Meta recently announced that it would be introducing an ad-free, paid-for tier for users of both Facebook and Instagram in the European Union as a response to ongoing investigations by regulators into the way big tech companies profit from user data. It joins competitors who have already or are planning to offer paid subscriptions – and it’s not just social media platforms. Consumers have long had the option to pay for ad-free streaming platforms such as Netflix, Disney+, Apple+, and there are also ad-free options for audio. This opens the possibility that consumers – particularly the all-important more affluent ones – will eventually be able to buy themselves out of advertising. So what’s driving the rise of the ad-dodgers, and how can brands reach these increasingly elusive consumers?
Meta and the rise of ad-free social media
In October Meta revealed that, from November, Facebook and Instagram users would be able to choose to pay a monthly subscription to use its products on an ad-free basis, meaning that Meta will not process their information ‘for personalized advertising’. The subscription charges are fairly high - €9.99 on a web browser for each platform, rising to €12.99 for iOS or Android; from March 2024, an additional fee of €6 per month for web and €8 per month for iOS and Android will be applied for each additional account in a user’s Account Center. Privacy rights bodies such as nyob in Austria are filing complaints about the cost, claiming that it is out proportion and that Meta’s annual ad revenue per user is just €88.88 – significantly less than the €250 per year it will charge users who have both Facebook and Instagram accounts. It’s unclear whether this move suggests that subscription models are the future for Meta – there are no signs that this will be launched in the US any time soon, for example. But Meta is certainly not the first social media giant to explore this revenue stream.
TikTok confirmed in October that it would be testing an ad-free monthly subscription in an ‘English-speaking market outside the US’ (rumored to be the UK), at $4.99 a month. However, this would only apply to ads served by TikTok, and not influencer marketing campaigns. Meanwhile, X owner Elon Musk has been pushing subscriptions on the beleaguered platform, offering 50% reduced ad-load (and other benefits) for those willing to pay $8 a month, while Snap has a $3.99 ad-free monthly plan, which is estimated to generate around $240m a year. YouTube’s premium ad-free service ($13.99 a month) has been available since 2014, and it is estimated that it had 80m subscribers at the end of 2022.
As well as potentially helping the platforms to allay the fears the European Union and other regulatory bodies (and therefore reduce scrutiny and lawsuits), the subscription model offers the social platforms a steadier revenue stream which doesn’t rely on variable, volatile ad dollars.
Not just social media: ad-free TV and audio
Consumers who are willing and able to can also choose to pay for ad-free viewing and listening experiences. On-demand streamers such as Netflix, Disney+, Max and Peacock – and many others – have ad-free subscription options. It’s also possible to dodge ads while listening to the radio and podcasts: Spotify has an ad-free tier (which has 226m subscribers, versus 317m on the free, ad-supported plan), as does Amazon Music, while Apple+ allows podcasters to create a paid-for subscription that offers an ad-free experience, as well as other benefits.
Will consumers pay to avoid ads completely?
It’s a fact that brands must face: most consumers find most ads disruptive and annoying. 74% of Gen Z say they feel bombarded by ads, whilst one in four say they find advertising extremely intrusive, and one in two admitting they find it at least somewhat disruptive. With this in mind, it’s hardly surprising that those who can afford to will pay for an ad-free experience wherever possible. Put another way, ad exposure decreases with income, whereas most brands would ideally like the reverse to be true. And while it is getting increasingly expensive to maintain all those subscriptions – especially in the current economic context – the most affluent will be the least likely to cancel their payments.
How can advertisers reach ad-dodgers?
With consumers – especially more affluent ones – buying themselves out of ads, many brands will need to think outside the TV-online box in order to effectively reach these ad-dodgers – and this becomes especially pertinent with the imminent demise of the third-party cookie. Advertisers should think about the touchpoints on their consumer’s journey to purchase, and as they go about their day. We may well see a return of budgets to out of home – billboards are unavoidable, even by the more affluent consumer. OOH is evolving, including its capacity to measure, to buy programmatically, for real-time activation and insights and to integrate with the wider landscape, making it a more enticing prospect for advertisers.
The marketplace or retail space – both physical and online - will also become increasingly important, reaching consumers of all income levels as they reach the lower echelons of the purchase funnel. Experiential marketing - creating high-value experiences for customers – is another channel to consider as is, of course, advertising around and sponsorship of live sports. Live sports are the great equalizer, and are a prime opportunity to reach consumers no matter their income level. Contextual advertising – which will come to the fore once the third-party cookie has finally made its exit – will be an opportunity to reach consumers while they consume content, for example, newspapers and magazines, both online and offline.
The answer to reaching ad-dodgers will lie, as always, in developing a deep understanding of the consumer, their behaviors, their day-to-day life and how they consume media – even if that consumption shifts.
Ad-dodger (noun): An individual who actively and creatively avoids exposure to advertisements, typically by subscribing to ad-free content platforms or employing various strategies to bypass or minimize exposure to advertising.
Image: Shutterstock/Hendri kumbang