The underwhelming initial response in early April to short-video streaming launch Quibi — which was initially mobile-only — seemed to put at least a temporary damper on enthusiasm for mobile.
Founder Jeffrey Katzenberg blamed it all on bad timing: Specifically, Americans’ lack of mobility as COVID-19 and shelter-at-home set in. Some have suggested that uninspiring content may have been as much or more responsible. But others point to a previous mobile streaming service disappointment: Verizon’s Go90, which shut down in July 2018.
What’s the realistic outlook for mobile video as a marketing channel, now and going forward?
Here, Bill Kiriakis, global SVP sales at Adjust, a mobile measurement and fraud prevention firm, offers his perspective.
Has COVID affected the mobile video growth curve?
Kiriakis: eMarketer’s forecasts show that 2.72 billion people will watch video on their mobile phones worldwide in 2023.
Installs and sessions in entertainment apps have increased rapidly as the world is social distancing — trending 55% above where they were last year. This tells a clear story of where the app economy is headed in the age of the coronavirus: toward the comforts of streaming.
However, after peaking at the start of April, ad spend and installs are trending downward as recession bites — suggesting that user acquisition or UA managers are buying fewer installs. These budget limitations could force marketers to adopt creative solutions to find users. Platforms are already experimenting with innovative formats to show ads, like Hulu’s pause ads.
Shoppable content and AR technology may turn out to be ideal for mobile, as mobile users are already used to interacting intensively with ads. While subscription-based services like Netflix, Amazon Prime or Disney+ are currently the gold standard for streaming services in the West, monetization strategies that rely on ads are more common in other parts of the globe.
Why should media buyers care about mobile in this new era of OTT?
Kiriakis: As we know, OTT media took off like never before after the coronavirus forced billions of people around the world to stay home late in the first quarter. And whether in the living room or on the move, mobile is an important component in the OTT mix.
eMarketer’s February 2019 survey showed 63% of U.S. consumers accessing OTT most frequently on their TVs, with mobile coming in second, at a modest 11.6%
As of this past February, just prior to the COVID crisis’s onset, eMarketer was still using those numbers, but was also reporting that mobile video consumption and ad spending were surging.
However, eMarketer also cited Conviva data from November 2019 showing that when you look at time spent per device, mobile makes up 22% of total time spent viewing — suggesting mobile users spend longer than average watching OTT content.
Mobile is also often a second screen for OTT consumers. Roku, for instance, supports a function where users can turn their mobile phone into a remote control.
Strategically, this is important for marketers, because even users watching on connected TV can be persuaded to install an app they saw while watching a streaming service.
A colleague cited the example of a food delivery company streaming an ad around dinnertime and incentivizing app downloads with a free pizza delivery within a certain time slot.
All signs point to advertisers spending more and more on OTT in the next couple of years, not only because of higher OTT consumption patterns, but because OTT allows them to work with ad formats that open new dimensions of contextuality, relevance and distribution.
They can minimize the customer journey with direct-buy options. And with all the data OTT generates on content preferences, we’re going to see great opportunities for targeting, particularly for niche products.
As the market grows and becomes hyper-competitive, it will become even more attractive for marketers of all types, with mobile marketing poised to benefit.
UA managers for OTT services — and advertisers looking to capitalize on the OTT boom — will need to become more critical of which sources are driving customer lifetime value. Proving performance is the name of the game, and mobile lends itself to that dynamic.
What factors are likely to drive OTT advertising in general and mobile video advertising in particular going forward?
Kiriakis: Currently, the options for apps interested in advertising in the OTT space are limited, whether for TV or mobile consumption. But this low inventory problem is something that will change going forward.
Consumption of AVOD, or ad-supported video-on-demand, was on the upswing even before the financial crisis really set in.
For instance, at the start of the pandemic, Reelgood data showed a 417% increase for paid SVOD services viewing between mid March and mid April, but also a 148% increase in AVOD services viewing. Overall, SVOD accounted for 44.5% of all streaming viewership, followed by AVOD at 28.6%.
And now, with cash-strapped consumers voting with their wallets, our own app trends report shows AVOD already experiencing a huge boost.
In the post-COVID world, consumers will have to prioritize their spending — and subscriptions are often the first expense cut.
OTT platforms will have to adjust to this new reality. People are likely to reduce or limit their paid channels and increase their use of AVOD options. This means we’re likely to see more product placement and freemium models in the mid- to long term.
Even when the effects of COVID-19 begin to wane — and the financial crisis is now looking like a long-term one, at least in the U.S. — it is likely that "subscription fatigue" will hit at some point. OTT users follow content, with high levels of subscription churn once certain “keystone” shows end.
When this is combined with the huge proliferation of platforms, it is going to become increasingly difficult to watch all the buzz-worthy shows with only one or two subscriptions. Users, wanting to catch the shows that everyone is talking about, might become a lot more tolerant of advertising so they don’t miss out.
But what will fundamentally shift the relationship between ads and OTT is when media that haven’t yet fully made the jump — like live sports — start to migrate to streaming platforms.
Sports are incredibly tied to advertising, and moves like Amazon Prime Video showing NFL Thursday Night Football will only become more common in the future. Viewing sports on mobile was certainly on the rise pre-COVID — increasing 46% year-over-year in Q3 of 2019, according to research from Brightcove.