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Why AVOD services need to focus on customer satisfaction as their business model takes charge

In the early stages of the pandemic, it seemed that subscription video services had an iron grip on the cultural zeitgeist. From  The Last Dance to Cheer, our conversations were dominated by the newest releases from Netflix, and the company’s stock soared together with other “stay-at-home” names like Peloton and Zoom.
 
Netflix’s prominence may have led some to believe that subscription video on demand (SVOD) represented the most viable business model for a post-pandemic world. However, the company’s recent subscriber miss and resulting stock decline show that SVOD may not be the right vehicle for long-term success. If Netflix can’t sustain its growth goals, entertainment providers will need to reconsider the debate between subscription and ad-supported models.

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Sometimes the hardest question to answer is “What do you hope happens?” In the world of Connected TV, that existential question can be tricky. Because while CTV provides all the targeting ability of digital media, it also provides all the emotional punch of live, linear TV. That dual capability, along with the fragmentation of platforms where CTV lives, makes for a challenging, inconsistent measurement across the industry.

But here’s the thing – it’s not actually the measurement that’s the first issue. It’s the strategy.
 
Here are a couple of examples.

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CTV’s growing popularity and the clear shift from traditional linear TV has reinforced its position as the future of advertising. In 2021 alone, 73% of CTV buyers planned to shift their budget from linear TV to CTV, representing a tangible change in the digital advertising market.

But what is driving this massive shift for advertisers from linear to CTV? And why should those in healthcare, specifically, be taking notice?

With the eventual deprecation of the cookie looming, a big focus for marketers in 2022 will be identity resolution. Healthcare marketers need to find innovative ways to harness privacy-compliant identity information to accurately track and measure audience engagement for their campaigns. Cookieless by design, CTV presents valuable opportunities related to identity resolution, something marketers will grapple with in 2022 and beyond as they adjust to this new era of digital advertising.

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The rise of streaming represents a generational shift in consumer behaviors. The pandemic radically accelerated what had been a persistent, long-simmering trend, and now the entire industry is transfixed by the challenge and the opportunity that is advertising on a connected TV (CTV) device.

The problem is, CTV and streaming are not exactly synonymous. Streaming is content delivered over an internet connection to any device, often via a direct relationship with the streaming service. The concept of CTV refers to the device itself, such as a smart TV, and the concept of CTV advertising covers the full range of opportunities made possible by having a screen that big connected to the digital advertising ecosystem.  Linear TV programming, when run across an internet-connected CTV device, can in theory present media buyers with addressable advertising opportunities on the big screen.

Marketers can be forgiven for conflating the two, because the fact is, Linear TV inventory has become addressable and programmatic at a slower rate than many expected, at least relative to the meteoric rise of streaming. A crisis of trust in common measurement standards has only slowed progress further. Folks today see CTV and assume streaming.

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Historically, in digital advertising, third-party cookies have been used to identify audiences in desktop and mobile web environments for the purposes of reaching them and gathering insights on consumer activity. Although the timeline has been extended, advertisers are still grappling with what the future of identity will look like across the entire landscape once cookies are eventually deprecated.

While desktop and mobile are heavily impacted by the fate of cookies, the same challenges that face these environments do not apply to connected TV (CTV) which is an inherently cookie-less environment. Although device identifiers (and their standardization) have advanced audience targeting and measurement capabilities in CTV, challenges do still remain for advertisers that are planning cross-channel or cross-device campaigns.

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Video streaming (OTT and CTV) has rapidly accelerated in terms of adoption and strategic importance for media companies. It has enabled a dynamic shift in how we consume content and changed the model for content production and distribution. At the same time, it has created a host of new challenges—especially when it comes to advertising.

This rapid growth and consumer behavior shift has also highlighted the increasing importance of these channels as core revenue generators, witness the acquisitions of Pluto, Tubi, Xumo and the high profile launches of HBO Max, Paramount+, and others. The revenue numbers are large and growing. Hulu is on track to do $2.7 billion in 2021 ad revenue alone, Fox expects Tubi revenue to more than double, and eMarketer projects that CTV ad spending will increase 40% from 2020 to 2021.

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TV and entertainment viewing patterns changed dramatically in 2020, accelerating numerous evolutions already afoot in TV targeting, reporting, data, measurement and more. What’s around the bend in media buying? Here are a few key areas of industry focus to keep on your radar.

More Is More in Streaming
The appetite for streaming content has skyrocketed and shows no signs of slowing down. Global viewing grew 44 percent during the last three months of 2020, according to research firm Convivia, which tracks 500 million unique viewers and 180 billion streams annually. In fact, within this streaming surge, ad-based video on demand (VOD) is projected to experience 22 percent compound annual growth and become a $20 billion segment by 2024, according to the VAB. If your TV ad strategy hasn’t pivoted to align with this surge, it’s in urgent need of a refresh. It’s also worth noting that this surge in streaming is on top of existing cable viewership, not in place of it.

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More than two months since its launch, it’s no secret where the new kid on the SVOD block, ViacomCBS’s Paramount+, is getting its programming persona: directly from its parent company.

Of the more than 30,000 unique television episodes available from the successor to CBS All Access at its early March launch, some 25,000, or close to 84%, were sourced from the ViacomCBS vaults.

And why not? With ownership of iconic pop culture brands like MTV, Nickelodeon and Comedy Central (not to mention CBS itself), ViacomCBS possesses an enviable content pedigree that gives the two-tiered streaming service immediate marquee value.

A deep dive into the Paramount+ offering quantifies how ViacomCBS has populated a deep streaming offering. A One Touch Intelligence VODTRAK® audit from March 2021 yielded this top-line breakdown of the content ViacomCBS’s own brands have contributed (approximate number of titles in 000s):

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