Television has dominated the living room for the better part of 70 years now making it one of the world’s most entrenched and ubiquitous forums for both marketing and entertainment. And, while the television still marks the centrepiece of most living rooms, its dominion over marketing and entertainment is starting to wain in the face of stiff and decentralised opposition.
What does this mean for television and those who market on it? What’s causing the most rapid change? And how can companies take advantage? In this blog we aim to break down a few of the trends coming to TV advertising and what they reflect about the wider industry.
Whether it’s QR-code access to adverts, augmented reality, or companion apps, greater levels of device integration and new technologies will continue to disrupt the space.
These newer technologies – QR codes and AR (augmented reality) experiences – will be used to bring the point of sale closer to the consumer in a more proactive way. QR codes, for example, can be placed in adverts of any kind – be they digital or print – and can bring customers to a specific offer or product in seconds.
To marketers, the impact of pan-digital technologies like QR and AR are twofold:
As well as augmenting our viewing experience, technology continues to blur the line between what we consider television or not.
Over-the-top media services exist outside of the traditional frameworks we associate with broadcast and film production. These services are delivered direct to the consumer through often-proprietary software and mitigate the need for an intermediary like a broadcasting network to greenlight projects, for example.
These are the biggest competition to conventional television as we know it. Many now watch the majority of their entertainment through providers like Netflix or Amazon Prime, and some may even bypass these entirely in favour of community-produced platforms like YouTube or Twitch.
The shift towards these types of services has fragmented the once-dominant ecosystem of TV advertising. No longer can advertisers rely on the attention of an audience of x million viewers – they’re more than likely to be on their phones between ad breaks.
Instead, advertisers are flocking to these platforms too. Currently, 51% of all revenues made in the OTT market come from ad-based platforms like YouTube, compared to the 40% made by non-ad-based subscription services like Netflix which draws its revenue purely from its subscriptions.
Video on demand – services like Netflix – swept in and disrupted the market with at-home content in the late 2000s. This trend shaped the next decade of media consumption, culminating in Netlflix – as well as the other major video-on-demand providers – becoming just as valuable as the TV networks they sought to replace.
But now we see these companies experiencing somewhat of a lull in interest and growth; Netflix recently lost nearly 35% after forecasting it would lose two million subscribers in Q2 2022. The company mentioned account spoofing – using the same login for multiple households – as a key driver of this subscriber loss.
Across the world, many are experiencing the highest levels of inflation seen since the 2008 financial crisis coupled with a cost-of-living crisis not seen in decades. During times like these, it is only natural to make savings where possible – like in the case of Netflix.
And one person who is unlikely to be making savings is Netflix’s CEO, Ted Sarandos, who took home a salary of c.$650,000 last year and over $34m in stock options. Clearly there is no headroom to cut in the company’s budget, though, as hot off the heals of a March price Netflix is now considering a lower price tier… With adverts.
The existence of an ad-tier in Netflix now seems inevitable, and I think serves as a good indication of the way things will go in the video-on-demand space.
The subscription model is losing its power to drive long-term growth, and subscriber growth will likely plateau. This is because competition both to win customers and to license content has grown, while prices are increasing amongst some SVOD platforms.