Why Digital Native D2C Brands are Turning to TV

We’ve seen an explosion in the number of upstart direct to consumer brands – companies which build their audiences online and sell to their customers directly – over the past few years. When it comes to marketing, many of these disruptors have tended to use social platforms and podcast sponsorship to build direct relationships, and social video to communicate exactly what their product is and how it works.

While these digital natives eat up market share in established industries, it might initially look like bad news for TV advertising. However, the reality is that as these brands mature, many of them start to behave like “traditional” FMCG marketers and turn to TV advertising to help them scale further.

A report earlier this year from the Video Advertising Bureau (VAB) highlighted this growing investment in TV advertising by what they call “direct disruptors”. VAB analysis of Nielsen Ad Intel data found that TV spend by the fifty D2C brands it analysed grew from $322.8 million in 2015 to $1,313.6 million last year.

So what’s driving these brands to TV?

Advanced TV specialist Simulmedia has worked with several of these brands as they’ve branched out into TV, and CEO Dave Morgan says it’s a matter of scale and brand building.

“Everyone would expect that these digital first direct to consumer brands would build their full businesses on digital, but what happens in many cases is they perfect their product and customer segmentations online, but then they find they can’t really scale any further using digital only,” he said. This hasled them to turn to TV.

Julian Hearn, co-founder of meal replacement powder maker Huel, who raised an additional $26 million last week, agreed that TV’s huge reach made it an attractive medium to his company, which just this week launched its first TV campaign. “I’m not a fan of offline advertising,” he said. “It’s extremely hard to track performance and therefore difficult to optimise. However, TV is interesting, it has massive scale, and it’s an engaging medium.”

“Mattress in a box” company Casper meanwhile ran TV ads from the very beginning, again because it provided reach quickly and efficiently. “We decided to start running TV ads from day one as TV is THE mass media that provides a very large reach in a limited amount of time,” said Quentin Luce, who handles Casper’s European TV advertising. “TV is also, surprisingly enough for most advertiser, a very cheap medium when bought efficiently, which allows us to maximise repetition and therefore increase brand recognition.”

As these digital natives move onto TV, Morgan says they are more focussed on bottom of the funnel metrics than traditional TV advertisers. “None of them say I’ve bought my gross rating point so I’ve got my brand, I’m good,” he said. “They want to know exactly who they’ve reached. In every conversation we’ve had with these companies at Simulmedia, they have involved data scientists or people with deep knowledge of data analytics as part of the conversation.”

Luce agreed that while Casper looks to TV advertising for brand building, they also want to see direct results. “While at first our ultimate aim is of course to drive direct sales in order to cover the cost of a TV campaign, the halo effect of any campaign has a long lasting effect and definitely builds the brand,” he said.

The VAB’s data suggests this approach works very well. Its analysis found that emerging D2C brands (brands founded within the last five years) tended to see their revenues take off after launching a TV campaign or increasing investment. It also claimed that TV is very effective at driving greater audience engagement online – it found that as emerging brands increased online spend by an average of 93 percent, they saw 312 percent growth in search queries, 206 percent growth in social actions, and 177 percent growth in online video views.

“We directly see from day one a TV effect on website visits, and sales coming from those direct visit usually happen quite fast afterwards,” said Luce.

Good News for TV?

This all sounds like good news for broadcasters, with new money flowing into linear TV. “I think that it is not unrealistic to expect that between five and ten percent of US TV advertising revenue in three or four years, certainly within five, will be coming from these direct to consumer brands,” said Dave Morgan.

He cautioned, however, that this won’t necessarily increase TV ad spend overall. “The big question is, does the Casper mattress dollar take away the Tempur-Pedic incumbent money, is it a net positive for TV? And as things stand, that’s far from certain,” said Morgan.

It should however alleviate broadcasters concerns that the rise of DTC brands will be bad news for TV advertising. So even if TV’s traditional big FMCG spenders see a decline, it appears there will be new advertisers ready to replace them.

But the industry needs to be set up to accommodate these upstart brands. “Very few of them use traditional ad and media agencies, and very few large TV companies have sales teams dedicated to selling to them,” said Morgan.

read more here: videoadnews.com

Streaming Video Services Attempt to Solve the Monetization Puzzle

“Direct-to-consumer” and “scale” might be the monetization buzzwords of 2018, but what actual strategies increase content services’ ability to generate revenue? Companies often won’t talk about their secret sauces, but we got Ellation, Xumo, FandangoNow, and other experts to chime in with insight and advice about how their monetization strategies are paying off.

According to Deloitte, streaming crossed the chasm last year, with 55 percent of U.S. households holding paid subscriptions, compared to 10 percent when the company first surveyed consumers about the topic in 2009. In another Deloitte report called “Digital Media: The Subscription Prescription” (2017), the company predicted that, by the end of 2018, 50 percent of adults in developed countries would have at least two online-only media subscriptions (this includes all media: TV, movies, music, news, and magazines), and this will double to four by the end of 2020. The report predicted that 20 percent of this same consumer group would have at least five paid subscriptions by the end of this year, and by the end of 2020, they’ll have 10 accounts, and their aggregate spend will be more than $100 per month.

There’s been lots of news about how Amazon and Netflix are spending their way to success with their investments in original content. However, not everyone has those kinds of budgets, so the companies we spoke to for this article have gone about things differently. What makes viewers stay tuned and keeps the lights on at media companies? Original niche offerings, easy access, 4K, exclusive live events, well-curated content, and of course, advertising. First, the T-shirt test.

Ellation: The T-Shirt Test
“[About 4 years ago] we had a strategy to build not just Crunchyroll but a ton of other different SVOD [subscription video-on-demand] properties focused on niche passion audiences; everything from arts and crafts to auto enthusiasts to Korean drama. While we were going through that strategy we realized that everybody was going and trying to do the same thing,” says Eric Berman, head of content partnerships and business development at Ellation, which owns anime SVOD service Crunchyroll.

Ellation decided consumers didn’t need more single-purpose apps. Instead, the company built VRV, a fan-focused aggregation platform where other complementary niche SVOD properties could reach their audiences without needing to hire large engineering or product teams to work on audience development. VRV works with traditional linear partners to deliver anime, gaming, tech, and cartoon content, and it continues to grow the breadth of its offerings. “At VRV we have something called the T-shirt test. For every brand that we bring on the service you should see someone walking around a mall proudly wearing that logo on their shirt, because it defines who they are as a person,” says Berman.

“Our users come for what we call appointment viewing,” says Berman. Each quarter, Ellation acquires 30 to 40 new series directly from Japan. Each season is 20-plus episodes, and each episode can range from 22 to 44 minutes in length. This binge-worthy content keeps viewers tuning in.

Behind the scenes, Ellation is using data-driven insight to shape everything on its platforms. “Establishing a data-driven decision platform is probably the single most important technology innovation that a streaming video business should work to take advantage of,” says Michael Dale, VP engineering, Ellation. “There have been several innovations that have facilitated better surfacing of actionable data, and leveraging these data points has helped our video streaming business succeed.” Those innovations include data normalization and server-side data integration via companies like Segment and Datazoom. Dale says Ellation was able to integrate with those platforms in a matter of weeks instead of “[what] would otherwise be a massive cross-platform integration project to build and maintain.”

These data platforms enable Ellation to measure the video experience against metrics such as the impact of video quality on churn or how the number of ads impacts minutes watched by viewers over time.

“We send most data into a central hub that lets us pipe video view events into several services for everything from targeted messages to user journey funnels that help us model our users into behavioral cohorts for further analysis,” says Dale. “[We can] connect the events into our marketing CRM similar to how we connect in our data analytics platform. This can enable triggering an email to users that experienced a streaming issue through the same system as other customer messages.”

VRV has a million monthly viewers, a good portion of whom are watching ad-supported content. Viewers can subscribe a la carte to individual channels or buy an unlimited, ad-free subscription called VRV Premium for $9.99. “It’s the only bundle that exists of all of these channels in one place,” says Berman. The pricing is fixed, so viewers get the benefit of new content without seeing the price go up each time Ellation adds new partners. That’s good news for viewers, especially Nickelodeon fans. This past summer, VRV launched an exclusive NickSplat channel from Nickelodeon featuring almost 300 episodes of nostalgic, animated content, and Dale says the company is beginning to partner with other linear cable channels.

read more here: streamingmedia.com

Snapchat Likes Its Programmatic Revenue In Q3, But Daily Users Dwindle

Snapchat saw promising gains for its advertising platform in earnings reported Thursday.
The company reported a record-high $298 million in revenue, with 43% year-over-year growth, and quarterly jumps in average revenue per user (ARPU) from $2.21 to $2.62 in North America and $0.66 to $0.85 in Europe.

But Snapchat is still bleeding daily active users (DAUs) since an app redesign early this year. Snap expects DAUs to drop again in the fourth quarter.

CEO Evan Spiegel insists the redesign was the right choice.

“It’s sort of like how the programmatic transition was difficult at first but the right thing in the long term,” Spiegel said, claiming content and inventory quality improved because of the redesign.

While Spiegel told employees in a letter that he expects DAUs to grow next year, he told investors that’s a “stretch goal” and not actual guidance.

Speaking of programmatic, the transition is paying off now and Spiegel said Snapchat’s self-serve ad business is up to 85% of revenue this quarter from 25% a year ago.

Global ARPUs surpassed the previous high of $1.53 recorded in the final quarter last year before Snapchat’s programmatic reset caused CPMs to plummet.

The company’s tracking pixel has also gained steam, which accelerates the advertising platform. Snapchat’s pixel tracked 230 million purchase events in Q3 after seeing only 70 million the quarter before, which leads to better lookalike audiences, measurement and CPMs.

Onboarding new advertisers and improving the ad platform performance will increase revenue for Snapchat even if users tail off. But to be sustainable long-term, the company needs user growth to return.

Snapchat has a two-pronged strategy to return to user growth, Spiegel said.

read more here: adexchanger.com

Deutsche Telekom Launches MagentaTV

Deutsche Telekom launched a new OTT service Wednesday as the German market heats up, with research suggesting that Netflix now has more subscribers than paybox Sky Deutschland. That finding comes after similar trends were reported in the Britain, meaning that streaming subscribers now surpass traditional pay-TV users in Europe’s two biggest markets.

The deep-pocketed incumbent telcos in Germany and the U.K. – Deutsche Telekom and BT, respectively – also want in on the action. Deutsche Telekom has revamped and re-branded its television offering to MagentaTV, which launched Wednesday.

MagentaTV will offer series and movies as well as programming from the catchup services of German pubcasters ARD and ZDF. In addition to a full-fat 300-channel service available through an IPTV settop box, there will be a skinnier over-the-top streaming equivalent for €7.95 ($9.07) a month. For that, subscribers will get about 75 channels.

“Telekom’s TV business is one of the key pillars of our growth strategy,” said Michael Hagspihl, MD, of the division that includes MagentaTV. “The combination of the best platform, strong partnerships and exclusive content remains our recipe for success for the future.”

The German telco has already inked a deal to allow its TV subscribers to access Netflix via its service.

The latest research underlines Netflix’s increasing sway in the German market. The streamer does not break out subscriber numbers by territory internationally, but Ampere Analysis estimates that it overtook Sky in the third quarter of last year, with 5.1 million customers compared with Sky’s 4.8 million. Amazon had 9.9 million subscribers at that point, with customers generally signing up to the wider Prime retail service, which includes Prime Video, instead of the TV offering as a standalone product.

Sky Deutschland’s latest subscribers count is 5.2 million, but it is safe to assume that Netflix and Amazon have also registered new customers. While the growth of the U.S. SVODs is a threat to the traditional pay-TV firms, it is not an either-or choice for many households, which take both. The research suggests that more than half of German broadband homes already take at least two SVOD services.

Aside from Netflix and Amazon, there is also room for more niche entrants. In transactional VOD, Pantaflix is a prime mover in Germany and has deals with major U.S. studios and local players.

read more here: variety.com

Viewers Enjoy Brand Videos on Facebook, YouTube, and Instagram

Where are consumers most receptive to commercial videos? Where do viewers not just put up with but actually enjoy brand videos? According to a report from Animoto, Facebook, YouTube, and Instagram lead the way.

Ananimoto, a company that helps businesses make videos quickly, released its State of Social Video report today, and the results are useful. One question asked viewers the platforms where they most enjoyed watching social videos from brands. People were allowed to pick up to three answers.

Facebook came it first with 65 percent of those surveyed, YouTube next with 61 percent, and Instagram third with 18 percent. That’s a big drop off before the number three spot, and it suggests that there are really only two platforms where people enjoy watching branded video.

If a large number of people really enjoy brand videos on those two platforms, what type of content do they want to see? The top vote-getter was how-to videos (35 percent), followed by sale videos (18 percent), and top 5 lists (13 percent). In this question, those surveyed could only pick one answer.

For the record, the least popular types of brand videos on social platforms are editorial or topical videos (4 percent) and videos featuring the company founder or owner (4 percent).

Other choice stats from the report:

– 46 percent of consumers watch more video ads on social media than on TV.
– 73 percent of consumers say a brand’s social media presence has had an impact on a purchase decision.
– 48 percent of consumers say a brand video on Instagram has impacted a purchase decision (compared to 31 percent who said the same in 2017).

read more here: www.onlinevideo.net

Netflix plans $2bn debt raise to fund further content growth

Netflix, which last week beat Wall Street expectations to post a strong third quarter rise in subscribers, is planning to raise $2bn through a bond offering to fund further content growth.

The funds will be used to acquire content, as well as develop and produce, the area Netflix is most interested in as it continues to build a war chest of original material.

Netflix expects to spend $8bn on content in 2018, and previously announced plans to increase the number of original titles by 700 this year. Stranger Things and The Crown are among its most popular original titles as the company races to build a stable that will overshadow the content creation ambitions of the likes of Amazon Studios and Apple.

Monday’s move follows recently announced fundraising plans by Netflix to the tune of $1.9bn last April, and $1.6bn back in in October 2017.

The announcement had little bearing on share price, which dropped to approximately $330 by mid-day on Monday. Moodys Investor Service gave the streaming giant a Ba3 junk bond rating. The service qualified that by attributing a “stable” outlook to Netflix, based on the latter’s strategy of greater original content delivered directly to customers across a global network.

Netflix has a famously heavy debt load – last month it reported $8.3bn in long-term debt, and total liabilities are understood to exceed $30bn – and acknowledged the scale of its content investment to shareholders last week, adding that they would drive growth in revenue and operating profits for a long time.

read more here: www.screendaily.com

Facebook sued over inflated video figures

Facebook was fully aware of inaccuracies in the way it measured how many users viewed video on its platform for a much longer than it has previously admitted, new court documents have claimed.

In September 2016, Facebook confessed that it had overestimated how much video its users had watched for the previous two years. But newly released papers that are part of a US legal action against the social media giant, claim that it knew about the problems as far back as 2013.

The error affected a Facebook metric called “average duration of video viewed”, which was supposed to tell publishers for how long, on average, people had watched a video. However, the metric did not include viewers who had watched for less than three seconds in the count. Discounting the shorter views – including people who had ignored a video in their news feed – boosted the average viewing times for each video. It was also criticised for counting a video as being viewed after three seconds.

Now, a number of advertisers are suing Facebook for unfair business conduct and fraud. As part of their case, they have viewed thousands of internal Facebook records and claim these show the company knew about the issue in 2015.

The plaintiffs claim that a Facebook engineering manager followed up on advertisers’ complaints that dated back to early 2015, saying there had been “no progress on the task for a year”.

Facebook developed a “no PR” strategy to avoid drawing attention to the error, according to the court filing.

The plaintiffs case hinges on the fact that the numbers provided by Facebook meant advertisers put more money into its video ads than those on other platforms.

In response, Facebook said: “This lawsuit is without merit and we’ve filed a motion to dismiss these claims of fraud. Suggestions that we in any way tried to hide this issue from our partners are false.”

Facebook now has a dedicated metrics team in palce, and allows third parties and experts to review its measurements regularly.

read more here: advanced-television.com

YouTube advertisers can now target audiences watching on TV screens

Google launched a new TV screens device type on Oct. 16 that allows advertisers to target YouTube audiences watching video on TVs through Chromecast, set-top boxes like Apple TV, video game consoles and smart TVs, the company announced in a blog post.

YouTube ads on TV drove an average lift of 47% in ad recall and 35% in purchase intent, according to Ipsos Lab Experiments data cited in the blog post.

Advertisers can access TV-focused analytics and special options through the new device-type update to determine a campaign’s success, according to Mashable. Advertisers can also set specific bidding for TV viewers.

As more consumers cut the cord and turn to over-the-top (OTT) and connected TV services, many marketers have struggled to drive engagement on these platforms, which typically blend in digital elements and don’t always support ads. By adding TV screens to its device categories for YouTube, Google is attempting to ease that process while also recognizing that the channel is a huge opportunity for its own business. The Alphabet company claims that people now collectively watch 180 million hours of YouTube content on TV screens every day.

The ability to specifically target YouTube audiences watching on TV also presents a much more affordable option than traditional TV ad buys, as noted by Mashable. TV ad prices have remained high despite ratings declines of 10% to 12%, according to Magna. Not only that, YouTube advertisers can also leverage valuable TV analytics to inform their video strategies across platforms, which has frequently been a struggle.

Marketers are broadly investing more in OTT, which promises better targeted ads, cross-screen planning and buying and addressability. Magna predicts that ad spend on OTT TV will increase 40% to $2 billion this year. The increase is being driven by higher consumer adoption of smart TVs and set-top boxes, and Magna reports that 80% of all U.S. households will be reachable through OTT in 2018.

YouTube’s viewership continues to grow, with the platform is projected to overtake Facebook as the website with the second-most traffic from U.S. users, according to a recent SimilarWeb study. The platform is also popular with younger audiences, groups that marketers continually strive to reach and who are helping to drive the cord-cutting trend.

read more here: www.marketingdive.com

Why Voice Search Could be a Game Changer for OTT

Much has been made of the ability of voice search to disrupt Google’s dominance in the search world (though obviously Google is one of the early leaders in the voice search space too), but it could have a particularly interesting impact for over-the-top (OTT) apps says Kevin McGurn, CSO at Vevo.

Voice search could provide a much smoother alternative to typing via a TV remote, and make navigating OTT apps much more straightforward, meaning whichever company takes the lead in the space could become very influential in OTT. In this interview McGurn also discusses Vevo’s OTT strategy, and how it positions itself within the music industry. Filmed at New Video Frontiers 2018 in London.

read more here: videoadnews.com

15% of Pay TV Customers Downgraded Service in the Last Year

According to the researchers at Parks Associates, 15 percent of all pay TV subscribers in the U.S. with broadband connectivity downgraded to a less expensive service in the last year. Also, 34 percent changed their pay TV service in some way. Other changes include switching to a new TV provider, upgrading to a more expensive service, subscribing to a TV service after not having service for a year or longer, and subscribing to a TV service for the first time.

The industry is seeing a wave of people leave pay TV and sign up for one or more OTT accounts. According to Elizabeth Parks, senior vice president at Parks Associates, OTT subscription numbers keep rising—with 64 percent of U.S. broadband households now signing up—while pay TV subscriptions are declining.

Last week, Parks revealed that 47 percent of U.S. homes with broadband watch user-generated content two or more times per month.

Parks Associates: Recent Changes Made to Pay-TV Service (PRNewsfoto/Parks Associates)

“User-generated live content is gaining popularity, with platforms such as Instagram Live providing new ways for content creators to engage with their viewers in real-time,” says Billy Nayden, research analyst for Parks. “As more alternatives to traditional TV emerge, all players will explore new and unique ways to package and present digital streaming as part of their services.”