As consumers spend more time with new streaming TV services, we could see digital video begin to approach the time spent levels of linear TV. According to eMarketer, the average time spent with digital video will reach about 30% that of linear TV this year, with the average adult consuming 72 minutes of digital video versus 241 minutes of linear TV per day. However, if one or two linear streaming services thrive, we think this could go closer to 50%.
The growing popularity of digital TV consumption will also heat up the digital video advertising market in 2017. Expect to see increasing innovation and scale in the market. And, expect things to get easier for media companies that want to measure and sell digital video advertising the same way they measure and sell linear TV advertising — the long-awaited convergence may finally arrive.
Continued expansion of digital video
In 2017, expanded offerings from key industry players like YouTube could significantly boost the popularity of streaming video services. This report from the Associated Press states that the dam appears to be finally cracking for even better content to come to YouTube. Combine this insight with the fact that YouTube has an audience it can upsell to of over 187 million US viewers.
These form the building blocks that will provide advertisers with access to an explosion of premium video inventory. Other industry players like DirecTV Now, Sling TV, Hulu, and PlayStation Vue have their own building blocks in place as well. Consumers will begin to associate connected devices with tune-in digital linear viewing — traditional, scheduled episodic or live programming delivered over IP — and not just on-demand viewing.
Forrester analyst Brandon Verblow provides a good summary of the ad-supported linear streaming video trend and encourages the industry not to just reproduce the exact traditional linear TV viewing experience on digital devices. Instead, he recommends, “Going forward, it will be important to track innovations such as audience-based buying, whether ads are targeted to specific users, or whether ads are interactive. These are the factors that have the potential to generate incremental value and the ones that should really matter to advertisers and content providers.”
A new king of ad formats?
Major advertisers have found that TV ads deliver better ROI compared with digital. For instance, Coca-Cola’s global chief marketing officer, Marcos de Quinto, told attendees of a recent beverage industry conference that, in 2014, his company returned $2.13 for every dollar spent on TV versus $1.26 for every dollar spent in digital.
Could 2017 be the year that media companies and advertisers figure out how to improve upon the linear TV ad in digital environments? There’s a real opportunity here to provide the same brand recall that advertisers get from traditional linear TV while enhancing advertising performance with the type of audience-based targeting that advertisers use within digital. If the advertising industry fuses the best qualities of the TV ad with the addressability of the digital at scale, it could be looking at a new king of ad formats — targeted, dynamic video ads in TV-quality streaming video environments.
Greater confidence in cross-channel measurement
Things are looking up for publishers and advertisers that want to transact using metrics that account for digital and traditional viewing behaviors. Some are going their own route to create their own metric, while others are leveraging established players.
NBC Universal is already transacting on a cross-platform metric they call the cumulative P-2 plus rating. An AdAge article about the rating quotes Dan Lovinger, exec VP of advertising sales, “Given the dynamic shifts in viewing from one platform to another, we wanted to create a system that allows us to pivot from one platform to the other in real time. P2+ allows us to pivot an advertiser to where that consumption is taking place.”
Also, Nielsen has received accreditation from the Media Rating Council for its Digital in TV Ratings solution, according to Adweek. This gives media companies and advertisers more confidence to transact with C3 and C7 ratings that now incorporate digital consumption of linear streams in addition to traditional consumption of linear TV.
Questions for media companies
These trends in OTT and TVE monetization spark a couple questions for media companies to consider in 2017. First, how are you thinking of monetizing streaming TV? Second, what are you doing to make your video advertising better than traditional TV advertising? Third, will you include digital views in linear ratings or pursue a different measurement and monetization strategy? Tune in to learn more from subsequent blogs on how Adobe Primetime and the rest of the Marketing Cloud could help address your challenges.