I am old enough to remember life in the P.C. era (that's "pre-cable");
in fact, I remember TV life pre-remote. And when cable TV started gaining in
popularity and there was talk of TV content moving to a subscription model,
some wondered what that would all mean to TV advertising.
Well, TV advertising continued to grow. Cable didn't take
advertising away. It became a subscription, of sorts—people pay for TV access—but
most perceive it as a way to get a good picture and lots of channels. The
packages are so broad that no one knows the price they pay for particular
channels, such as ESPN or HistoryHD.
Things are now changing once again. Disruption is again on
the horizon. eMarketer is reporting that cable subscriptions may decline as
more consumers begin using over-the-top (OTT) content viewing. OTT is the
newest term in the digital-meets-TV space, so let me spend a few sentences
explaining.
One definition says OTT "describes broadband delivery of
video and audio without a multiple system operator being involved in the
control or distribution of the content itself." This refers to accessing the
likes of Hulu, Amazon, Netflix, YouTube, etc. to view programming that
previously was to be found only on television.
According to eMarketer, the percentage of people watching
OTT content daily is now 33%, which is double the number from two years ago. And
the percentage that does it at least weekly stands at over half: a big 59%.
What I find particularly interesting about this trend is
that OTT is device-agnostic. When you have a Netflix subscription, you can
access the content from any device—TV, tablet or mobile. So there is potential
for devices to merge much more quickly than once thought. Today, I have apps
for Netflix, YouTube and Amazon on three devices. Will all content viewing—or
at least a great percentage of it—via TV become app-based? Will the age of
broad cable packages with hundreds of channels become a thing of the past,
replaced by a la carte buying to be viewed device agnostically?
In this model, where will TV advertising sit? One
possibility is that some video content will be bought via subscriptions to
Netflix/Hulu and the like, and some will be ad-supported in the form of
pre-roll and mid-roll video content, much the way back episodes of shows like Survivor
can be watched on PCs with a few commercial breaks. Once again, the
interesting thing is the device-agnostic nature of this advertising. The ad "units"
bought will be able to run on any device.
Another potential is that some companies such as Microsoft (take
the recently unveiled Xbox ONE for example) will be able to insert ads before
content viewing for consumers who choose ad-supported vs. subscription access
to games and video content.
Finally, the third option is that Google will simply take
over all pre-roll video ad serving on all devices and leave the crumbs for
niche players.
For years there has been talk about the growth of digital
pre-roll video advertising. The only thing standing in the way has been the relative
lack of online video content. Where will it come from? How will more content
get online? Perhaps it's not a matter of video content, such as movies and TV
shows coming "online," but more a matter of "online" in the form of OTT viewing
coming to TVs.
The key message to brand marketers and brand researchers:
digital is coming fast and the old models are quickly breaking down. The best
way to be prepared is to learn as much as you can about how digital advertising
and pre-roll video is sold, bought and measured as quickly as you can, so that
you will be ready for the device-agnostic future of content viewing and brand
communications.
Ipsos ASI is an advertising research company that
aids in all stages of the advertising development process and helps maximize
the return on clients' advertising investment.
