As an industry, we are in the midst of a period of profound change marked by new technologies, new privacy regulations, the imminent demise of third-party cookies, and the overarching sense that we need to rebalance our relationship with consumers and how we create value going forward. That sense of transition is particularly apparent in the video and advanced TV worlds, heightened by the “streaming wars” and a media landscape dependent on consent and identity management to deliver personalized content and ad experiences. We can take this time to be fearful of what is to come for the advertising space, or we can rally together and use this moment of transition to make the industry stronger than ever before.
Here are some highlights and key takeaways from the video and streaming revolution track at the IAB Annual Leadership Meeting (ALM):
Streamers are becoming increasingly adept at toggling between services, but as more players enter the space, expect tradeoffs to come.
While there’s admittedly some confusion among consumers in terms of where to find their favorite shows, most would agree, it’s a great time to be alive given the banquet of choice and degree of control that we all have. The important thing for marketers and publishers to consider is how best to engage viewers who are becoming increasingly accustomed to richer content offerings and less intrusive ad experiences.
With an eye towards the consumer, Julie DeTraglia, Vice President and Head of Research & Insights at Hulu, pointed out that today 25% of homes have three or more streaming services, and as more players enter the space and bundling incentives increase, so too will the size of consumer’s streaming portfolios. We all know that attention is a limited resource and for advertisers, the core question remains, “are people paying attention to my ads?” Pointing to initial research conducted among Hulu viewers, DeTraglia shared some insights that show on-demand content yields more attention to commercials than live linear content. While more details will be shared in the coming months on the research, it’s clear that the nuances of viewer choice will have big implications for brands in terms of how they connect with consumers. While we are still in the early days, it’s critical that we, as an industry, focus on developing ad experiences that are commensurate with the viewing experience. To win with “generation stream,” we need to put viewers first, creating content and advertising informed by data, rooted in insights, and optimized to become more relevant.
Winning the streaming revolution (without making consumers lose)
Addressing the economic model that underpins streaming video and the speed of disintermediation that is underway, Jeffrey Cole, Director of the Center for the Digital Future at USC Annenberg School for Communication and Journalism, posited that the next 12 months will be the “most important year in the entertainment business since the beginning of television” as the landscape shifts between traditional players and streaming startups. Cole pointed out that Rupert Murdoch, the most powerful man in media and entertainment, “looked around and realized he had become a small player.” The irony is that Murdoch didn’t get small; everyone around him got big.
Addressing the battle between AVOD (Ad Supported) versus SVOD (Subscription-based) services, and the extraordinary cost of quality content, Cole predicted that in the next 2-3 years subscription services like Netflix will “have” to accept advertising. “They’re just not going to be able to grow in the way that they have without making the switch.” That prediction may bode well for future ad inventory, but Cole also cautioned the audience to not get too comfortable with the standard (mid-roll) ad model. While consumers don’t hate advertising as much as they say they do, “what they do hate in 2020, is advertising in the middle of content.”
When asked whether live sports will become a tipping point of streaming audience growth and who will win NFL broadcast streaming rights, Cole quipped, “The winner will be NFL’s commissioner.” We expect the bidders will be trillion-dollar companies such as Facebook, Google, Amazon, Microsoft, and perhaps Alibaba, TenCent, and Baidu. It will come down to who’s got the biggest checkbook.
The creative imperative for streaming video
When Scott Donaton, Head of Creative at Hulu, posed the question to his group of panelists “Is streaming video fundamentally different than traditional television?”, the consensus from the group was unequivocally yes. Picking up on implications of change for advertisers Jeremy Cohen, VP, Head of Global Content Partnerships for Publicis added “The idea of advertising has typically been associated with standard commercial breaks, but that is changing. Brands can be additive to content experiences.” Janna Reddig, Director of Global Integrated Marketing at Beam Suntory, spoke of the opportunity to leverage new ad formats as a creative canvas to break the fourth wall between the brand and the viewer. “If we show up in Hulu in the same way that we show up on traditional television, that’s not necessarily going to move the mark.”
This is where creative innovation and the opportunity to leverage incremental reach creates value for streaming video advertisers. Hulu has taken these marketplace insights to heart, leveraging brand and consumer insights on its platform to create new ad formats like the binge ads and pause ads. We should expect to see more publishers, media agencies, and creative agencies partnering to test, learn, and understand what works best for the new engagement models available on OTT streaming video.
Moving beyond legacy ad and content models to advance the OTT streaming space
Whether one is “TV minded” or “digital first”, at the core of the convergence debate is a clash between buyer / seller world views, rapidly changing consumer behaviors and what it means for marketers going forward to not only reach, but also interact directly with audiences entirely via IP address. No one yet knows how addressability – the opportunity to serve a specific ad to a specific household or individual — will affect the way inventory is bought and sold across platforms and whether efficiencies that come with more precise targeting will ultimately result in higher CPMs. For example, if we think about over-the-top (OTT) streaming video in the context of TV and try to have a price parity conversation, CTV looks much more expensive. However, when we think about it in the context of being able to use data to improve the way we reach audiences–as opposed to GRPs–then higher, effective CPMs begin to make more sense.
To bridge these contrasting world views, companies should look closely at how they are organizing themselves internally to straddle the cross-platform, streaming video landscape. Do they have one video team that handles both linear and OTT? If there are two separate teams, are they sitting close to each other and working hand-in-hand? In this period of rapid change, the industry needs to be sharing what works and why, including how to organize for success amidst the streaming revolution.