What’s Next for Netflix?

What’s Next for Netflix?

Connected TV

Remember when Meta shocked the world by announcing a historic drop in its stock price? Well, Meta has some company now that Netflix realized a massive drop in its own market capitalization after announcing that the streaming service had lost subscribers for the first time in 10 years. The news shook investors, but it also inspired speculation about new directions for Netflix – notably the likely introduction of advertising, a move that Netflix has resisted for years. But times have changed, and now Netflix must adapt or die. Here’s what I think will happen next:

  • Advertising will happen sooner than you think. Netflix said it will take a few years to integrate ads into the platform. But I’m thinking it will take months. The company has endured two consecutive disastrous quarters and forecast another bad one on the way. Netflix is under too much pressure to wait two years. Plus, its audience is receptive: two-thirds of connected TV viewers in the U.S. prefer to see ads if they can pay less for the service, according to a recent survey conducted by DeepIntent and LG Ads Solutions. On top of that, Netflix is already set up to create an ad business. The company is sitting on top of deep first-party data. All Netflix needs to do is partner with an ad tech platform to get an ad business up and running. (The Trade Desk has been circulated as a likely partner.) And watching content on streaming is a pretty straightforward experience: it’s easy to drop in ad spots before or after shows, and during them, just like linear TV. And connected TV offers even more options such as ads appearing alongside the search bar or in the screen menu. Knowing Netflix’s aversion to advertising, I suspect the company will avoid interruptive ads even for a lower-price tier.
  • Ads will get creative. Sure, we’ll see plenty of traditional commercial spots like you see on Hulu. But Netflix has been quietly building a merchandising operation over the past few years. The company recently launched its own digital commerce site to sell clothing tied into its popular shows. Netflix will likely create merchandise licensing deals to feature products from other businesses in its shows, such as Stranger Things. So far, Netflix CEO Reed Hastings has been reluctant to go down this route. But all bets are off now.
  • Netflix will get sold. I don’t think advertising will be a savior for Netflix. True, there is a receptive audience, but is there enough to sustain Netflix’s future? I predict that Netflix will be sold to Apple. Apple launched its own streaming service, Apple TV+, in 2019, and the company is hungry to grow. Apple has deep pockets and is eager to achieve brand cachet, which it lacks right now. But Netflix has plenty of brand cachet. I could see Apple buying Netflix but allowing the company to keep its own name. The most expensive part of owning a streaming service is creating contentNetflix gives Apple TV+ a way to accelerate content development.

What Brands Should Do

The Netflix news is a wake-up call for advertisers to embrace connected TV. The only reason Netflix has a future is because connected TV (CTV) has evolved far enough to allow for ads in the first place. Oh, and guess what? Executives at competitors such as Disney+ are doing exactly what Netflix is doing. Hulu, for one, already figured out how to crack the code with CTV ads.

According to Forbes, a recent study from the Leichtman Research Group estimates that 80 percent of TV homes in the U.S. have at least one connected TV device. That number represents a steady increase from the 57 percent logged in 2015, and 24 percent in 2010.

Predictably, CTV use soared during the pandemic: Forbes also cites a Nielson report, which notes that CTV viewing exploded from 2.7 billion hours during the pre-pandemic week of March 2, to 3.9 billion hours during the weeks of March 23, March 30, and April 6. Even during the week of May 4, when stay-at-home laws eased in some states, CTV viewing remained above pre-pandemic levels at 3.5 billion hours.

These stats are good news for advertisers embracing CTV. So is the fact that CTV allows brands to reach out to specific audiences. As Forbes notes, “CTV’s targeting capabilities are the ‘holy grail’ for advertisers.” Many CTV companies use ACR, or Automated Content Recognition, which collects data that can inform programming recommendations for users and better target ads to niche groups. Although audiences in the era of connected TV may not be as huge as the linear TV days, CTV helps brands better understand and reach their niche market effectively.

Contact True Interactive

Eager to capitalize on the opportunities CTV can offer your brand? Contact us. We can help.

The Roku Deal with Google: Advertiser Q&A

The Roku Deal with Google: Advertiser Q&A

Connected TV

The fight is over – for now. Connected TV provider Roku has reached a multiyear agreement with Google to keep YouTube and YouTube TV on its streaming platform. Thus ends a months-long standoff between Roku and Google that had resulted in Roku users losing access to YouTube TV (Google’s livestreaming service) and most likely the YouTube app. The deal will allow the 56.4 million active Roku accounts to continue to watch YouTube and YouTube TV without disruption. So, what does all this mean to advertisers? Let’s answer some questions:

Why does Roku matter to advertisers in the first place?

Roku matters because it’s a gateway to over-the-top (OTT) television viewing, which is gaining in popularity. OTT television refers to watching TV content that is streamed directly through the Internet – such as subscribing to a streaming service or streaming content from apps like YouTube on TV.

Approximately 2.3 billion people worldwide watch OTT content, and the number are growing. The OTT market will grow to $1.039 trillion by 2027, according to Allied Market Research. Of all the revenue made in the OTT market, 52 percent comes from advertising video-on-demand (AVOD). In short, advertisers are following the eyeballs.

You don’t need cable to watch OTT — but you do need a device like Roku.

Roku competes with devices such as Amazon Fire TV and Apple TV to offer audiences access to OTT. These devices collectively are known as connected TV. Roku is the most popular device, with a 37 percent share of TV viewing time in North America.

These devices control access to content on OTT. They need to support apps and streaming services in order for a viewer to get access to OTT. In short, connected TV devices wield considerable power. And Roku is especially popular because it sells smart televisions with built-in streaming technology along with devices that users can plug into TVs.

Roku makes most of its money selling ads on streaming channels and taking a share of the streaming services’ subscription revenue and ad inventory. In addition, Roku offers OneView, an ad-buying platform for TV streaming.

What was the problem between Roku and Google?

Roku had removed YouTube TV from its channel store in April as part of a dispute with Google over how search results were displayed on Roku’s platform. As a result, viewers could still watch the Google app, but access to the app was about to expire when Roku and Google reached a deal.

Roku alleged that Google interfered with Roku’s independent search results, requiring that it favor YouTube over other content providers. The company also claimed that Google discriminated against Roku by requiring search, voice, and data features not required of other connected TV devices.

As a result of Roku removing YouTube TV, an owner of a Roku device could not stream YouTube TV via OTT. The YouTube TV app allows subscribers to watch live TV channels online for a monthly fee. YouTube TV offers live streams of nearly 100 popular channels, including ESPN, CBS, Fox News, and CNN.

And, Google lost access to those viewers for its ad-supported YouTube TV service.

Why did Google and Roku reach an agreement?

Google was under pressure to reach a deal. Google would have lost out on millions of dollars in ad revenue in addition to the YouTube TV revenue that would have come from Roku. But Roku had motivation to reach an agreement, too. Competitors such as Amazon Fire TV and Apple TV carry YouTube. Roku could have lost customers to those competitors.

What were the terms of the deal?

Terms were not disclosed. We don’t know what concessions both sides made to restore access to YouTube TV for Roku viewers. Likely Google eased up on some behaviors that Roku deemed anticompetitive, but it’s hard to say exactly what might have happened.

What should advertisers do?

The news underscores why it is important for advertisers to understand the constantly evolving OTT and connected TV landscape. Connected TV makers are rolling out more ad units that increase revenue (for the connected TV devices) and reach (for advertisers). For example, Amazon is expanding advertising opportunities on Amazon Fire TV, which competes with devices such as Apple TV and Roku to stream content on connected TVs for millions of viewers. Amazon Fire TV is more than a connected TV provider. It’s a way for advertisers to reach people as they browse and discover new entertainment. One new ad unit, Sponsored Content Rows, is designed for businesses to promote content such as new shows and movies in the form of a row (or carousel) of sponsored content while people browse for shows on their connected TVs (akin to sponsored search results in a Google search engine results page).

Watch, learn, and capitalize on connected TV and OTT ad opportunities.

Contact True Interactive

Eager to capitalize on the opportunities connected TV can offer your brand? Contact us. We can help. Learn more about our connected TV services here.

For More Insight

Advertiser Q&A: Connected TV,” Tim Colucci

How Video Advertising Delivers Results

How Video Advertising Delivers Results

Video

The digital advertising industry is picking up steam, and one reason is the growth of video advertising, according to a new research report from PQ Media. Anyone who works with video advertising can attest to this growth. Video ads are delivering more benefits because:

  • The formats and placement channels are expanding. Look at how TikTok has exploded in popularity. It didn’t even exist five years ago.
  • In the age of TikTok and YouTube, consumers love video as a content format.

At True Interactive, we’re definitely seeing the results of video’s popularity. Recently, one of our clients experienced a challenge: its share of branded search was dropping. The client, a photo curating and sharing company, naturally wanted to improve. So, we launched a video-based awareness campaign that spanned display, YouTube, Google Display Network, connected TV, Yahoo Online Video, Facebook, and Yahoo Display. Our focus: mobile and connected TV. We also ensured that YouTube ads could target connected TV screens. 

Our ads consisted of continuous promotions with six-to-seven offers consisting of aggressive pricing and deep discounts across multiple products. We ran:

  • 10 different 15-second videos specific to a product (trimmed from a master 30-second video).
  • Four 30-second videos.

The ads also focused on mobile users in order to drive downloads of the client’s app.

As a result, our client enjoyed significant improvements in both awareness and also revenue – showing how powerful video can be as a direct-response format in addition to brand awareness:

Year-over-year sales results

Meanwhile, the client’s search share increased noticeably for three consecutive months. Mobile and TV screens typically accounted for 65 percent-to-70-percent of video views/Impressions.

So, why did this campaign deliver results? A few reasons stand out:

  • We began with a large audience (women aged 25-54) with the purpose of hitting as many eyes as possible. That’s because the brand’s low levels of search volume told us that it lacked brand awareness more broadly. Targeting an audience would have been premature.
  • Incorporating mobile video to drive downloads of the client’s app was well timed with the popularity of in-app usage.


Mobile app usage

  • Our approach allowed us to keep CPMs down. The more targeted you are, the more expensive the ad becomes; your CPMs increase when you narrow your audience.

We recommend that businesses take a closer look at how you are using video advertising. How much are you investing into video ads? If you’re not deploying video ads, what’s holding you back? If it’s a lack of in-house creative and media expertise, then a partner can help you.

Contact True Interactive

We deliver results for clients across all ad formats, including video and mobile. To learn how we can help you, contact us.

Photo by CardMapr on Unsplash

Advertiser Q&A: Connected TV

Advertiser Q&A: Connected TV

Advertising

As we blogged in 2019, we are living in a connected TV (CTV) era, one in which audiences are fragmented, consuming content across multiple devices and channels. CTV provides brands with tremendous opportunity, but some confusion persists about what it is exactly. Read on to learn more about CTV, how it differs from over-the-top (OTT) TV, and how it might benefit your brand:

What exactly is connected TV?

Connected TV refers specifically to the device used to access content (e.g., devices such as Amazon Fire, Roku, and Apple TV, not to mention gaming consoles like Xbox). Andison Flores at LiftIntent explains, “CTV is anything that allows your TV to access video content through the public Internet, as opposed to traditional cable.”

Is connected TV the same as OTT?

Though CTV and OTT are often used interchangeably by marketers, brands, and even reporters, there is a distinction. As Tal Chalozin, Co-founder and CTO at Innovid, says, “OTT means you are accessing content ‘over the top’ of infrastructure providers.” For example, users might be purchasing bandwidth from a provider like Comcast. But they can go “over the top” of Comcast by buying additional content—subscribing to Hulu, say, or Netflix. Chalozin explains, “You’re using the bandwidth provider as an access layer but not as the main way you’re accessing content.” In short, OTT refers to the new breed of content providers.

The Interactive Advertising Bureau (IAB) makes a handy comparison:

  1. “Use CTV when you are specifically talking about Smart TVs and streaming devices that are attached to TVs. Mobile and desktop devices are not included under the term CTV.
  1. Use OTT when it doesn’t matter which devices are included. For example, if you want to talk about ‘OTT services’ (like Hulu or TubiTV), and delivery to a particular device doesn’t matter. OTT is still a valid term that distinguishes premium television content from the vast world of online video where user-generated content is commonplace.”

Why is connected TV getting popular with viewers?

As Anna Kuzmenko, COO at BidMind by Fiksu, notes, CTV offers users the freedom to “watch whatever they want, whenever they want.” Millennials and Gen Zers in particular have “cut the cord,” eschewing the limits of linear TV viewing in favor of streaming.

Why is connected TV popular with advertisers?

Advertisers are following their audience. According to Forbes, a recent study from the Leichtman Research Group estimates that 80 percent of TV homes in the U.S. have at least one connected TV device. That number represents a steady increase from the 57 percent logged in 2015, and 24 percent in 2010.

Predictably, CTV use soared during the pandemic: Forbes also cites a Nielson report, which notes that CTV viewing exploded from 2.7 billion hours during the pre-pandemic week of March 2, to 3.9 billion hours during the weeks of March 23, March 30, and April 6. Even during the week of May 4, when stay-at-home laws eased in some states, CTV viewing remained above pre-pandemic levels at 3.5 billion hours.

These stats are good news for advertisers embracing CTV. So is the fact that CTV allows brands to reach out to specific audiences. As Forbes notes, “CTV’s targeting capabilities are the ‘holy grail’ for advertisers.” Many CTV companies use ACR, or Automated Content Recognition, which collects data that can inform programming recommendations for users and better target ads to niche groups. Although audiences in the era of connected TV may not be as huge as the linear TV days, CTV helps brands better understand and reach their niche market effectively.

And the future of CTV looks bright. Kuzmenko says, “In 2021, CTV ad spend is estimated to hit the significant sum of $10.81 billion.”

How do you set up a connected TV campaign?

The approach for now is very passive: you give a connected TV provider such as Verizon Media/Yahoo the desired demographic you want to reach, and Verizon Media/Yahoo tells you what the CPM (cost per thousand impressions) will be. Verizon Media/Yahoo manages the rest.

Note: different providers have different requirements. With Verizon Media/Yahoo, for example, you can dive in with any budget, but a $20 CPM is minimum if you want to get a reasonable amount of impressions. And as might be expected, the more targeting that you do—narrowing your demographic by city, say—the more expensive advertising is going to be.

What metrics can connected TV providers give you?

It varies. iHeart Media gives you impressions, cost, CPM and completion rates as well as some demographic results with similar KPIs. Verizon Media/Yahoo gives you impressions.

Additionally Verizon Media/Yahoo can include conversions as well based on users’ IP address, Yahoo mail receipts, and other proprietary data/tools.

Contact True Interactive

Eager to capitalize on the opportunities CTV can offer your brand? Contact us. We can help.

Photo by Li Lin on Unsplash

Why Yahoo! Scores An Advertising Touchdown with NFL Live

Why Yahoo! Scores An Advertising Touchdown with NFL Live

Advertising

As more cord-cutters embrace connected TV, advertisers don’t reach as many people as they used to. We blogged recently about the fact that even blockbuster TV shows like Game of Thrones attract a fraction of the audiences that used to gather in linear television’s heyday. The change has created an environment in which content creators and advertisers are invited to find new ways to make money from digital audiences. The shift isn’t limited to shows or series, of course. It also includes live sports, with platforms and publishers such as Facebook, Twitter, Yahoo!, and YouTube landing rights to broadcast games from the likes of Major League Baseball, the NFL, and the NHL. Yahoo!, for example, has adapted to the connected TV era by providing the NFL Live experience, which, in turn, creates an opportunity for advertisers: a less expensive, more targeted way for brands to reach NFL fans.

What Is NFL Live?

NFL Live is currently the only free mobile site for watching live NFL games. Yahoo! makes free NFL viewing a reality by empowering businesses to advertise on NFL Live. Some of the advantages to advertisers are straightforward: brands get their name in front of six million+ people who have downloaded the app, for example. But it’s not just the volume that matters—it’s the ability to target viewers. Instead of buying advertising spots for certain times during a game (the third quarter of a Bears/Packers game, say), advertisers on NFL Live can reach out to particular audiences. By targeting a group as specific as women ages 25-34 making $100,000+ annually, an advertiser may not reach the largest audience — but they can reach a market they determine is uniquely suited to their brand. It’s a trade-off that can be lucrative, bringing to mind the maxim “quality versus quantity.”

Another perk: it’s less expensive to advertise on NFL Live. A typical network ad during an NFL game costs about $300,000. By contrast, there is no minimum spend for advertising on NFL Live. Advertisers can spend as much or as little as they want.

How Is Yahoo! Expanding NFL Live to Yahoo!’s Fantasy Football App?

Yahoo! has done something else. The company is ramping up its NFL Live offering by also streaming NFL games on Yahoo!’s popular Fantasy Football app. As Yahoo! Fantasy analyst Liza Loza recently said, “NFL fans all over the country can root for their favourite teams and watch all local and primetime games free and unauthenticated in the Yahoo! Fantasy Football app, the Yahoo! Sports app and other Verizon and NFL media properties on phones and tablets.” Multiple streaming locations mean a larger audience. They also hold the promise of attracting new fans. Yahoo! Sports general manager Geoff Reiss said that the digital platforms have brought in a “concentration of younger fans watching the NFL . . . Half of our fans were under the age of 40. I think one of the reasons the league was interested in working with us is we would be a means for them to reach younger audiences.”

Contact True Interactive

Yahoo! is a prime example of a business that’s adapting with the times. It’s important that advertisers remain nimble and aware of what companies like Yahoo! are doing, and capitalize on the opportunities that the changing market affords. Accept the fact that you won’t be reaching as big of an audience. Embrace the reality that you can in fact reach a much more targeted audience: one that’s smaller but more measurable. Call True Interactive for more insight into how to do that.