Tis the season…for award winning advertising. The holiday season puts advertising in the spotlight, with brands competing to get in front of viewers during this peak shopping period. From Oscar winning directors to familiar mascots (e.g. Kevin the carrot), adverts become a hot topic of conversation for the industry and consumers alike. However, 2022 is a difficult time to advertise to cost-conscious consumers.

Economic uncertainty and the cost-of-living crisis are impacting people across the globe, and having a knock-on effect in the media industry. In a recent study by Digiday, agencies – although cautiously optimistic about budgets for 2023 – all agreed that flexibility will be key to success. This is one strength of CTV advertising over traditional TV. Agility, combined with a growing audience, makes it a key channel for the uncertainty we find ourselves in.

As we head into 2023, Rakuten Advertising has taken a look at consumer streaming behaviour across Europe. The results provide key learnings for agencies about how to navigate this evolving landscape, helping them to outthink and outperform in 2023 and beyond.

Over one-third of viewers can’t be reached through linear TV

One striking takeaway from our research was the increasing number of people watching video-on-demand exclusively, i.e. cord-cutters. 36% of respondents watch some form of video-on-demand but not live TV. Just two years ago, this number was closer to 20%. When we look at markets who were early adopters of CTV this is even higher. Take Sweden for example, where a massive 50% of respondents watch VOD exclusively.

This steady growth in the number of viewers who advertisers are unable to reach through linear TV is only likely to continue. According to IAB Europe and PubMatic, 100% of agencies cite connected TV as a growth area over the next 12 months. That being said, agencies shouldn’t adopt a VOD-only mindset, with over 50% of respondents watching a combination of streaming services and live TV: a VOD-first approach will be best.

Cost-conscious viewers shifting from SVOD to AVOD

Video-on-demand encompasses many different formats. For agencies, advertising video-on-demand (AVOD), is key, as this is the channel that allows them to get in front of the highly-engaged and growing VOD audience. Viewers behind the walls of subscriptions have, until very recently, been inaccessible. Various changes in the industry and the economy will see this change, including concerns about the cost of subscriptions.

62% of viewers claim they will be watching more free streaming services with advertising as a direct result of the cost-of-living crisis, with 46% actively cutting paid subscriptions to save money. This is great news for agencies who have been dying to tap into the exclusive SVOD audiences previously unavailable to them. For media planners targeting women and younger generations this is even more important with the figures highest among these demographics (most notably in the UK and Netherlands with over 70% respectively viewing more free streaming services with advertising).

Viewers are looking for brands who are ‘helping’

We’ve established that viewers are heading to AVOD services, the next challenge for agencies is how to tailor messaging for cost-conscious consumers who have less expendable income to enjoy now.

52% of viewers are looking for adverts that are not just relatable but more transparent and honest, when thinking specifically about the cost-of-living crisis. This isn’t a new idea and is a hot topic in the industry. However, consumers responding to our research went a step further and said that they wanted brands to communicate how they are trying to help their customers during these difficult times. There is a time and place for aspirational advertising and for the majority of viewers this isn’t it. When agencies are advising their clients about the right tone of voice to strike in unsettling times, it’s all about empathy. For example, it’s not that luxury brands shouldn’t be advertising, rather that they need to be mindful of the challenges their audience are facing and demonstrate this awareness. We’ve already seen many brands, particularly the big supermarkets, highlighting their charity partnerships in their Christmas adverts which is resonating well with consumers.

What next?

AVOD is a key part of the mix; exclusion from the media plan isn’t an option when over a third of viewers are watching content exclusively through this medium. The industry openly acknowledges this as a high growth area, and our research reveals this trend is likely to be accelerated over the next few months due to various factors.

Whilst economic uncertainty is a challenge for all it also presents opportunity. Agencies are in a unique position to reach new audiences who were previously unavailable to them. Combining the agility of CTV advertising with the growing audience on AVOD will mean big wins for agencies in 2023 as they look to outthink and outperform.

Download the full report now for more insights.