Brands are increasingly interested in ad-supported video on demand (AVOD) as consumers continue to shift from traditional linear TV to streaming online.

However, Jenny Croswell, EVP, head of investment and agency operation at Horizon Media, says "the portion of ad-supported streaming content that audiences are consuming is still small – some studies have pegged it at roughly 10% of overall streaming hours."

That said, "the U.S. streaming market is growing exponentially and if we look to the U.S. as a gauge, we should see the Canadian market grow over the next two years as well," adds Croswell.

According to Statista, Hulu had the highest advertising revenue in the U.S. between October 2020 and September 2021, at US$2.1 billion. Paramount+ was second, with ad revenue of US$822 million, third was Peacock at US$279 million, and fourth was Tubi at US$250 million.

Dan Zangrano, EVP, integrated investments for UM, says that AVOD opportunities are growing in Canada, thanks to connected TV. However, while consumers are increasingly accepting of ads in exchange for free content, the more prominent, established players in the streaming space remain subscription-based. Zangrano notes that the recent launch of Discovery+ provided Canadians with an option to subscribe at a higher price-point in order to be completely ad-free.

"With many Discovery+ shows owned by Canadian broadcasters and various specialty station lineups, this launch was followed closely across the industry," he says. "It remains to be seen if any of the established SVOD streamers will deviate from their existing models to introduce an AVOD option. But it is worth noting that many new streaming offerings are launching with a [dual ad-supported and subscription] approach."

The Roku Channel is one of the ad-supported choices available to Canadians and marketers, and is in the top three ad-supported channels on the Roku platform. The Roku Channel recently added 50 Roku Originals, free for all Canadians. The platform has also seen growth in FAST channels (free ad-supported streaming TV) in addition to on-demand content and has more than 100 free live channels across news, sports, and entertainment.

The Streaming Decade survey, released by Roku in October 2021, reported that more than eight in 10 Canadian consumers agree that one of the biggest factors when deciding whether to try a new streaming service is if it offers both free and paid subscription tiers. Other findings include half of AVOD viewers consuming more than three hours of content in a typical TV streaming session, while 38% stream 20-plus hours compared to only 27% of SVOD viewers.

Nileen Ventura, Horizon Media's VP channel and consumer insights, concurs that various independent studies published around the state of video consumption in Canada, specifically AVOD, all point to the increasing penetration of this platform. "Streaming video content has become second nature, especially among the younger age group. While this cohort accounts for largest share of consumption, growth in usage can also be seen across various age groups."

Ventura adds that when there is an uptick in consumption, supply follows. "We have seen big names like Roku and Tubi moving towards commissioning original content. This means there is appetite among Canadians – enough to justify the economics of these endeavors."

She says that diversifying media mix to achieve incremental reach is key to efficient and effective media plans, with each element serving a purpose. One of the roles of video streaming platforms is to supplement advertisers' base television plans, however, quantifying that incremental reach is going to be key when it comes to measurement.

To that end, one of the biggest AVOD developments in Canada is VAM (video audience measurement) by Numeris, will allow for holistic measurement of video audiences and more data-driven planning and buying. VAM is still in its infancy but as the streaming market grows, industry experts say that it could become more established and widely used by planners and buyers as a video measurement tool.