By Marianne Hayes
With Netflix booming, what's a brand to do?
Neftlix's latest earnings report only confirmed what all of us already knew—the streaming video giant is basically taking over the world. About the report, CNBC's Jim Cramer said: "It took my breath away. They've got every demographic." The company now boasts over 50 million subscribers, over 70 percent of whom are located here in the U.S. The impressive numbers invite an interesting — perhaps urgent — question:
What does this mean for advertisers?
Numbers from a 2014 Experian Marketing Services study emphasize the flip-side of this phenomenon — massive viewership reductions for traditional TV. Over the past few years, the number of Americans going without cable or satellite TV has been steadily rising. In 2010, a little over 4 percent of U.S. households had cut their service. As of last year, that number had risen to 7.3 percent. Faithful readers of the Tongal blog will recall our "Skyfall" article, which showed that TV's precipitous share-loss is even faster among millenials and young females.
Altogether, this represents a seismic shift in the primary means advertisers have used to put their products in front of consumers for more than half a century. According to eMarketer, 70 billion will be spent on TV media in the US alone in 2015— 30 Billion from the Fortune 500 — the impending migration of these mega-dollars is the primary factor that's making forecasters like Cramer hyperventilate.
And with more and more viewers turning to SVOD (Subscription Video On Demand) and OTT (Over The Top) television, how can brands capture this rapidly growing population of "Netflix-infatuated" eyeballs?
More than one answer...
"I feel like advertisers are sort of confused and are going to have to figure out what to do with their marketing budgets and how to spend it," says Eric Bosco, CEO of ChoiceStream, which provides optimized programmatic advertising for agencies and brands.
While everyone is still trying to clarify which digital avenues might reach those same consumers, the rise in SVOD and OTT television has nudged advertisers to get creative when it comes to getting their message to the masses. This, in turn, has completely revolutionized the digital landscape.
Native advertising is picking up steam
It seems that every leap forward in analytics accuracy reveals the truly deep value of customer engagement for marketers. Which is why banner ads and pop-ups have all but faded permanently from relevance.
In other words, it's all about content these days. Experts at Business Insider predict that native ad spending will soar from about $7.9 billion this year to $21 billion in 2018. "You go to websites like The Weather Channel, for example, and they look radically different today than they did three years ago," adds Bosco. "Now you've got to create content, you've got to create copy, headlines that cause users to click through, and images that are beautiful and that display your brand."
The value of real-engagement is also underwritten and emphasized by the rise of the "second screen."
The second screen: possible answer? Or...just another diversion?
"People aren't just watching television when they're watching television," says Rebecca Lieb, analyst and author covering digital media and marketing. "They're on their laptops, they're on their tablets, they're on their smartphones. So if you want to reach somebody with an advertising message while they're watching a specific program, you don't even know where their eyeballs are trained when your ad appears." According to Lieb, more and more brands are sparking conversations around programming and making the second screen a part of their plans.
"Twitter's making a very big play for this, and encouraging advertisers to do promoted tweets around, say, a tent-pole event like the Game of Thrones season finale, or other social media channels where brands might be talking about this," she says. Of course that strategy might work well for event television, but event television is exactly what Netflix is actively eroding with their primary benefit: watching what you want, when you want to watch it. So...now what?
Start your own OTT channel?
Some brands are rolling with the content-first landscape by launching their own OTT channels. A number of professional sports organizations like the NFL, NHL, MLB and WWE (World Wrestling Entertainment) have all gotten in on the game. Some are subscription-based while others are free / supported by ads. Some brands have begun to consider themselves as media outlets as much as they are product companies.
But you don't need your own channel to get started making content that earns its own viewership.Consider what Dick's Sporting Goods did with "We Could Be King" which screened at the Tribeca Film Festival and played on ESPN2. Dick's partnered with Tribeca Digital Studios to articulate the brand's "sports matter" message on film, and worked to get that content seen by a wide (but targeted) audience, probably for just about what they'd spend on a normal television commercial.
Automakers Volvo invested in a project with crowdsource media studio Tongal, to help launch an original film project, New Voices of The Twilight Saga in cooperation with Facebook, Women in Film, Lionsgate — and Stephenie Meyer, author of the beloved Twilight books. James DeJulio, co-founder and president of Tongal, adds: "The Twilight book and film franchise has a following so devoted, and the work has been so good —we fully expect a billion people to see this work."
Start with a focus on the content...
"We're about to witness a sea change in media-consumption patterns — away from traditional channels," advises Lieb. "In much the same way that we've moved from the vinyl record to the compact disc to the MP3, TV is about to see that happen to them."
DeJulio also has some parting advice for brands navigating these waters: "I would say that even when you see big change coming — the thing to really focus on is the quality and durability of the content you create. Can you make something that will earn and keep its audience over the long run? If you do that, the audience will find you wherever you are."
