Shift to VOD: video advertising wars

A few weeks ago the Australian market saw the launch of another major streaming service: Disney+.

The launch of the service into our already increasingly busy streaming market led to much discussion on the future of television – and the reinforcement that the video streaming wars are changing today’s media landscape. It also proliferated talk that consumers’ interaction with content is changing.

In Australia, 14 million people access either a subscription television or video-on-demand service. Netflix claims 11.5 million subscribers and Stan 2.9 million. Just weeks after launch, Disney+ has over 10 million subscribers globally. Closer to home, in just 12 months Kayo Sports has secured 364,000 subscribers with those viewers streaming 65 million hours of sports content.

As we battle this fragmentation of eyeballs, what seems to be missing from the conversation is the fact that these video streaming wars are also a defining moment for the advertising world.

Since Google and Facebook first began to sell digital ads, we are about to see a seismic shift in the marketing sector, and the most impactful change for video players.

As we enter 2020, we are facing the biggest transformation our sector has ever seen: the video advertising wars.

Since the first TV advertisement appeared in 1941, video has proven itself to be the strongest and most impactful media for brands to engage with audiences and drive behaviour. And in the attention economy, impact is critical.

Today, more people are watching more video than ever before. Take the Foxtel platform for example. Since we introduced the New Foxtel Experience in July 2019, total VoD viewing has increased by 121% per user, per month – led by Sport which was up 249% and Movies, up 200%. ThinkTV figures show BVOD viewing across all Australian broadcasters in H1 2019 has increased 35%, with the average consumption per week hitting approximately 14 hours.

The shift to VoD is a boon to advertisers, who are no longer restricted to ad breaks on linear television. Now, they have a multi-platform environment that reaches viewers everywhere, anytime.

But, for the past two decades, if not longer, the advertising industry has been playing catch up with how consumers interact with media. Both brands and agencies need to evolve and break free from the digital vs linear mindset.

It’s time to shift our traditional thinking.

The winners of the video advertising wars are going to be the marketers who understand the new investment dynamics of advertising. Successful agencies will develop and execute video creative that takes consumer behaviour into account by being present across multiple platforms in multiple formats – be it 6, 30, 60 seconds or longer.

If the video streaming wars will be won or lost on the quality of content, the video advertising wars will hinge on the viewer experience. After all, a critical difference between the video advertising wars and the streaming wars is the fact that many of the top streaming players don’t currently offer advertising. This redefines the rules of engagement.

For media companies this means optimising the viewer experience by having sustainable advertising loads, and having high-impact formats that deliver the cut-through and recall advertisers don’t just need, but frequently request. For marketers it means creating advertising formats and executions that support rather than interrupt content.

As the video advertising wars unfold, another major arms race will be the use of data. The possibilities across both sides of the advertising equation are seemingly limitless, from personalisation and targeting audiences, to helping to shape messaging and proving the effectiveness of a campaign or strategy. Addressable audiences are fast becoming the new battleground – marketers with the deepest knowledge of their customers will have a major tactical advantage in the battles ahead.

The three major players in the video advertising wars – media platforms, marketing agencies and advertisers – have the opportunity to get ahead of change. To be victorious, you must lead from the front.

Consumers are showing us they’re not afraid of changing their behaviour, so the advertising sector also needs to embrace evolution. We can’t be afraid to mix this up, and be too fearful of challenging old ways of doing things.

This means rolling out new innovation in the interface between advertising and customer experience. It means exploring new partnerships around data and deepening our understanding of the viewer, and how they interact with content.

The opening shots of the video advertising wars have already been fired. It’s time to hit fast forward and charge ahead.

By Mark Frain, CEO, Foxtel Media

This article was first published by AdNews