Companies Rethink The TV Ad Model For OTT

The advertising model for traditional, linear television is actually pretty simple. Networks air TV shows, and those shows have regular commercial breaks. In total, they typically end up being around eight minutes of commercials every half hour, and 16 minutes in an hour.

Now, as consumer viewing shifts to over-the-top video — a format dominated by the ad-free giant Netflix, and the limited-ad giant YouTube — companies are realizing that those old ad models just won’t fly.

“It is clear to us that consumers are not going to stand for 16 minutes of ads per hour,” Scott Rosenberg, the GM of Roku’s platform business, said at the Business Insider Ignition conference last week. “The consumer we are serving is highly empowered, they have lots of screens to choose from — ad-free experiences to choose from. While they value free, there is a tolerance. It is very clear that ad loads will come down, and the ads will have to become smarter and more engaging.”

So what can companies do? Better targeting and more relevant ads are a start, but so are ads that are not interruptive to the viewing experience. Roku will be adding search-based and discovery-based ads in the coming months, and is looking at other formats as well.

Other companies, such as Hulu and AT&T, are looking into other options, including “pause-vertising,” in which an ad would begin to play after a user presses pause on a show they are watching.

The logic is that as consumers increasingly binge-watch shows, they are increasingly pausing the action to grab a drink or use the bathroom. That could present an opportunity for certain advertisers.

While some consumers may be annoyed by these types of ads, they are certainly less interruptive than traditional commercial breaks, and are part of the value exchange of ad-supported OTT.

“Ad-free is a great product, if you can afford that type of viewing experience, it gives you back some time,” said Hulu CEO Randy Freer at the Business Insider event. “What we really like is that we can offer choice. We can offer a $0.99 package, or our Spotify bundle to consumers, and that is ad-supported, they understand that, and it has less than half of the commercial time than you have in traditional markets.”

Value is the key word here. Rosenberg says that consumers clearly want free ad-supported options to complement their paid subscriptions, and that “free” is the most-searched for term among Roku apps.

“I think many of us in the industry have been trying to figure out what the balance of ad-supported and ad-free viewing will be five years from now,” Rosenberg says. “It is very clear to us now at Roku that consumers are cutting and shaving the cord, not just because they are looking for more choices, but because they want value, so free is a really important selection criteria as consumers get into OTT.”

read more here: www.mediapost.com

Roku Lets Publishers Sell Inventory Using Its Audience Data

Roku released its Audience Marketplace on Tuesday, designed to let publishers use its first-party data based on how consumers interact with the OTT device.

The new marketplace allows publishers to match their audiences with Roku’s. The device’s first-party data also provides behavioral insights – such as what content Roku users search for or how much time they spend streaming content – that allow publishers to sell their inventory based on a deeper understanding of the consumer.

Turner, Fox and Viacom are the first publishers to sign on.

“Historically, we sold using show mix from an OTT perspective,” Noah Levine, SVP of advertising data and technology solutions at Fox, told reporters at a press briefing. “There have been challenges developing a sense of identity on OTT. The reason you need a source of identity is so you can activate data.”

While Roku’s marketplace isn’t a singular solution to the challenges of buying inventory on connected TV, Levine said it’s a step forward.

“What Roku has done here is probably one of the first steps needed to be able to do programmatic on connected TV in a meaningful way because, guess what, there’s no cookies on connected TV,” he told reporters.

Roku hopes the marketplace will ultimately serve its viewers, too. If publishers can run more relevant ads, the viewer is more likely to engage with them. Roku doesn’t sell all the inventory on its platform. Instead, advertisers can buy inventory from one of the company’s partners, such as Fox, Turner or Viacom. So it doesn’t hurt Roku now that it can monetize inventory it doesn’t itself sell.

Less waste is more engagement, or so the ancient marketing adage goes.

read more here: adexchanger.com

Hulu, Roku, YouTube Execs Talk Importance of Curating Streaming Content

With peak TV hovering at almost 500 scripted shows alone, for many content providers the question is not how to break through that glut with a standout original of their own but instead how to make sure the audience can find the content they will connect with on their specific platforms.

“Roku has over 5000 channels,” Rob Holmes, head of programming for the OTT service, said at the ATX Television Festival Thursday. “Our purpose was really to make it easy to find free stuff. …We worked with a variety of partners to make…sort of an end-cap, like you’d find in a supermarket. [The free content] is curated into this experience that’s front and center on the platform.”

Holmes acknowledged that as the landscape changes, there is an “increasing challenge to highlight the great stuff that’s there.”

“We’re going to leave the super high quality, must have, must pay [programs] to the others who are doing it very well,” Holmes said of Roku’s content plans.

For some, attracting an audience without focusing on originals is also about the sheer diversity of offerings.

“We set out to basically reinvent television. We were the first channel to present multi-channel television [online],” Dwayne Benefield, head of Playstation Vue, said, adding that the reason they have been able to have the high ratings they have is because they are doing something digitally that other streaming services are not yet.

Vue also uses “channels” as a way to further curate its content and help users navigate the large amount of choices they have, which Benefield acknowledges could go away in the future but for now has helped the audience narrow those choices down.

While originals are an important side to Hulu’s business, the acquisitions are key, too. Curating content for which the audience is clamoring is key there, and series such as “Golden Girls,” “Boy Meets World” and “ER” have been proven performers in getting viewers staying on the platform for days at a time. “ER,” for example, attracted more than 35,000 bingewatchers who watched every single episode within the first two months it was available on the service.

“We look for those shows that are sort of the comfort food to blend in with [originals like ‘The Handmaid’s Tale’s’] intensity,” said Lisa Holme, vice president of content acquisitions at Hulu.

Hulu also expanded into the live television experience to provide consumers who cut the traditional cable cord a chance to watch series when they air in a more traditional time period.

But whether or not it will expand into hosting or creating live events the way YouTube has, Holme says it’s about, “What’s the right content that matches the right business model that hopefully matches the delightful consumer experience?” So while there are no solid plans to expand in that way today, “[it] could come some time,” she said.

As the success of series such as “The Handmaid’s Tale” proved for Hulu, the evolving landscape does often require the creation of original series to push streaming services forward in a bigger way.

YouTube Red also saw success with “Cobra Kai” last month and certainly hopes to continue it with series such as “Impulse” and “Origin.” The service, which is rebranding to YouTube Premium, gets a lot of pitches for high school set series as well as tech-based shows, said head of scripted drama Jon Wax. But that’s not all they want to be.

“On the drama side, we’re definitely looking for some more premium content that could compete with our brethren…but with probably a slightly younger bent for our audience,” he said.

Both Hulu and YouTube are open to acquiring series that started their lives on other networks. But both Holme and Wax said that the decision over whether or not to “save” someone else’s original comes down to if the “economics of the show and the size of the audience” match.

“The reality is that often when a show has declined over time and lost some of the audience over time and the network decides not to continue with it, that was the right decision,” Holme said.

read more here: variety.com

Apple finally gets it shot at reinventing TV

Apple has been angling to take over the TV experience since Steve Jobs claimed to have “cracked it” back in 2011. With the Charter integration with Apple TV, the company finally gets its shot.

Charter to support, promote Apple TV

At its Worldwide Developers Conference in San Jose on Tuesday, Apple announced that Charter Communications Spectrum TV subscribers would soon be able to replace the cablers set-top box with an Apple TV. Charter and Apple will work to tightly integrate the Spectrum TV app for Apple TV 4K with Apple’s tvOS. Customers will be able to use Siri voice commands and search for TV shows and on-demand content through the remote.

Charter will offer the Apple TV 4K to its customers in special promotions. Also, Charter will offer Apple phones and tablets to customers when it launches Spectrum Mobile, a wireless service set to debut June 30th.

Zero-sign-in for dual-play Spectrum customers

Spectrum customers that get TV and broadband services from Charter will not need to login to use the Spectrum TV app. Neither will they need to login to use any TV Everywhere app from programming partners. The Apple TV can detect a Spectrum broadband network and automatically authenticate the viewer to use the Spectrum TV app, and apps like HBO Go and Watch HGTV, provided the viewer has the right to view these channels.

Roku provides a similar feature, called single sign-on. However, the pay TV subscriber must enter their operator login credentials once for the first TV Everywhere app they use. After the first login is successful, the subscriber can use any other TV Everywhere app without having to log in again.

A big deal for Apple

Apple has been angling for a way to become part of the TV infrastructure for years. For example, in 2014 it was rumored to be in discussions with Time Warner Cable (purchased by Charter in 2016) to bring the cablers content onto its new Apple TV (second edition.) Nothing came of these discussions. As well, the company has been talking about reinventing the television experience since Steve Jobs claimed to have “cracked it” back in 2011.

The Charter integration finally allows Apple to take control of the television experience. Spectrum TV customers will be able to use the device to watch TV, listen to music, and access any SVOD service, including Netflix and Amazon Prime Video. As long as they don’t want to watch a DVD, they need no other device beneath the television.

At $169.99, the 4K Apple TV box is the most expensive streaming media player of the top four steaming media player market share Q1 2018 brands. The Roku Streaming Stick+ offers 4K support for $100 less. Apple TV is also trailing far behind market leaders Roku and Amazon Fire TV. According to data from Parks, Roku’s market share is 37%, Amazon Fire TV’s is 26%, and Apple TV’s is 16%.

read more here: nscreenmedia.com

Free trials work! 60% convert to paying customers

It can be a struggle to find and retain subscribers for smaller SVOD services. New data from Vimeo shows that a free trial is a critical tool in converting subscribers and apps help cement the relationship.

Vimeo has been helping content rights holders launch online video services for more than a decade. It has plumbed data from 3.6 million worldwide online subscribers to bring some insights into how to build a successful video service. Two of the five data points in the just-released The 2018 OTT Revolution report struck me as particularly useful to any online video service provider looking to boost subscribers and increase customer lifetime value.

Free trials work

Online video service providers (OVSPs) could be forgiven for hesitating to provide a free trial. There are risks that many people will signup, binge the content they want, and then bolt without paying a dime. New data from Vimeo shows it is worth taking the risk. Vimeo data shows that any online video service provider (OVSP) would foolish not to allow free trials of the service. The company found that 60% of people that sign up for a free trial from any platform end up becoming a paying customer.

The company saw the highest conversion rates through iOS devices, 69.6%, and Roku devices, 69.4%. 68.4% of those signing up through a web interface converted to paying customers. Android TV and Android conversions were slightly lower, 64.7% and 62.7%, but only slightly.

The challenge is to get people to sign up for a free trial. Vimeo says an OVSP can increase its chances of that happening by one-third if it can get them to use the service app rather than the web interface. Since downloading an app implies a bigger commitment than browsing the website, it makes sense that free signups would be higher. The trick, however, is to get people to download the app in the first place.

Apps a critical part of the ecosystem

Vimeo says that it examined subscriptions to hundreds of online video services it powers. It found that more than 73,000 people subscribed through a web browser in 2017. Of those, over three-quarters also watched through an app. 32% watched through an app on their iPhone, 20% on an Android device, 2.4% through a Roku, and 3.3% through an iPad. This data strongly supports the idea that when consumers signup for a service they expect to have access to it through all the screens they use.

read more here: www.nscreenmedia.com

Roku transitions to an ad-driven business

Roku had a very strong finish to 2017, with strong growth in active users and revenue from its platform business. The company seems well positioned to take advantage of the expansion of the online TV market, despite a tightening streaming media player market.

Q4 2017 sees strong growth in Roku’s key strategies

One of the key strategies for Roku is to grow the base of active accounts. On that basis, 2017 was a very successful year. Active accounts increase 44% year-over-year (YoY) to 19.5 million. The amount of streaming time also increased sharply, up 54% to 4.3 billion hours. However, on a per active subscriber basis, viewing was flat over the previous quarter, though up from one year ago. In Q4 2017, the average active user streamed 2 hours and 25 minutes per day. In Q3, average users streamed 3 minutes more and in Q4 2016 16 minutes less.



Player market tightens

In the earnings call and the investor letter, Roku was clear that it does not view player sales as a key engine of revenue growth for the company. The player is a tool to help the company expand its user base:

“Our primary focus in selling players is to increase active accounts; we are not focused on maximizing hardware revenue and hardware gross profit.”

In an ultra-competitive market like streaming media players (SMPs), there is little opportunity to charge a premium price. Apple is trying with Apple TV but not seeing much success. Roku lowered the price of its premium player, the Ultra, from $129.99 to $99 in the fourth quarter. That help to boost unit sales volume by 25%, according to Roku’s CFO Steve Louden, but led to a 7% decline in player revenue versus Q4 2016.

Even though rivals are selling their SMPs at close to cost, Roku continues to make 9.5% gross margin on its player business. Last year in the same quarter gross margins were 13.3%. Expect margins to continue to tighten this year.

Platform revenue surges driven by advertising

Platform revenue continues to grow strongly. It grew 129% YoY to $85.4 million in 2017. It accounted for 45% of total revenue, up from 25% in 2016. The company expects it to overtake platform revenue in 2018. 75% of platform revenue comes from advertising and 25% from platform licensing.

Though it does not provide much revenue, license sales are an essential part of Roku’s strategy. Most importantly, the company continues to win over smart TV manufacturers and help them sell TVs. Anthony Wood, Roku Founder and CEO, says that: “1-in-5 smart TV’s sold in the US in 2017 were Roku TVs.” He later commented that half of the new active accounts came from licensed sources.

2017 was the first year that smart TV sales exceeded streaming media player sales. Roku’s strong footprint in the smart TV and SMP markets positions it well to continue to drive the expansion of active users throughout 2018 and beyond.

The success of The Roku Channel is helping drive ad revenue growth. The free ad-support channel launched late last year and is already the third most popular ad-supported channel on Roku. Mr. Woods was clear about the importance of ad revenue to Roku’s future:

“We are increasingly tapping into the $70 billion that US advertisers spend on TV as the TV ad ecosystem moves online.”

read more here: www.nscreenmedia.com

Connected TV Advertising is Surging

It’s no secret that connected TV devices have made huge gains in the U.S., with penetration at 60% of homes or more depending on the research source. But whereas these devices were initially used mainly for streaming Netflix and other ad-free SVOD services, evidence is building that viewers are also now using these devices to watch ad-supported video, in turn driving a huge expansion of ad inventory.

For example, Roku has been saying for a while that Netflix’s share of overall Roku users’ watch time has been steadily decreasing, with ad-supported channels gaining. And today, Beachfront Media, a video supply-side platform, said that it saw a huge jump in CTV ad requests to over 2 billion in Q3 ’17. Beachfront works mainly with mid-tail and long-tail video providers like WatchMojo, Newsy and Crunchyroll.

Beachfront’s CEO and founder Frank Sinton told me in a briefing that the company has seen completion rates of 97% and viewability of 100% on CTV inventory, the 2 main performance indicators buyers focus on. Measured CPMs are also 3 times higher on CTV than on mobile video and aren’t showing any signs of softening as CTV inventory continues to be in short supply relative to demand.

While CTV combines the best of the big screen experience with the best of digital targeting, Frank said it’s not yet clear to him which budgets CTV spending is coming from, TV or digital. However, he did say that anecdotally he’s hearing more and more interest in CTV and that 2018 is shaping up to be a strong growth year.

Roku’s Share of Streaming Market Rising

As streaming becomes more popular as a way to consume TV programming, Roku is increasing the number of homes in which its devices are used, according to a new report from Parks Associates.
In the first quarter, Roku’s leading share of the streaming media player market in the U.S. grew to 37% from 30% a year ago.

The gain puts Roku further ahead of competitors including Amazon, Google and Apple.
“Roku emerged early as a U.S. market leader for streaming media players, and the company has held firmly to that position,” said Glenn Hower, senior analyst at Parks Associates. “Higher-priced devices, such as the Apple TV, have not been able to keep up with low-priced and readily available Roku devices, which can be found at Walmart for as low as $29.99.”

Amazon’s Fire TV increased it share to 24% from 16% in the quarter. Google’s Chromecast dropped to 18% and Apple TV fell to 15%, according to Parks.

“One-third of U.S. broadband households own a streaming media player,” Hower said. “The growth of the U.S. OTT market provided consumers with unprecedented ease of access to video content. These streaming media devices make for quick and easy access to the top OTT libraries.”

The Parks report, Reinventing CE: Transforming Devices to Service Platforms, looks at how the CE industry has migrated from producing and distributing hardware to distributing OTT content and leveraging advertising models.

Roku Moves From Audience Measurement To Demographic Guarantees

Two years after Roku starting working with Nielsen on audience measurement it’s become the first OTT platform to offer demographic guarantees based on Nielsen Digital Ad Ratings. “It’s a huge mile marker for our industry,” Jim Lombard, Head of Advertising Sales, says in this interview today with Beet.TV during a break at the 2017 Transformation conference of the 4A’s.

The advancement of Roku’s video ad platform capabilities helps advertisers reach audiences on its 300-plus channels that are drifting away from linear television while using detailed demographic metrics comparable to linear TV. “It allows for advertisers to transact the same way as they would with measurements in the linear space in the OTT space,” says Lombard.

Two years ago, Roku announced that it was working with Nielsen on audience measurement deals. The next logical step was audience guarantees, particularly since they are becoming more popular with linear TV buys.

“Essentially, what we’ve done is Roku registration data is matched with a third-party vendor,” Lombard explains. “The metadata is passed through in the ad call, and then Nielsen uses their measurement tool to be able to verify age and demo against that ad call.”

One of the ways Roku has differentiated itself is that its technology enables its channel partners to do targeting, measurement and interactivity. The company also has its own sales team that sells and monetizes inventory across more than 300 channels.

It’s also the only platform that has both comScore and Nielsen, according to Lombard.

read more here:

https://www.beet.tv/2017/04/jim-lombard.html