With both Netflix and Disney+ about to enter the fray, ad-supported streaming is about to get a lot more competitive.
And with the world’s largest streaming service diving in full force, and Disney’s expansion of its already formidable video advertising experience and capabilities, both through traditional television and Hulu, innovation is also bound to accelerate.
In addition to increasingly sophisticated targeting capabilities, streaming presents unprecedented opportunities for formats that engage, connect and monetize in new ways.
Hulu — which should be 100% owned by Disney within two years, if not sooner, per its deal with Comcast — was the earliest pioneer on this front, and now offers an array of innovative formats, including its Ad Selector, Binge Ad, Pause Ad, Branded Entertainment Selector, Gateway Go, Branded Slates and other offerings.
Disney is certain to apply Hulu’s experience with these formats, and developing new ones, to Disney+. And other streamers will also attempt to build off Hulu’s successes.
Meanwhile, Netflix is promising a fast ramp-up in targeting and other advertising capabilities and, along with Disney+ and others, is making its with-ads version palatable via light ads loads and frequency caps.
Netflix’s aggressive push into gaming — buying gaming studios, starting two of its own, and exploring cloud gaming — is, for the present, largely aimed at retaining subscribers and attracting new ones by offering a growing menu of compelling, ad-free games as part of both its no-ads and with-ads streaming subscriptions. (An incentive that Netflix no doubt hopes will, in the short term, help to offset some of the inevitable churn created as it attempts to convince password-sharing freeloaders to convert to its paid sharing program.)
But having shed its long aversion to ads in the streaming medium — and being no stranger to product placement and sponsorships — it seems unlikely that Netflix won’t also, at some point, carefully test monetizing its heavy investment in games in other ways, including ads, or at least sponsorships. Especially since it’s been shown that gamers have become somewhat more accepting of some kinds of ads — interactive and “rewarded” ones — in return for free play, and that ad memorability is significantly heightened by well-designed gamification strategies.
“Gamification presents endless possibilities that, done right, can create interactive ad experiences that brands and audiences love while encouraging more viewership,” points out Curt Larson, chief product officer of the omnichannel programmatic supply-side platform Sharethrough.
What are some possibilities? “Netflix could further encourage watching new episodes through challenges and sponsored rewards,” he suggests. “Watched an entire season of ‘Stranger Things’ on release day, or binged an entire season? Win a box of Eggos, or a case of Coca-Cola.”
Another: Super fans could be rewarded through interactive quizzes, he notes. “Know more about animals than the ‘Sexy Beasts’ contestants? Use your phone or remote to take Chewy.com’s animal quiz. Think you know more about love than the ‘Love is Blind’ contestants? Use your remote to take eHarmony’s short dating quiz.”
Nor is gaming the only new frontier. Integration with social connections and shoppability offer two others.
“Streaming presents a massive opportunity to overhaul how we interact with our TVs and reimagine modern advertising,” says Larson.
Currently, streaming, like traditional TV, is disconnected from the viewer’s social graph and connections with others. “But from a UX perspective, what if our screens showed a feed of shows, news, photos and stories intertwined with comments and faces from our social networks, all algorithmically organized to surface whatever is most relevant and engaging?,” Larson says. “What if, in essence, everything becomes a feed?”
For instance, just as TikTok, Instagram, Twitter and other platforms monetize with native ads, Netflix could use its sophisticated thumbnail AI to create its own versions of native ads as viewers browse for content, he notes. “Since there’s already a large demand for native ads from advertisers bidding on the open web and social platforms, this could be one of the easier options for Netflix to develop. Additionally, given their ability to reach consumers through in-app notifications or email, clicking could lead to viewers activating on a second screen.”
As viewers browse Netflix’s catalog for content to watch, content appears in sections like “Ensemble TV Comedies” and “Watch In One Weekend,” and these could provide an even more “native” option, he adds. For example, brands could use those native ad placements to promote long-form content sponsored shows (e.g. “Trending Makeover Shows From Sephora'' displayed in the “Reality TV” section).
There could also be an opportunity for Netflix to create a content studio specifically for creating long-form content for brands, Larson points out.
Given ecommerce’s huge potential for incremental revenue, it’s not surprising that shoppable streaming content is already in its early stages.
NBCUniversal “is really pushing the envelope on shoppable formats, including their ‘Love Island’ shoppable TV launch,” Larson says. “That should shed light on viewers’ responsiveness to scanning QR codes to shop products in what’s proven to be a very popular show.”
NBCU also appears to be using a variety of media assets to drive users to shoppable experiences on sites like E! Online, and “it will be interesting to see if keeping shoppers on their owned and operated sites provides more benefits to the advertiser or NBCU,” he says.
Roku’s partnership with Walmart — which allows direct on-screen purchases, sans QR codes or multiple steps — is perhaps even more intriguing, Larson notes.
Disney+ has already done some experimentation with QR codes, and Netflix and other streamers could use QR codes or direct on-screen technology to enable purchases of products integrated in series, he adds.
Will all of this “engagement” be embraced wholeheartedly by viewers as being “better,” or might ubiquitous commercialization prove to be a turnoff, at least for consumers who are paying something — even if a reduced price — for access to these streaming services? Guess we’ll have to stay tuned.