WTF are Fast channels (and should advertisers care)?

Worth $4bn in ad revenue in the US, free ad-supported streaming TV channels are only now gaining momentum in the UK. Here’s what you need to know…

Free ad-supported streaming TV (Fast) channels are, as the name suggests, free and funded by ads, and they now populate internet-connected TVs in their thousands. To viewers, they’re almost indistinguishable from linear channels of old, but instead of being broadcast, all of their content is streamed. To broadcasters, they’re inexpensive, flexible and easy enough to stock with library content.

Why should advertisers care?

The US Fast market is several years ahead of the UK and Europe. The first thing to realize is just how vast the landscape is, with more than 1,400 channels across 22 networks. These are served through platforms such as Pluto TV, Xumo, Tubi, Roku, Samsung TV Plus and Amazon’s Freevee (formerly IMDbTV). S&P Global Market Intelligence estimates that US Fast ad revenues are worth $4bn in 2022, with this projected to hit $9bn by 2026.

Channels are spun out by niches, such as cooking, crime or sci-fi, similar to satellite and cable channels, or dedicated to re-runs of much-loved shows such as The Walking Dead Universe channel or Hell’s Kitchen. Because they are fairly quick and easy to roll out, channels can be reactive – say a World Cup-dedicated channel or royal documentaries following the Queen’s death.

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Audiences are watching these channels to complement the premium shows and movies on their paid-for TV subscriptions, such as Netflix and Disney+, with this style of viewing reminiscent of the satellite and cable days.

We don’t quite know how many people are watching these thousands of channels because the channels aren’t yet covered by ratings measurement firms Nielsen or Barb, but Roku, as an example, is available in around 61m US homes, so penetration is high.

Advertising is bought via programmatic auctions rather than pre-buys and is arranged with the channel operators using the broadly the same ad-buying tools they would use online. There’s also much talk of the power of contextual advertising, aligning relevant brands on suitable niches.

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But are UK advertisers interested?

Jon Manning, client investment director at Starcom, says Fast viewing is “not normalized in the UK”. It isn’t yet on his clients’ media mixes, but he says that will change with the launch of ITVX (ITV’s new streamer will launch on December 8 with 10 Fast channels).

“ITVX will make Fast more mainstream in the UK and should normalize the behavior.” But until the UK ad industry has seen proof from ITV’s channels, Manning says it is difficult to assess advertiser appetites.

“I don’t know if anyone is specifically saying I want to buy Fast channels at the moment in terms of the inventory, but it will probably get advertisers excited to buy top-level sponsorship to align their brand to the channel.”

These could be a good buy if they keep viewers in the video environment for a good duration, topped with channel sponsorship opportunities. “On the face of it, it seems like a really innovative way to increase supply and increase audience stickiness.”

According to Rufus Radcliffe, the managing director of on-demand at ITV, Fast channels were strongly favored by focus groups, hence their elevated status on the streamer. “They will offer content in a more lean-back curated way, which we know is a benefit to some viewers when there is so much to choose from.”

ITV’s editorial team will use consumer data to understand what channels are working, then they’ll “dial up and dial down channels accordingly, in response to viewer demand,“ he says. The ad sales team will sell inventory to either sponsor or to place mid-rolls.

Richard Young, who is director of syndication at Little Dot Studios, is responsible for running the company’s seven Fast channels (Real Stories, Timeline, Wonder, Real Crime, Real Wild, Real Life and Don’t Tell the Bride). “What we’ve forgotten in the move to AVOD and SVOD is that people actually quite like channels and that is happening across all demographic groups,” he says.

The issue of discoverability on SVOD is a known risk to advertisers. A survey by Now (formerly Now TV) found that nearly half of viewers have at some point decided not to view TV after failing to find something to watch. “People like the experience where they don’t have to search for content, where someone is programming it for them and they can lean back and be entertained,” says Young.

While TV will be increasingly delivered online, that doesn’t mean audiences only want to watch premium on-demand content on Netflix, Disney or Amazon. “SVOD will always be there but for certain types of content – it doesn’t need to be a premium paid environment,” adds Young.

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What are other UK buyers saying?

Kieren Mills, who is head of broadcast for Total Media, says Fast channels offer brands an opportunity to connect with viewers who have left the linear ecosystem. Total Media is building up its Fast channel client offering, although Mills says: “It isn’t for every brand just yet.”

He says: “Fast allows brands to be a little more flexible in scheduling campaigns within a less competitive environment, compared with the more considered longer-game linear broadcast advertising schedule.”

Meanwhile, Chris Camacho, the chief executive officer at Cheil UK, says that, “given the economic crunch and the fact consumers are looking to tighten their purse strings,” Fast channels are particularly appealing to viewers as they cut back on SVOD services.

“Fast channels will allow easy access to content via traditional advertising routes. This is a great opportunity for brands to reach audiences as they migrate away from subscription models while still maintaining a high demand for content.”

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WTF are Fast channels (and should advertisers care)?
Entertainment Flash Report