Why the Growth of Subscription VOD is No Bad Thing for Advertisers

(SVOD) platforms as a threat to video and over-the-top (OTT) advertising, with audiences spending less time on ad-supported services. But Chris Hardiman, product director at Xaxis, a WPP-owned programmatic media and tech company, argues that ad-supported video services will thrive even as SVOD services grow. In this piece, Hardiman outlines how advertisers should think about video ad format and length, and the contexts of the platforms they’re using, when reaching audiences on ad-supported video platforms.

Subscription VOD (video-on-demand) has been in high demand during lockdown, with Netflix adding almost 16 million subscribers in the first quarter of 2020. Not to mention the successful European launch of Disney+, which looks set to reach ‘infinity and beyond’ with its global subscriber base recently surpassing the 50 million mark. This may sound like bad news for advertisers. With subscription VOD platforms largely ad-free, it seems a migration to subscription will naturally make it more difficult to reach viewers’ eyeballs. But there are still plenty of opportunities to reach consumers through engaging video advertising and achieve real outcomes as video continues to emerge.

The video opportunity 

Pre-COVID-19 forecasts showed the potential of video, and it doesn’t look to be slowing down. UK adults will spend one and a half hours a day consuming digital video by 2021 and only a small proportion of this will be via ad-free, subscription platforms. Deloitte predicts advertising video-on-demand (AVOD) revenues will reach £500 million in the UK in 2020, and that AVOD will be the dominant model by 2025, with the majority of streaming services funded wholly or partly by advertising.

Add to this the fact that UK adults watch an average of 34 minutes of YouTube video content per day, compared with 18 minutes of Netflix content. The platform has moved beyond its early user-generated content offering to deliver professional video experiences, and offers a scaled solution that supports the targeting and measurement brands expect. To reflect this increased consumption, video is predicted to account for 50.4 percent of total programmatic digital display ad spend by 2021.

Rather than get distracted by the multitude of video environments, advertisers must focus on putting the right creative message in front of the user.

Achieving outcomes with video

It’s critical advertisers focus on creativity, relevance and performance when planning video advertising to ensure the right viewer is exposed to the right creative, and ultimately an outcome that supports the business objective is achieved. Digital video measurement is now sophisticated enough to understand where consumers are viewing content and ensure frequency is managed across multiple environments, which reduces the number of wasted impressions. It also allows brands to align their ads with specific subjects or content types and reach viewers with niche interests. For example, sports enthusiasts being able to catch up on match-day highlights for their favourite team. But it’s not just the context of content advertisers must consider; they must also be aware of the context of the platforms themselves.

This need is well illustrated by looking at how much consumer attention is garnered by different platforms. Research found social media and communication apps represented 50 percent of time spent on mobile in 2019, with 21 percent of time spent on video and entertainment apps, and nine percent on gaming apps. By combining multiple environments at scale, advertisers can ensure they’ll reach their audience wherever they are consuming content, whether that be via YouTube, news and lifestyle publishers or popular app environments.

In addition to ensuring contextual relevance, advertisers also need to pay attention to video ad formats and lengths. If viewers are watching long-form TV-style video content on a connected TV or desktop they may be happy to watch 30-second ads that delve deep into the brand story. If, on the other hand, they are watching shorter video clips or browsing their social feed on a smartphone, their attention span will be reduced, and a six-second ad may be more appropriate. These shorter ads within premium app environments can be used to reinforce longer videos ads, focussing in on a single element of the message and driving brand recall. Ultimately, a video ad has its greatest chance of success when the format is appropriate for the ad message, and adapted to the device or environment where it is viewed.

Subscription VOD platforms are at the pinnacle of their popularity, but we’ll see the landscape continue to shift over the coming years as ‘subscription fatigue’ hits, and potentially as media consumption levels even out post-COVID-19. An advertiser’s priority should always be to identify the right creative message to place in front of the right audience wherever they are consuming content, before refining for the device or environment as appropriate. Only then can we ensure marketing success in an age of evolving video.

Originally published on Video Ad News