans now make up nearly one-in-three new sign-ups.

This is no small thing! When Netflix first dominated the early subscription video market with an ad-free offering, the advertising industry was left to wonder how it would reach consumers in the future. The Pay TV model has never really offered advertising as a choice for consumers, so when video services first started to offer ad-supported options, it was an open question as to how consumers would respond.

To analyze the ways that consumers choose advertising in subscription video, Antenna has created four segments: “Ad Avoiders,” “Ad Engagers,” “Ad Managers,” and “Ad Oblivious.” When given the opportunity, Ad Avoiders always choose ad-free plans, and Ad Engagers always choose the lowest-cost, ad-supported plan.

Ad Managers mix-and-match ad-supported and ad-free plans, while Ad Oblivious have not yet signed-up for a service where they have had to make a choice about advertising.

Four years ago, two-thirds of American video subscribers had never signed up for a plan which gave them an ad choice. That number has dramatically decreased as new ad plan options have come to market, and as consumers sign up for more services the Ad Oblivious segment is now just below one-third of the market.

If we put aside that Ad Oblivious portion of the market, we can see that, while Ad Avoiders are the biggest segment at 42%, 58% of Americans have chosen advertising either some or all of the time they are given the option.

By definition, Ad Management is not even possible until one has made the ad choice at least two times. If we look only at consumers who have been faced with the ad choice two or more times, a fascinating story emerges. 71% of these Americans have chosen advertising at least once. And the biggest segment is Ad Managers, at 46%. Consumers are not only learning to choose whether or not they want ads, they are also learning to make the decision on a service-by-service basis.

The ramifications of this for the media industry are substantial. For services, they will need to understand what drives these ad choices, particularly among the Ad Managers. Is it the type of content they feature? How well their ads are integrated into the experience? Ad loads? The difference in price between their ad-free and ad-supported options? For brands and their agencies, building an advertising media plan has all sorts of new challenges in this world of consumer ad choice.

Looking at the big picture, there is a strikingly optimistic story for the advertising industry. Consumers clearly understand the value that advertising brings towards funding the production of the storytelling that they love. 

The Antenna data is clear: given the choice, most Americans choose advertising.

For more detailed information on Antenna’s methodology and definitions of core metrics, please visit http://www.antenna.live/methodology.

Brendan Brady is a Content Strategy Associate at Antenna, a measurement and analytics company providing insight into purchase behavior and subscription metrics across the new media landscape.