Commentary

The Future For Brands In The OTT Space

Wheresoever there are people, there shall be advertising.

It’s practically a universal law. With few notable exceptions, wherever an audience can be reached via sight or sound or a combination of both, you can be sure brands, agencies and media owners will have cooked up creative ways to grab and hold the attention.

Naturally, some media are more successful than others and deliver different results.  And that -- along with horse-trading, underlying costs, scarcity of inventory etc. -- is what ultimately drives differences in price.

TV has long sat at the top of the media hierarchy for the majority of brand categories when it comes to delivering messages to mass audiences at the same time. It is likely to do so for the foreseeable future. As digital channels continue to grow, there are relatively few opportunities to reach millions with the same content and in the same context at the same time.

TV does this day in day out.

However, as services like Netflix and Amazon Prime have gained ground, and as many TV networks have seen ratings decline, an obvious question arises: How do brands connect with the seemingly growing number of consumers spending more and more time discovering and watching shows in those ad-free environments?

Though Hulu and some other players provide advertising opportunities within the mix, the lion’s share of attention goes to Netflix and others that do not.  And they are highly unlikely to do so in the future.

To date, discussion has mostly focused on the impact such services are having on viewer behavior and upon the fortunes of networks. While the impact on network audiences inevitably comes home to roost with regard to advertising, there has been little consideration to the steps brands may take to leverage that time given to viewing on, for example, Netflix.

To my mind, there are a handful of approaches we may see evolve in the future. Some are on-screen and some are not.  Some involve collaboration directly with Netflix et al, others with content producers and networks. Such as:

Brand Integrations – nothing new here, but when the option of spot air-time goes away, successful integrations become more important. Different content will require different approaches and in some cases, Erwin Ephron’s famous Paradox of Product Placement will still need to be navigated. “If you notice, it’s bad.  But if you don’t notice, it’s worthless.” Arguably more true of drama than unscripted shows.

Sponsoring Content Themes – brands could associate themselves with curated programming threads that reflect aspects of their brand (Iconic Comedies, Classic Movies, Best of … Seasons etc.).  How the brands sponsorship (or underwriting to use PBS-speak) manifests itself here will be critical in this most ad-free of worlds.  My guess is that the more it looks like an ad, the less welcome -- and possibly effective -- it will be.

Original Content – more brands will “do a Red Bull,” which is a masterful example of a brand giving life to itself through content that says more about a brand than a string of ad campaigns ever could. If indelibly associated with the brand, streaming services provide a natural home.

On-Pack Promotions – For brands that sponsor content themes, movie seasons or produce their own content, I can see on-pack promotions being used to drive people to the content. They could be a discount for new Netflix subscribers or even a rebate for the duration of the season, as long as you view that content among whatever else you choose.

Of course, none of this will deliver the scale that TV currently does. There will be much need for experimentation and testing along the way.

But the fact remains. With so many eyeballs spending so much time on ad-free streaming services, there is no way brands can afford to allow themselves to be wholly excluded.

No doubt there are more ways brands will experiment than I’ve listed above.  Maybe the comments will throw out more ideas.

4 comments about "The Future For Brands In The OTT Space".
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  1. Ed Papazian from Media Dynamics Inc, March 3, 2016 at 12:01 p.m.

    Henry, you make some interesting points and I agree with many of them. However we must recognize that conventional TV viewing continues to be dominated by commercial-supported content. In the good old days about 9% of all viewing went to content that was not ad-supported---mainly PBS and pay cable. Today, approximately 16% of all viewing is to ad-free content, with the increase due, of course, to Netflix and the other SVOD operators. Offsetting this somewhat is the fact that overall viewing rates keep slowly rising as more channels and venues appear. My point is this. While SVOD is drawing away some viewing tonnage, today's advertiser can still attain mass reach using TV in "as is" form, providing more channels and dayparts are utilized.

    Obviously, getting people not to zap ads remains a problem and methods of avoiding such losses should be investigated---including product placement and sponsorships of content where a premium CPM is paid but commercial clutter is minimized. I believe that as the progression towards more and more SVOD services continues and their share of viewing rises, that advertisers and agencies will adapt. It will be interesting to see how this develops.

  2. Mike Bloxham from Magid, March 3, 2016 at 2:56 p.m.

    Ed - I couldn't agree more.  Ad-supported TV is not about to lose its dominant position in the landscape. for all the reasons you stated.  That said, just as networks are concerned about the increasing time spent with the likes of Netflix, so too do a number of advertisers.  Whether they see it as a problem to be addressed or an emerging opportunity some brands are definitely looking to see how they might find a way to connect with viewers in the OTT space absent the option of ads.

    We are indeed talking about incremental adaptation - for brands, agencies and media owners alike.

    Thanks for reading and commenting.
    Mike

  3. John Capone from Whalebone, March 4, 2016 at 1:36 p.m.

    I thought immediately of Red Bull, and of course you mentioned and nearly verbized it (it's a short leap to they Red Bulled their content marketing). Another couple of brands that spring to mind are Levis and Converse. Whereas Red Bull has created it's own content channel destinations (websites chock full of original video, concerts and events, magazine).

    Converse and Levi have done a remarkable job of following the distributed model. Converse, most recently, branded a short doc series about iconic recording studios that is very on brand (but not so much that its distracting, in kieeping with the brand integration dilemma. And Levis has been forward thinking in this regard in tons of ways; one example that springs to mind is the set of filters it created for the camera app and community VCSO (while not OTT, this does suggest some interesting directions).

    Red Bull though, remains the master at this, leaving a trail of bread crumbs for GoPro (with its video editing software aquisitions) to follow.

  4. Mike Bloxham from Magid, March 4, 2016 at 7:41 p.m.

    John - Yes, Red Bull is prbably the best example of how a brand can build its equity with original video that resonates with it's audience.  It produces more original video than some cable networks!  And all of it relentlessly on brand.
    Then of course, going back about 15 years, there was BMW with those very cool videos featuring the likes of Clive Owen and James Brown.  They were ahead of their time.  With the kind of distribution latforms available now, maybe they'd still be doing it.  I have them on a DVD somewhere - now I need to dig them out.

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