The fight for the streaming advertising dollar goes white hot in Australia

Jason Pollock
By Jason Pollock | 7 May 2024
Credit: Kelly Sikkema via Unsplash

The advertising streaming wars are about to intensify in Australia as Amazon, Disney and Paramount launch ad-supported offerings in the second half of 2024.

With Netflix already dominating and media agencies increasing their use of advertising on streaming, the introduction of three more global players will create more competition and more inventory in the market.

Amazon’s CEO recently said that the Seattle-based multinational sees “significant opportunity ahead” in areas such as Prime Video ads. 

And Paramount executives told AdNews there is “pent-up demand” from both advertisers and consumers from the ad-supported Paramount+ product that’s on track to launch in June.

With Netflix already well established with its ad-supported offering, incoming streamers will likely look to offer similar if not better terms for potential advertisers to lure brands away from the existing options, according to media agencies AdNews spoke to. 

UM Australia’s planning director for Queensland, Sam Willmer, said that he expects to see a range of pricing from levels similar to BVOD to higher premiums for advertisers.

"As the next frontier in the total screens pie, there's certainly a place for the latter; however, the onus will be on publishers to demonstrate high attention, quality programming, and restricted ad loads," he said.

"Paramount+ will be an interesting one to watch, as they look to find the balance across a broader screen's portfolio. Although we're seeing improved screens spending overall, total value propositions will remain heavily scrutinized until publishers establish their own efficacy and delivery credentials."

Orange Line's head of media, Gavin Chew, said that similar to other ad inventory on the market such as BVOD or CTV, he expects the pricing strategies will be cost per metric (CPM)-based premium video inventory, likely available through a managed service and/or self-service via a demand-side platform (DSP) - for example, Amazon DSP for the Prime Video inventory.

"This model ensures advertisers are familiar with the process and that it can be quickly and easily adopted," he said.

On the consumer front, Kinesso’s head of digital planning and investment, Charlie Allatt, said that new entrants into the streaming market have the luxury of prior example - both internationally and from local execution.

“If we take Netflix, their ‘downgrade’ option represented a new tier, and a cost saving for consumers. While long-term projections (and new signups) suggest as much as 40% of new subscribers are taking advantage of that option, attrition on their current paid-subscribers has been low,” he said.

“For Netflix, the new tier is a smart incremental strategy for more price sensitive consumers. Amazon, conversely, have had ads for their shows running consistently across Prime for many years; an encouraging signal that they may be opting for more of a premium approach similar to sporting providers Kayo or Optus - where ads are 'part of the package'.”

Bench Media's co-founder and CEO, Ori Gold, predicts that Australian viewers can expect a more affordable streaming landscape with the introduction of ad-supported tiers, but an increase in prices for ad-free subscriptions.

"Paramount+ has taken the first step with its June 2024 launch at $6.99 AUD, matching Netflix’s same price point. Disney+ and Amazon Prime Video are expected to follow suit, offering ad-supported tiers at slightly higher prices based on their current US pricing," he said.

Strategies to acquire more viewers will extend beyond just price, however - Gold said that he expects to see innovative bundling strategies, with each service leveraging its existing strengths.

"Amazon, for instance, could bundle it with their Prime Shopping offers and will continue to combine an additional pay-per-view on top of the subscription for some specific events and titles. Disney+ could explore intriguing partnerships with pay-TV providers such as Foxtel or Stan as it did in the past and is expected to combine Hulu and Disney+ as a packaged offer," Gold told AdNews.

"Paramount+, with its combined offerings across various platforms and potential local content bundles, is well-positioned to be a major player in this evolving market. The coming months will be fascinating as these streaming giants unveil their final pricing models and compete to win over Australian audiences."

Allatt said Kinesso is seeing enthusiasm for the potential growth in scale that the new streaming video on demand (SVOD) entrants represent as SVOD is a significant part of consumers' ‘content diets’, but ad-availability has been limited except for the sport-specific platforms like ESPN, Kayo, or Optus Sport, which for some brands represents a deviation from the broader appeal content of the traditional broadcast video on demand offering.

“BINGE, on the other hand, has been a breath of fresh air - accurately representing their scale in market, and meeting the demands of marketers for a reasonable, stable, fresh source of broad appeal premium content,” he told AdNews.

“We believe Amazon Prime and Paramount+ will easily fit into the same mould that BINGE has carved, and Netflix is slowly growing into, ultimately doubling the space of current available volume for ad-availability across the rare and otherwise inaccessible SVOD consumer diet.

“The introduction of Disney+ towards the end of the year, or in 2025, may face some niche scale challenges, but should also bring additional demand, as brands warm up to the idea of piecing together disparate sources of video into a flexible screens strategy.”

UM’s Willmer said that advertisers are consistently looking for the ability to invest in high-quality, lean-back video formats at scale, with SVOD or AVOD environments particularly appealing given the cut-through and engagement they offer with a strong endowment effect.

“While there will certainly be an initial wait-and-see period for more conservative brands, the proposition of growth in total TV will have benefits for publishers and advertisers alike. Hopefully also for consumers as subscriber growth should also mean a compelling production investment, including Australian content,” he said.

Gold says that while clients are currently asking questions to Bench Media to understand the potential of integrating these platforms into their advertising mix, this initial curiosity will likely take a year or two to translate into actual demand and budget shifts.

“As these ad-supported options become more established, we expect a budget shift,” he said.

“Clients will likely allocate funds from traditional linear TV and potentially some online video budgets towards these new streaming channels. This shift will be driven by the targeted reach and potentially lower costs associated with streaming advertising.

Chew said that Orange Line’s experience is that for clients who have the budgets to invest in above-the-line, there is high demand.

“It is no secret that streaming audiences make up a significant portion of the connected market, and up until now we could only reach a portion of them at any given time, so there is definitely excitement to be able to reach them in a targeted way,” he said.

Rising tide set to lift all boats

Bench Media’s Gold said that the AVOD market is poised for significant growth in the next two to three years, benefitting all platforms, including Netflix and BINGE.

“Rising subscription costs for ad-free options could push viewers towards AVOD, increasing demand for both existing and new services. This will likely also lead to a rise in BVOD offerings from the local media networks as viewer comfort with ads increases,” he said.

Chew said that like any marketplace, greater competition and greater choice is (almost) always better.

“It provides more options, which makes marketing plans more robust and let's be honest, more fun! Especially if it means we are able to better align targeting and messaging to the newly available audiences,” he told AdNews.

Chew said that while a more crowded market will naturally take business away from existing players, this is not necessarily a bad thing. 

“It drives them to be more innovative, to develop their product, to be more competitive and as a result everyone benefits,” he said.

“Where would LinkedIn Ads or Twitter Ads be without Facebook (Meta) Ads leading the charge on social media? Where would Disney+ or Amazon Prime Video be without Netflix pioneering the way? This is how our industry grows and evolves.”

Willmer said that the introduction of Amazon Prime Video, Disney+ and Paramount+ will put some pressure on the market in the short term, given the current market and economic circumstances.

“However, in the longer term, we'll see the category grow and benefit all. I can see share discussions continuing to lead the agenda as exclusive DSPs will pose their own challenges in terms of effective campaign management, but that's all the more impetus for continued innovation in this space, which is a good thing,” he said.

Kinesso’s Allatt said that SVOD is not necessarily wholly distinct from other 'screens' - while linear TV has been spotlighted for declining audience, the reality is that the industry is in the midst of an adjustment and fragmentation of consumer behaviour when it comes to watching.

“The growing capacity to bring more of that diet into ad-availability is the single strongest potential solve for the puzzle of how to manage the decline, and we're going to need all sources,” he said.

“Binge, Netflix, Amazon Prime, Disney+, Paramount+, ‘Traditional BVOD’, Samsung Ads, Fetch TV, YouTube - they'll all have their place on the plan, and we're going to have better tools to manage that fragmentation in terms of operation and measurement, but if you’re looking for “one winner” in this new landscape – it will be the advertiser.”

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