Marketers Weigh in on Disney+ And Ad-Free OTT Services
What’s an advertiser to do when the developing trend in streaming services is going ad-free? Three of our team members, Alexa, Meghan, and Ryan, weigh in with their perspectives on what this means for the digital advertising industry.
Streaming services are changing the landscape of how US audiences consume media from brands and networks. In 2018 alone, cord cutting climbed by more than 30% to 33 million consumers according to eMarketer. While this trend will continue to impact legacy television providers, advertisers can also expect to take a hit in the form of losing access to key audiences over time. This is even more alarming as nearly every available service (Netflix, Hulu, Amazon Prime and now Disney+) offers ad-free options, limiting targeting opportunities to a highly engaged audience. This begs the question: how can we reach and engage with our target audience if more platforms offer ad-free options?
Digital Advertising Outside of the Box
As the prevalence of streaming continues to grow, marketers continue to invest more in digital advertising channels. In fact, digital advertising revenue totaled $107.5 billion in 2018, according to the Interactive Advertising Bureau’s Internet Advertising Revenue Report. Outside the more traditional methods like social to leverage video ads, what are our options?
- Addressable TV: As data collection through digital channels continues to improve, so does a marketer’s ability to create a personalized ad experience. Addressable TV works across both linear and OTT, though OTT and connected TV provide data more closely aligned with traditional digital capabilities. Their internet connection via a streaming service or Smart TV allows us to pair demographic information with affinity or behavioral data, as opposed to only providing the demographic information associated with linear.
- Second Screen: While personalizing a user’s ad experience via linear or OTT TV is great, let’s think about how we can augment that experience. Enter the second screen. A second screen is a laptop, tablet, smartphone or any handheld gaming device. According to a 2018 report from Nielsen 45% of adults say they use a second screen “very often” or “always”. Sure, people will scroll through their feeds while watching a show, but sometimes they’re also looking for ways to engage online. As a brand, this creates an opportunity to join that conversation and encourage conversions.
Alexa’s Final Thoughts
In more recent news, Disney announced it will assume operational control of Hulu. The company also plans to combine forces and possibly create bundling discounts with ESPN+. “We will be able to manage customers across all platforms,” Disney CEO Bob Iger said. “Customer data, of course, password, username, billing. It gives us the ability to bundle and share data. Ad sales is another benefit to all of this, because we can integrate with our ad sales across other platforms.” Things are getting interesting!
Netflix is no longer the key player in ad-free streaming services. With Disney, AT&T, and Viacom’s new subscription service, Disney+, media giants are beginning to enter the ad-free entertainment space, and at a lower cost. So, what does this mean for marketers and the advertising world?
Disney+ will enter the market at a subscription-based cost of $6.99 a month or $69.99 per year, a dramatically lower cost than the leading Netflix subscription service. But is this something they’ll be able to keep at a low cost without advertising?
Content library subscription services are flooding the market. According to Linda Yaccarino in eMarketer’s “Behind the Numbers” podcast, this creates a high probability that these competitors will remove their content from other subscription platforms. Faced with the possibility of loosing some of their most valuable content, ad-free streaming services like Netflix are going to have to look to significant price increases or new ways to incorporate ads without upsetting their subscribers.
Not All Hope Is Lost for Advertisers
According to the Interactive Advertising Bureau, 73% of streaming platform viewers watched ad-supported video in late 2018. On top of that, 59% stated they are fine with watching ads as long as they can view the content they want, when they want it. This directly correlates with Hulu’s increasing ad revenue, which has grown YoY and is forecasted to hit $1.82 billion this year. Even with viewers being open to ads on these platforms, Hulu still raised their service fees, hinting low subscription costs on streaming services may not be feasible in the long run.
Video Advertising Growth
Video advertising growth in the ad-streaming platform space, as well as across all digital platforms, is increasing YoY. Video is on the upward trend in the digital world, offering an alternative to ad-free streaming platforms through Native, Instream, Connected TV, and Mobile advertising.
- Connected TV advertising refers to the ads viewers see when watching TV via the internet, on a smart TV, Roku, Chromecast, etc. Targeting capabilities are similar to programmatic display audiences and run across a number of DSPs. As more and more people opt into cable-free television, this market continues to grow.
- Instream video ads are ads viewers see when watching online video content—these can be run on YouTube, Google Ads, and the Google Display Network. Not only do they offer a wide variety of placement options to boost brand awareness, marketers are also able to add CTAs to increase conversions and click-throughs with less intrusive formats.
- Native video ads allow your videos to be viewed across multiple devices in a non-intrusive format. Native ads fit right within the audience’s content, helping prevent negative brand opinions. They can also be priced per engagement. Placing consumers in control of whether they choose to engage or not results in a better attitude toward the ad and more qualified engagements.
Meghan’s Final Thoughts
Even as more and more ad-free streaming platforms enter the marketing world, additional video advertising will always remain and provide less intrusive formats. Lucid has the ability to help you get ahead of the growing video landscape by helping you build out your video strategy and execution.
Focus on: Leveraging Locations
As more streaming platforms and content providers move towards ad-free models, the need to develop unique targeting and advertising strategies is increasing. We’ve all heard, “right place, right time, right content”. Our “right place” aspect is shrinking and becoming increasingly competitive, making the other two components more important than ever.
Let’s say our target market aligns with a segment of users who will likely be Disney+ customers; home-owning parents aged 35-54 who collectively earn more than $100k per year and have children ages 3-11. These parents are most likely to be watching movies with their kids in the evenings or on weekends.
Going leaps beyond typical tracking cookies or affinity audience, we can use location-based audience segments to reach the target market based on movement history or habits. For example, you can target users who visited a list of popular destinations for children’s birthdays such as trampoline parks, zoos, aquariums, or mini golf.
We have our location-based audience segments. Now we can layer on ad distribution scheduling to only serve ads between 4pm-7pm on weekdays and 12pm-5pm on weekends to the mobile devices parents typically check. This allows us to reach our target market both at the right place and right time.
Once we get the right time and place dialed in, it’s crucial to focus on who we are targeting and when to cohesively bind all of these components together in our marketing message. Let’s say, for example, we are marketing a new inflatable playground destination that floats on the water. Having access to location-based data informs our marketing strategists of the users in our targeting that typically frequent family entertainment destinations. With this, we can create a full screen ad featuring relevant messaging that shows up on a website the parent is scrolling through—harnessing the “right time” component as well increases the ad’s relevance and effectiveness.
Ryan’s Final Thoughts
Using the “right” capabilities can go wrong…
Some companies feeling the pressure of ad-blockers, cord cutters, ad-free streaming, and other recent movements to avoid advertisements are looking for new ways to project their ads—PespiCo’s plan to use orbital billboards to project ads into the night sky, for example. While orbital billboards may have the reach, such ads would be memorable to consumers for all the wrong reasons.
Even armed with the best content available, marketers serving ads in the wrong place (star-filled sky) at the wrong time (night) will find their campaigns unsuccessful.
The experts agree: Disney+ and other streaming services going ad-free has added a twist to the world of digital advertising. Marketers will need to invent creative solutions and quality content to stay ahead of the pack—but if there is one thing we know for sure, it’s that tomorrow will bring another new and exciting change.