Reading the room and the marketing mood

Ad-funded video-on-demand eats subscription

With viewers under new economic constraints, streaming platforms competing in an increasingly expensive content arms race, and innovative technology enabling more targeted and creative messages, ad-funded video on demand (AVOD) is set to enter a new age of domination over the video streaming category.

Leading streaming platforms build-up their advertising capabilities

The two biggest premium streaming services, Disney+ and Netflix, have just launched ad-supported tiers. Netflix is pushing this in 12 markets, while Disney+ is initially trialling it in the United States.

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User numbers showed at Netflix showed slower growth in 2022 than in previous years, and through Disney+, Hulu, ESPN+ and Disney+ Hotstar, Disney, the group, now has more paid subscriptions. The introduction of ad-supported tiers could both increase the overall number of subscribers, a key metric for investors, and bring in additional revenue from advertisers keen to put their messages within streaming content for the first time. While no official numbers have been released, unofficial estimates for France (source: NPA Conseil/Harris Interactive) put the figure at 1.4 million for that market (more than 10 per cent of Netflix subscribers), with 60 per cent of the homes on the tier being new subscribers.

Technology opens new opportunities for creativity and targeting

Connected TV (CTV) advertising is also evolving. The growth of CTV means that advertising can potentially be targeted in a much more granular way to broadcast TV mediums and reach people who are less likely to watch so-called linear TV – potentially younger people who prefer to watch on demand rather than follow a TV schedule. Formats can be more innovative and interactive too. It is possible to click on ads, to send information to the user’s phone and to make shoppable ads, where people simply use their remote to buy from the screen.

Amazon has announced that it will be introducing virtual product placement to some of its programming, using special-effects techniques usually seen in movies, to seamlessly insert brands into programmes post-production. Examples might be a poster on a wall, a beverage can or sauce bottle on a table, or even a car parked on the street.

Brands can explore new opportunities in the high-profile streaming channels and ask how it can impact audiences, reach and outcomes.

They can also look beyond traditional advertising. Greater commercialisation will also bring additional opportunities in product placement and ad-funded content.

Brands can also capitalise on the multi-screen potential. Many streamers also have apps that can enable mobile activation.

From going shopping to always shopping

Commerce has become so omnipresent that people no longer “go” shopping as a conscious activity but are “always” shopping as they are surrounded by moments where they can spontaneously move from inspiration to transaction.

Shopping permeates social and messaging platforms

Last year saw social commerce become mainstream, with more brands experimenting and creating stores within apps such as Facebook, Instagram, Snapchat and TikTok. The global social commerce market was estimated to be US$584.91 billion (source: Grand View Research, 2021) and is expected to grow at a compound annual growth rate of 30.8 per cent from 2022 to 2030.

We also see American platforms experimenting with adding commerce to their messaging platforms. In August 2022, Meta launched its first test in India with the creation of JioMart on WhatsApp, a collaboration with Reliance Retail and Jio Platforms. Users can send a message to the JioMart WhatsApp account, browse a selection of products in a carousel, add what they need to their basket and then check out.

A native TV experience

Commerce is also coming to TV. The growth in penetration of smart TVs means that for many homes, TV now has the potential to be shoppable within one device, rather than relying on a secondary technology (scanning QR codes, visiting an on-screen URL or even calling). In June, the American digital channel Roku announced a test with US grocery and hypermarket chain Walmart where users could see shop products in adverts by using the remote control, using their existing Roku account details, including payment and delivery address.

This technology is still in its infancy, but if tests are successful, if penetration of smart TVs continues to rise and streaming platforms continue to introduce advertising-based models, this technology will proliferate beyond advertising, with, for example, viewers being able to shop the show.

Brands can test and learn to understand which of the new platforms are most effective for their particular campaigns and storytelling.

They can then create native stores on platforms to make the experience even more frictionless for consumers and develop a spontaneous strategy – essentially how to capture the public imagination with either products, prices or times of the week that will make people more likely to buy spontaneously.

Social algorithms give users what they don’t know they want

Social media has changed. Platforms like Twitter and Instagram traditionally focused on who users followed, but as feeds try to compete with TikTok, it is more about seeing engaging, entertaining, noteworthy content, whoever shares it.

The TikTokisation of social algorithms

TikTok’s most important innovation has been its endless feed based on observed interests and popular content, rather than follows. Users’ feeds are different, but this is largely driven by the algorithm, rather than who they have consciously decided to follow.

Services such as Instagram also rely on algorithms, but until recently algorithms picked the content users would see from accounts they follow, rather than broadening the pool to include all content on the platform. This is how users could see important life events such as births and weddings at the top of their feeds even if they had not opened the app for a few days. Twitter initially showed a chronological feed, taking all the content from every account followed, but switched to the algorithm model in 2016.

These days if you use these platforms it can seem like half the content is from accounts you do not actually follow, shown with explanations that are ‘based on your likes’ or ‘accounts you follow also follow’.

What this shows is that social media has now become much more about the content shared than the fame or the number of followers the user has. It is now much more possible for content from anywhere to go viral, and for new users’ content to be seen, if it is judged to be good by the algorithms, based on likes, shares, video views and more.

Search may also be changing

Younger people are searching less on traditional platforms such as Google. Could it be that daily exposure to feeds on apps such as TikTok and Instagram is organically bringing content to people so that they do not think of search in the same way as older generations?

Or is it that they are searching within these apps instead? One writer spent a few days testing similar searches on TikTok and Google, and claims that while Google is better for closed questions with a definitive answer – for example, ‘How many milligrams in an ounce?’ – TikTok returns surprisingly useful and entertaining answers for more open queries such as ‘restaurants in Galway’ and even ‘what to watch?’. If users have good experiences they are likely to use search more, even if that is not in the original design of the service.

Brands can test new creative-based strategies to capitalise on the changes in social media, work with partners to ensure that content is engaging, relevant and timely, including testing memes and develop short-form video answers to popular search queries, to capture searches on the newer platforms.

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