Paid Media Becomes Table Stakes For Subscription Video

Pay-TV providers are increasingly investing in paid media to promote new and original programming on their streaming video services.

To offset the pricy programming costs, these SVODs must attract a steady stream of new subscribers.

Entertainment advertisers have always relied on tune-in tactics to promote new shows.

But streaming video services now are also leveraging paid media and acquisition marketing to ensure short-term success – and, hopefully, long-term sustainability – on the new battleground for subscriptions.

Consider the most recent Super Bowl, when streaming video services Amazon, Hulu and Netflix each spent at least $5 million on a 30-second spot – on broadcast network NBC.

Then, Netflix, which doesn’t sell ads on its own platform, said during its Q4 earnings it would increase its marketing budget by 54% to $2 billion in 2018 to support its $8 billion investment in original content this year.

And, during its Q4 earnings, pay-TV and satellite giant Dish revealed it spent about $550 million in 2017 on subscriber acquisition advertising. That budget presumably went toward promoting its largest-growth business: streaming video service Sling TV.

In the first three quarters of 2017, Hulu spent more than $127 million to market its streaming TV service, according to data provided to AdExchanger by Kantar Media.

For the sake of comparison, Netflix spent about $75 million in the same period, while AT&T-owned DirecTV Now spent $54 million, according to Kantar.

Those figures include TV, digital, outdoor, radio and print ad spend but exclude social, which means these streaming video services’ ad investments are likely an order of magnitude larger.

A new flavor of targeting

“When it comes to promoting SVOD services, much of the appeal is on original programming, and now there is data to promote these new options to viewers across screens,” said Jay Prasad, chief strategy officer for cross-screen ad platform VideoAmp.

But acquiring and retaining subscribers can sometimes be challenging for OTT.

“The biggest issue in SVOD tune-in is that if a programmer wants to measure across multiple SVOD partners [if, for instance, a show is being distributed to many apps and platforms], the overall attribution data is harder to get,” Prasad explained. “With linear, it's actually much more straightforward with set-top box and smart-TV data being very granular and more generally available.”

SVOD also faces the familiar challenge of churn that its pay-TV predecessors know all too well from selling traditional cable and broadband services.

New customers might sign up for a promotional offer around March Madness, for instance, but cancel their service shortly thereafter.

That puts the onus on pay-TV providers to create value for subscribers and reduce the chances of short-term churn, Dish’s CEO said during its quarterly earnings.

Tried-and-true tactics

Effective marketing in this medium requires knowledge of both acquisition and retention, said Mike Baker, CEO of Dataxu, which partners with large pay-TV providers like Dish and Sky to buy OTT inventory.

“They’ll need to merchandise their product at different price points for different segments, which are the fundamentals of digital marketing and CRM,” Baker said.

SVOD marketing mimics the very basics of CRM and acquisition marketing, which is to know one’s audience, send personalized and relevant offers and then identify opportunities for upgrades for different customer segments.

And, like how mobile app publishers use app-install ads to drive an initial conversion – as well as post-install engagement – SVOD services are doing the same to drive subscriptions and subsequent tune-in.

For instance, Roku has access to unique viewership data across its streaming devices that can help app publishers generate more subscriptions and trials.

That data might tell them whether someone began a trial but didn’t convert, or what types of content they consume most based on their tune-in behavior.

“It can be a marketing bonanza for people who have the data, analytics and campaign management to promote TV apps,” Baker added. “Look no further than Roku’s financials if you want to see the power of that model. They not only sell advertising, but a lot of their business is commissions from other TV apps being adopted in their platform.”

 

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