The TV segment has become an integral part of human life which covers the daily entertainment and information needs of consumers. According to Statista, the average time spent watching TV in 2021 by US adults was 3 hours and 17 minutes per day, and they can do this via any device, whether desktop or mobile.
Today, state-of-the-art TV channel alternatives allow users to watch their favorite shows, movies, documentaries, and other video formats (gaming, music) under the various conditions offered by different platforms — from linear to connected TV. The TV industry is considered one of the most popular and engaging options for advertisers to cater to picky viewers with exceptional advertising content as well as offering the chance to evolve ROI. In 2022, the TV advertising world is expected to generate a revenue of $159 billion which is higher than in 2021 ($151 billion).
A new trend of free advertising-supported streaming TV (FAST) has appeared thanks to the quick growth of this market across the globe. So What is FAST? Why is it gaining interest among media companies and advertising agencies?
What Are FAST Channels?
FAST denotes a free ad-supported streaming TV service. It is much the same as live TV but without a subscription. This media format also enables both streaming providers and advertisers to build ad business models and monetize exclusive content.
As the COVID-19 pandemic has led to a significant introduction of smart TV (CTV) to audiences at large, FAST services have gained a boost. For example, in the USA in 2021, about 83% of American households had at least one CTV. In the wake of this, advertisers have shifted their monetization from traditional television to streaming TV with studies indicating that marketers intend to spend over $25 billion on ad-supported video by 2025.
FAST is mainly embedded in Internet-connected CTV platforms. If a linear model TV provides a standard package of video content and costly subscriptions, FAST channels improve the viewer’s experience by offering personalized content and organically placed advertisements. Ads are typically inserted in various FAST TV channels with the programming scheduled at a certain time. Accordingly, they carry such common features as:
- in total ads take around 13-15 minutes per hour;
- ad breaks appear every 6-9 minutes, with 3-6 ads per break;
- as viewers report, they spend about 20 minutes per day with FAST services.
The Tandem of FAST and AVOD
When dealing with the advertising of video content in the TV industry, acronyms VOD and AVOD are to come up first. VOD stands for video-on-demand available to viewers for free or for purchase. In order to access VOD content, one should have an account on particular streaming platforms. Such video streaming introduces various VOD monetization models, including AVOD.
AVOD signifies an ad-supported video on demand. In a nutshell, it is VOD content monetized with ads instead of a subscription. Viewers are offered to watch ads appearing within the content they want to watch for free. Typically, ads are uploaded through video commercials, sponsored content, display banners, and more. An example of AVOD is a popular YouTube.
In FAST, monetization works via ad-supported live content. AVOD and FAST reach the same objective but with a focus on different types of content.
FAST and AVOD are both decent solutions to apply with ads to monetize and generate revenue. They also reduce the need for an expensive cable subscription. One recent report states that 53% of smart TV owners are watching FAST services, and 55% watch AVOD. Such a growth rate of free ad-supported TV has made consumers gradually lose interest in subscription video on demand (SVOD). As statistics declare, the share of US homes with SVOD has decreased to 85% in the third quarter of 2021.
FAST channels are available through popular AVOD platforms like Roku, Pluto TV, Tubi, Peacock, Xumo, IMDbTV, and Samsung TV+ Plus.
FAST Service Types
When it comes to implementing FAST services to enhance revenue on ad spend, it is essential to distinguish between the different types of FAST business models. There are several classifications that can be used to discern between them.
- The approach in scaling the service:
- Multi-operational — available on various platforms like Roku, Xumo, Peacock, and Pluto TV;
- Platform exclusive — available only via one particular platform (LG, Samsung TV Plus, and Vizio Watchfree);
- Conditions to access FAST service:
- Free — when used with only AVOD and/or linear TV channels;
- Premium version — when supported with offers like pay-per-view (CPM) or an SVOD option.
FAST is gaining pace by providing consumers with premium content and targeted, personalized ads in such regions as the USA, Canada, EMEA, APAC, and Latin America. It allows distributors and advertisers to notice the genre preferences in various regions. For example, the news segment is leading in the US, while in Latina America viewers prefer watching movies and EMEA prefers documentaries. When it comes to the APAC region, news also takes a leading position, and music is showing a good ad conversion. These insights allow advertisers and marketers to provide personalized ad streaming to win a broader audience of viewers.
The Ad Value on FAST Channels
The payoff from the FAST service is calculated by “impressions”. These are CPMs (Cost Per Milles) that show the amount of ad views the content provider gets paid for per 1,000 ad views.
This parameter is difficult to measure as it can vary depending on the ad content and time of the day, but it usually fluctuates between $10 and $25. FAST allows distributors to provide ad content more dynamically and makes it consumer-centered whether to a household in general or just one individual. The CPM model in FAST TV channels is measured in $40-$50 per 1,000 impressions. Thus, TV content providers can earn $0.60-$1 for every hour a single consumer watches their FAST channel. With an audience of millions of viewers, the cumulative number ends up being really impressive and profitable.
Taking into account the leading platforms in free ad-supported TV, it is easy to see the benefits they obtain from launching their FAST channels. For example, Hulu makes around $15 per month on advertising per subscriber which is more than they charge for their premium ad-free package, which is currently $12.99.
Another large FAST channel aggregator is Pluto, which earned its 1st $1 million in 2019 and has broken $3 million a day thanks to increased content consumption.
Takeaways
The new brand of FAST channels is succeeding hand in hand with AVOD platforms. Each region accounts for the ad content preferences of an average consumer and picks the best solutions for viewers and advertisers to receive an impressive streaming package while also making a reasonable profit through the ad-only business model respectively.
Thus, according to the advantages of reaching a target audience with exclusive content and gaining immediate ad revenue, free ad-supported streaming TV services are expected to make strides and move forward across the world in the coming years.
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