There are some serious issues with streaming video advertising. Sure fraud, measurement, and latency followed by viewability (and low ad completion rates)—all driven by automation (and sometimes fragmentation)—account for many of its sorest spots. These issues are being worked on, of course, either by the industry as a whole or by independent publishers themselves. But maybe not fast enough.

As CTV and OTT spending and impressions continue their ascent in tune with consumers’ rapid cord cutting, buyers and sellers need to get in front of the problems around ad quality and poor user experiences. Do I really need to see the same ad five times in a row during the course of one program? Repetitive ads have been a cloudy stain on streaming advertising since time immemorial. Intrusive ads and wrong ad formats to boot.

In the game of SVOD (Streaming Video On Demand), the difference between the winners and losers will come down to a publisher’s ability to use their data and useful and intelligent ways toward improving the overall user and customer experience (UX/CX).

 

The Opportunity

The truth is, “Consumers are watching ad-supported content and 54% rather have ads and watch programming for free or at a lower cost,” said Justin Gutschmidt, Head of Sales Strategy, Premion, at the recent inaugural Adweek NexTech Conference.

Just look at the rise of free ad-supported streaming TV services (FASTS)—Tubi TV, Pluto TV, XumoTV, Roku Channel, Amazon Freedive and the like—in response to the growing consumer subscription fatigue. People are consuming content like crazy and ad impressions are up, up, up.

In theory, the promise of OTT is that it’s a data-driven business in which content can be more personalized and the hypertargeting capabilities should make it better than digital, or even TV. In comparison to linear, CTV is ready-made for capping frequency and relevant retargeting.

The rich data that streaming provides also enables better reporting and measurement. “If I know who and I know what and I know when and how people want to watch something then ad completion rates should be high,” said Keith Zubchevich, Chief Strategy Officer, Conviva at Adweek NexTech.

Even Disney’s new streaming bundle offers the ad-supported version of HULU, and 70% of HULU’s 82 million viewers are on the ad-supported plan.

So if consumers are consistently choosing to stream instead of watching linear and they don’t mind watching ads, then why is the streaming ad experience still so bad?

The Challenge

It’s a complex ecosystem. Streaming TV is fragmented, as consumers are watching on a number of devices and switching back-and-forth, increasing complications of delivering quality viewing experiences. And there’s a question of the pipes. “The ad requests may not always work, ensuring proper decision and selection in making sure the right ad gets to the right person—from point A to point B—in the right place,” said Zubchevich. “You need real-time measurement so you know when there’s a problem.”

Since advertisers tend to purchase streaming by impressions, sometimes fulfilling commitments leads to the scenario where a viewer sees the same ad one too many times. And though viewers are used to commercial breaks, the ad breaks in streaming are often irrelevant content showing up at inopportune moments. What’s not sold directly, is filled through an ad exchange, which is built to serve pre-roll ads more than TV ads or they’re targeting based on demographics, so the experience is not the best.

Repetition and interruption aside, there’s also the question of delivering the right creative. Is the ad in the right format? Does the ad provide the best experience for the device on which it’s being viewed? Is the ad relevant to this consumer on the device she’s watching it on right now?

Here’s where making the best use of viewer data to improve experiences comes into play. It’s also where publishers increasingly have the opportunity to strengthen their relationship with advertisers as both creative and data consultants.

Putting the Consumer First


 

“Direct-to-consumer brands like Hulu have to be obsessed with the consumer experience,” said Peter Naylor, Senior Vice President and Head of Advertising Sales, Hulu at Adweek’s NexTech Conference.

Hulu’s viewer-first approach is one that puts consumer behavior at the head of the company’s advertising strategy. Back in May, at the Hulu NewFront, some new ad products were announced, highlighting the company’s obsession with user data as a tool for targeting viewer behavior.

On one hand, there’s the binge ad format that allows advertisers to serve personalized experiences to viewers, including an ad-free episode or a discount on a product or service. These personalized experiences can also be offered via Easter eggs throughout the site, unlocking either Hulu’s own or partner offers. And based on the data that there were 1.1 billion pauses on Hulu’s ad-supported accounts monthly, the company launched a pause ad feature enabling brands to feature a static non-intrusive display ad that will be initiated by a user’s pause behavior.

One of the most interesting things that Hulu has been able to do is institute frequency caps so that a viewer won’t see the same ad more than two times within an hour. Now they’ve expanded on that initiative with a daily frequency cap, where a single viewer won’t see the same ad more than four times per day. Frequency caps can be costly for players who don’t have the user-base that Hulu does.

Hulu users also get count-down clocks on ads and interactive ad experiences, where the viewer can engage with the brand or product, providing consumers with total transparency into their ad experience. The streaming giant wins because they can scale and sell across devices, so it’s just a plus when they put the consumer first in their strategy.

Another great example of the data-driven nature of the streaming advertising business is Roku’s Audience Marketplace, that leverages Roku’s first-party data and proprietary ad tech to embolden publishers to sell targeted audiences—at a household level—on Roku’s platform to advertisers.

Major players like Hulu, Amazon, and Roku have been able to operate as walled gardens, either limiting inventory or making it hard for third-party networks to play in their sandbox.

Given the potential of usable first-party data obtained from streaming behaviors (with consent), deep-pocketed publishers might do well to build walled gardens of their own, or at least partner with other like-minded publishers, enabling access to even more user data and the power to scale across multiple platforms. It might be the only way to truly put the customer experience first.

Right now, streaming is the great land of opportunity and it’s definitely not yet certain that he who got there first or he who has the most users will win.

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