Ad Personalisation is a Relationship, Not a One-Night Stand
We live in an era where the influence of the viewer is stronger than ever. As the future of broadcasting lurches from the safe house of traditional television to the fragmented environment of multiple devices and platforms, it is crucial to recognise and understand the choices the viewer makes. In this article I'll explore how investment in a long-term relationship with the viewer is paying off.
Following the initial surge of online video services, and the threat it carried for the traditional cable companies and networks, there seems to be a sense that the market is maturing and that "cord-cutting" is no longer seen only as a threat. A significant factor in this is the sharp growth of live streaming, with FreeWheel's most recent Monetization Report (Q4, 2015) reporting a 129% year-on-year increase in ad revenues for live simulcast.
Driven by live sport, which accounts for a massive 69% of total online sports viewing, according to the same report, the major players in broadcasting are well aware of how significant the implications are of this development. Kelly Williams, commercial managing director at ITV, the UK's largest commercial broadcaster, commented that "live TV is precisely what Netflix, Amazon and YouTube cannot offer." In other words, it requires a level of expertise that is predominantly the domain of broadcasters and TV networks. By turning their attention to live simulcast they are looking to dominate the medium before online-only players have the chance to get involved.
With a looming summer event schedule that includes the newly expanded Euro2016 soccer tournament and Rio 2016 Summer Olympics, the popularity of simulcast is set to grow significantly further over the coming months, especially as much of the action will take place during the working day when many viewers are away from their TV sets. Online platforms also allow for many more live channels to be deployed than on traditional television so there'll be much more content and much more choice for the end user.
Live television is the lifeblood of broadcasting, and the figures are demonstrating the viewer's willingness to watch online. That's great news for the provider, but it brings the challenge of how to monetise live channels, to which there is only one solution: server-side ad insertion. Or, to be precise, server-side ad replacement, which is gaining a lot of traction due to a variety of problems with other approaches to ad replacement (listing these would fill an article of its own).
The next challenge, then, is to implement an ad insertion solution that is consistent with user expectations—after all, this is an environment in which the viewer must be the focal point. In the case of simulcast, viewer expectations—even those of the much-maligned millennials—have been formed by their experience of traditional live television. It is crucial to reflect that reference point in simulcast because, more than any other video form, live channels allow the viewer to sit back and be fed content. If anything disrupts that experience, it breaks their sit-back, relaxed state.
That means—and I know I am going to upset some by saying this—no pre-roll. Realistically that argument probably won't fly, so let me rephrase: no lengthy pre-roll (preferably no more than fifteen seconds). Any longer is simply too disruptive. Instead, allow viewers to access the content quickly like they would do on a TV, and concentrate instead on replacing the ad breaks in a way that makes the transitions as seamless as the user expects them to be. Remember, this is a relationship and not a one-night stand. Provide the content viewers want and they'll accept an ad break every ten to fifteen minutes for the duration of the streaming session. Put the user first and don't do anything that could stop the session before it's even begun.
Building a strong relationship with the viewer is vital when it comes to online streaming, especially if there's a desire to apply personalisation to advertising. "A well-executed data strategy can add significant value," said Keith Underwood, Channel 4's director of strategy and technology, at an event this year. The UK broadcaster boasts 50% of all 16-34 year olds in the country among the 13 million registered users on All4, its TV Everywhere platform. As such, it represents a significant yardstick for other networks and providers, which currently serve an older demographic, when considering their digital futures.
At the heart of Channel 4's relationship with its viewers is a strict privacy commitment around the data it collects, but it's not trust alone that forms the bedrock of the relationship, though it is incredibly important. There's also the promise of high-quality recommended content that is only available on All4. User data is applied to enhance the viewing experience as well as informing the advertising, so there's a true give/take relationship there. And the level of addressability this relationship enables is growing at quite a speed, with Channel 4 predicting that 50% of all its revenues will be data-driven by the end of 2016—up from 30% last year.
When you bundle together all of these points, the future of live broadcasting suddenly appears much brighter than a lot of people might realise. The sharp growth in live simulcast over the last couple of years demonstrates that a huge audience is there, ready and waiting for live online channels. It makes sense, really, because—and I can't emphasise this enough—viewers have a reference point from watching traditional linear television. It is what they're used to and as long as that experience is preserved in an online environment then it is an experience they feel very comfortable with, and it is an experience that sets up huge revenue potential for the provider.
At Yospace we see an average viewing time of over 30 minutes across all the live channels we deliver. To the provider, that represents an average of ten ad spots per live session, opening up significant revenues from a source that it was previously unable to monetise. When you add personalisation into the mix the value of each of those ad spots becomes even greater.
With the key elements—user experience, user data, trust ,and technology—in place, network providers and broadcasters are achieving view-through rates of over 98% in live simulcast, an incredible figure that, significantly, is higher than most network averages. This opens up an argument that live channels viewed online could generate higher ad revenues than traditional television.
Most dynamic ad insertion (DAI) projects for live are initially driven by immovable sporting events, which is why Euro2016 and the Rio 2016 Summer Olympics promise to drive a surge in live implementations this summer. What is notable, though, is how many providers retain DAI for live channels when the major 'gold-level' events are over, demonstrating that the service remains economically viable for day-to-day viewing. Given the revenues they're able to generate, and the fact that live television is currently untouched by the likes of Netflix and Amazon Prime, it's no surprise that network providers and broadcasters see their futures in simulcast.
As providers learn more about their audience and respect what they want, a relationship is formed that promises to hugely beneficial to both sides for a long time to come. The viewers have spoken. They want live television. And now is the time to monetise it.
[This is a contributed article from Yospace. Streaming Media accepts contributed articles from vendors based solely on their value to our readers.]
The vast majority of young adults skip online video and TV ads at least some of the time, making them hard for marketers to reach.