Edward Munro

How will advertisers remain relevant with streaming TV?

What will advertisers do when more people switch to streaming TV? I recently “cut the cord” and now watch Apple TV with Netflix being the centerpiece to view programs from around the world on my mobile, tablet, laptop and big screen TV. The reason for the switch is because of cost and convenience. As actor Kevin Spacey said in August 2013, “The audience wants the control. If they want to binge… then let them!” In other words, “give people what they want, when they want and in the form they want – at a reasonable price and they will more likely pay for it rather than steal it.”

Streaming content is great for consumers but how will advertisers remain front and center with their audience?

Today, there are plenty of free viewing options beyond cable and satellite TV. Take the news for example. With Apple TV, I can watch Sky News, PBS NewsHour, Yahoo! and Bloomberg. I also tune into the NBC Nightly News on podcast – and again, all these options are free and for the most part, without commercials. I used to pay DirecTV $115 per month for these news services along with HBO and 200+ channels that I never watched. In fact, a recent Nielsen study shows that most viewers only watch 17 channels. As a result, I now watch Netflix and these other “channels” on Apple TV and besides HBO, do not miss anything.

I also use an antenna to capture over-the-air channels and (depending on the Supreme Court decision regarding Aereo) soon, I may be able to view more channels. The question for advertisers is because the cable TV industry model is dying, what are the best ways to connect with a large audience? A recent article in Forbes had this to say:

“The industry formerly known as TV, is rapidly turning into T/V (Television / Video). As David Matathia, director of marketing communications at Hyundai Motor America told eMarketer, “We’re pretty much approaching all of our major broadcast partnerships in concert with our digital programs.” He said, “When we’re working with network partners, it’s now rare to see a standalone TV or a standalone digital deal. It’s almost become standard practice to package digital and broadcast together.”

However, as mentioned, although most of what I am viewing comes without commercials including Netflix, SkyNews and podcasts. The PBS and Bloomberg streaming content does includes ads, but will this be enough? Is the :30 TV spot going to change? I suspect yes. I know with my viewing habits the goal is to avoid or mute ads wherever I can. So what to do?

What I believe is missing is that advertisers now have the opportunity to engage viewers with worthy content, gamification and rewards. There has to be a way to make the promotion of products and services a welcome addition rather than an annoying disruption. If the viewer has a reason to interact – that is quick, fun and rewarding, there will be  more opportunity to create lasting impressions that will lead to product trial and eventually consumer loyalty.

Why is it when we’re in the midst of a “crisis” we tend to think this event is somehow unique in human history? At first there is a tendency to panic and then, after way too much hand wringing, the vast majority of people eventually pick themselves up and move on.  It’s only years (or months) later with the benefit of hindsight that historians are able to clearly see who the innovators were based on their courage and ultimate success while the rest flailed about in fear of change.

This scenario could easily be about politics, war or business since a “crisis” is often the result of a human endeavor that involves similar emotions, reactions and ultimately – solutions. In this case the subject matter isn’t about the auto or banking industry or the even the manufacturing sector that’s under siege, instead it’s about the advertising industry. At this very moment, while many insiders are worrying about their agencies, a few brave souls are charting new paths to success while also employing basic principles that still work.

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In his current Harvard Business Review article, Andrew O’Connell discusses the findings of a recent Journal of Advertising Research study that claims households with DVR’s “showed no decrease in recall or in prompted recognition of commercials among DVR users” who had used the fast forward function. This was especially true for ads that had previously been seen at least once at regular speed.

The article goes on to recommend that advertisers should consider airing their spots on live programming (such as news or sports) to ensure viewers will first have a chance to see the ad at regular speed. After that, viewers who hit the FF on their DVR remotes will have their eyes glued to the screen for the first sign that their program has returned and hence see the speeded up ads along the way. Currently many cable stations are airing spots that only display bold text as a VO drones on and on, but at 3 or 4 x speed it’s a quick, silent read. (And yes, just as boring and lame as ever, but they seem to be getting some results.)

Since the JAR study estimated that 68% of DVR owners skip past commercials, it’s a sure thing that DVR makers, such as TiVo, may soon provide options to skip past entire blocks of commercials in an instant – thus creating more headaches for advertisers.