For years, Netflix was the monolith of OTT media — but no longer. Multiple competitors have stepped up with alternative streaming services, all catering to customers who are tired of traditional cable. But in a world where Netflix has a clear head start, brand hopefuls need to exhaust every opportunity to outpace their competitors. Many are turning to in-app advertising as a solution, and there’s a lot of reasons why, but keeping growth net-positive will require a keen eye for the pitfalls that have impacted the platforms that have come before.
My name is Meghan McAdams, and I lead National Brand Sales at Tapjoy. In my last post, we defined OTT media services and their role in the modern media landscape. Today, we turn our attention to OTT growth marketing and how today’s most sophisticated players are taking a holistic view to their subscriber acquisition and monetization initiatives.
While Netflix has critically-acclaimed original programming, part of its initial success was being the only game in town. This pioneering brand quickly became synonymous with streaming subscriptions on principle. Content providers had to partner with Netflix, or risk losing audiences who prefers streaming to cable TV packages.
Today, Netflix isn’t going away but it does face increased competition. OTT growth means a new generation of streaming services have launched, each with network advantages Netflix hasn’t cornered. Many of these platforms were established by traditional cable companies to counter Netflix’s initial disruption:
There’s just one problem — these services cannot be marketed to audiences through traditional channels. The same audience that embraces “cord cutting” isn’t going to see televised commercials for CBS All Access. So where do these brands find new subscribers?
Roughly three billion people own at least one smartphone. They use them to download music, watch movies, post on social media, and — in rare cases — make phone calls! Smartphones are often used as OTT players themselves, streaming online content from WiFi or mobile networks.
Naturally, these devices have become the primary channel for marketers to reach new audiences. Mobile advertising is at least 30 times more effective than traditional advertising methods, and often ranks higher engagement among customers. More importantly, smartphone users spend roughly 90% of their mobile time in apps, most of which are monetized with ads. You would be hard-pressed to find a better marketing opportunity anywhere else.
Second-generation OTT providers are quickly becoming aware of in-app advertising’s potential. Amazon Prime, CBS All Access, and many other brands are running video ad campaigns for original content alongside traditional marketing efforts. Social media apps feature native advertisements for OTT trial subscriptions. In other words, in-app advertising has immense potential for OTT media services, both in terms of subscriptions and cross-promotion. Keeping growth net-positive however, means prioritizing returns as well lowering acquisition costs.
Since the start of the market’s diversification, there’s been more to OTT platform revenue than just paid subscriptions. In this year’s IAS Industry Pulse survey, 44% of brands and 45% of marketers believe OTT is a top advertising industry opportunity. Meanwhile, only 30% of brands and 33% of agencies consider it a priority. It’s also quite telling that 2019 is the first year OTT was included as an IAS survey option.
There are many reasons why OTT growth is a lower priority for brands. Several impressive technological developments are taking place in AI and machine learning that marketers would rather focus on. Perhaps the most understated issue is that OTT marketing is still considered a risk thanks to the rise of OTT ad fraud.
Bypassing telecommunications networks has granted OTT solutions more freedom in terms of monetization, which in turn feeds growth initiatives. As OTT platforms often leverage advertising themselves as a means of generating revenue-positive growth, it unfortunately also puts them at greater risk of advertising fraud. Every type of fraudulent scheme that digital providers faced in recent decades has OTT equivalents, and it’s limiting market growth potential.
A recent Forbes report on OTT fraud outlined three main concerns:
These are not minor problems. Advertisers still remember the 2016 Methbot device fraud that generated $5 million per day by falsifying 300 million video views. With so much of the free-to-use OTT market based on ad impressions, few brands can take that risk. Sustaining OTT growth in the short term will require increased security from advertising networks. Thankfully, many solutions are taking steps to authenticate digital identities and data sources, ensuring ad impressions are reflect genuine engagement.
As pioneers of the mobile platform, we here at Tapjoy are deeply entrenched in the industry’s most effective anti-fraud practices. We partner with organizations like IAB and were among the first adopters of their open measurement SDK in an effort to keep the subscriber acquisition side of the equation fraud-free.
Consumer demand for OTT services is rising, and the number of entertainment platforms capable of delivering them is on the rise. If the industry can address these roadblocks, we should expect to see significant OTT growth in the years ahead. If you represent an OTT media platform, Tapjoy can help by addressing all of your advertising and monetization needs, so feel free to get in touch!.
For more information about OTT media services, check out Meghan’s full blog series starting with What Is OTT?