Binge TV Viewers Are More Receptive to Ads, Study Finds

Netflix NFLX -0.94%, IncAMZN -0.90% and Hulu are making it easier for consumers to indulge in hours-long sessions of their favorite TV show. Where does that leave advertisers?

New research from Annalect, Omnicom Media Group’s marketing technology platform, found that 58% of binge viewers enjoy watching at least three episodes of a show in one sitting because they don’t have to watch ads.

The good news for marketers is that the study also found that viewers are willing to tolerate ads under the right circumstances. More than a third of binge-viewers said they wouldn’t mind seeing ads while binge-viewing if it lowered their subscription rate and over a third also said ads provide a nice break during binge-viewing.

“Many consumers understand that there is a value equation, so if they’re getting to watch on their own terms, they have to sit through ads,” said Annalect’s U.S. research director Jed Meyer. “Live TV is ad-supported and people do watch ads. The good ads cut through the clutter.”

To be sure, binge-viewing isn’t necessarily an ad-free experience. While Netflix doesn’t run ads, video on demand services on cable insert ads into shows, for instance. And Annalect noted that binge-viewers are more receptive to ads compared to TV viewers who do not binge. According to the study, 20% of binge viewers said they often discuss ads with friends and family, compared with just 12% of non-binge viewers.

Fifteen percent of binge viewers said they share ads via social media, while only 7% of non-binge viewers said they do. Binge viewers tend to be younger — Annalect found that 80% of Millennials were likely to be binge viewers, compared with 68% of Generation X-ers and 49% of Baby Boomers. Women are also slightly more likely to be binge viewers than men, Annalect said. Twenty-one percent of binge viewers said they remember ads seen while binge-viewing more so than the ads seen when watching TV in smaller doses, compared with 10% of TV viewers who don’t usually binge view.

Binge viewing gives viewers the ability to watch a TV show as it fits their schedule, allowing them to have a customized viewing experience that’s not dictated by a broadcaster. It’s not an entirely new concept – TV marathons, renting series on DVDs and watching multiple episodes on TiVos facilitated binge viewing before the advent of sites like Netflix and Hulu. However, new technology, consumers’ desire to watch TV on their own terms and an increase in quality TV content have brought binge-viewing to a new level, Mr. Meyer said.

For marketers, figuring out how to deal with binge viewing is crucial. Half of households nowadays have at least one TV connected to the Internet and nearly half subscribe to either Netflix, Hulu or Amazon Prime, according to Leichtman Research.

Annalect conducted a national online survey of 1,307 respondents above the age of 18 years old who spend five or more hours a week watching televised content on any device. Of the respondents, 826 were binge-viewers. Annalect defined binge viewing as watching at least three episodes of the same show in one sitting.

According to the research, two-thirds of TV viewers binge-view frequently, mostly during prime time. More than half of binge viewers said they will continue binge viewing as more TV shows are created, but 49% said they will also watch TV shows in real-time after they catch up with all the episodes. Roughly two in three binge viewers said they binge at least once a week.

Binge viewing “is not a fad, it’s an emerging trend,” Mr. Meyer said, adding that binge viewing gives new opportunities for brands to engage with consumers. To make VOD a more appealing outlet for marketers, some networks allow for “dynamic ad insertion,” a technology that lets networks switch out ads that air on VOD with a more current ad. As a result, a viewer can watch old content but see ads that are timely and relevant. Marketers can also opt to sponsor shows on certain VOD providers.

TV networks are also trying to adapt. Big networks have been advocating a shift to getting paid for commercials that viewers see up to a week after they originally air, a system known as “C7″. Currently, the industry operates under a “C3″ model, in which advertisers pay based on three days of commercial viewing. In the most recent upfront, the big broadcast TV networks — NBC, ABC, Fox and CBS — reached C7 agreements with a major media buyer, Group M. 

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$0.45 USD - $4.00 USD

Note: The accepted formula that Auxiliary Mode Inc. uses to calculate the CPM range is $0.45 USD - $25.00 USD.

The range fluctuates this much because many factors come into play when calculating a CPM. Quality of traffic, source country, niche type of video, price of specific ads, adblock, the actual click rate, watch time and etc.

Cost per thousand (CPM) is a marketing term used to denote the price of 1,000 advertisement impressions on one webpage. If a website publisher charges $2.00CPM, that means an advertiser must pay $2.00 for every 1,000 impressions of its ad. The "M" in CPM represents the Roman numeral for 1,000.

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