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Autor: Redaktion


DPP - The Future of Video Advertising (3 / 3)

What will video advertising look like in the future?

[color=#111111][size=2][font=Verdana, Arial, Helvetica, sans-serif]The Discussion[/font][/size][/color]

4. Branded content 
 
High quality branded content and product placement are sometimes seen as the sweet spot for promotional messages that live comfortably with high quality video content. 
 

“Branded content is really exciting. The audience knows what it is, it’s clearly labelled and it works really well for the brands themselves. If it’s really good content, audiences don’t care. It’s just good content.” 
 

“Red Bull TV attracts attention with a film of a Formula One car spinning on the helipad of a skyscraper; and then they can boost that attention if a Red Bull car wins a race. They’ll immediately see the impact in sales – it will be highly attributable. So branded content can attract millions of views, and drive sales, if you get your brand right and the fit right.” 
 

“But, equally, really bad product placement with no relevance to the story in the programme can turn consumers against a brand. Do we really want to do lots of branded content and product placement just for the sake of getting the revenue?”
 
Some have seen branded content and product placement as the future for video advertising. But to date, the proportion of advertising spend on such content has remained small. In some respects that may be because of the lack of suitable opportunities, especially within the linear TV model. But it may also reflect an unwillingness to innovate among many advertisers. 
Perhaps surprisingly, there has been a shift in recent years within advertising spend away from brand building campaigns and towards direct sales campaigns. There was a perception among many in the room that the quality of video advertising in recent years has fallen – and this may reflect the shift in emphasis towards sales. After all, many of the most creative and memorable adverts have been expensive campaigns focused on building brand awareness.  
At a time of economic uncertainty, constrained budgets and a greater-than-ever range of media channels, it is perhaps inevitable that the think piece is sacrificed to the sales piece. In practice that can also mean the online video ad being sacrificed to the TV ad and the web banner campaign. 
 

5. Business models  
 
Even if the shift away from brand building content was redressed; and even if all branded content succeeded in being relevant and of high quality, could there ever be enough of it to meet the needs of advertisers, content providers and consumers? Premium quality, mass audience programming costs a lot of money, and the number of brands in a position to fund such content is limited. Can it ever match subscription, for example, as a revenue model?  
There is never enough high quality content, whatever the medium, so it feels unlikely branded content could provide the whole answer. But there may be a more fundamental limitation in branded content: the lack of flexibility in how it can be used. 
 

“Branded content challenges the revenue stream. With ads versus subscription you can make the choice. “ 


“Whether a show goes on BBC or ITV or Netflix, it may have ads, it may not have ads, but the content is reusable.” 
 

“If branded content starts becoming part of your mix, then you can’t really make a decision later on whether your model is going to be ads based or subscription based. We’re getting to a stage where people are going to decide they are able to pay for TV subscription, with no ads, or they aren’t going to pay a subscription, and they’ll accept the ads. The viewer is gaining the capability to decide which funding model they’re choosing for their content. They will then get frustrated if a piece of content they want is hidden behind a paywall, or there is advertising on something they have paid for.” 
 
Currently, it was pointed out, the business model for the content provider (and, it could be said, the consumer) is largely dictated by the means of distribution: if it’s linear TV it is likely to be either ad funded or publicly funded; if it is online, it is likely to be subscription based.  
In an ideal world, however, the consumer might be able to make the choice about their relationship with advertising, depending on how they want to spend their money, and regardless of how the content is distributed. The content provider, meanwhile, might be able to balance their revenue between content for which they charge a subscription, and content that is ad funded, also regardless of the distribution method.  
But can we really expect revenue from ad funded and subscription models to gain equivalence? 
 

“The revenue coming from an OTT platform is not going to be anywhere near what you’d get from advertising revenue. If you think of the millions of subscribers a major broadcaster might get for its online video player, well they might get a million times £3.99 or $3.99 a month – but that’s 3.9 million – and that’s a fraction of what they’d get from advertising.” 
 

“Certainly it’s not completely equivalent at the current time, but I’m also certain that online delivered addressable video ads haven’t reached their potential. I firmly believe you could make more money online from ads than from subscriptions, or vice versa, depending on the content and the dynamics. And that’s where the broadcasters would have a choice on their price points.” 
 
But even if such supposed freedom of choice did come into existence for both consumer and content provider, would all consumers really have the choice? Could we create a world of haves and have nots where only the better off can afford to buy their way out of an ad funded environment?  
 
Many suggested the subscription model is no longer just about paying to avoid adverts. It is also about paying to have features. 
 

“We’re not comparing apples with apples in terms of consumption preference. I’ve signed up to Spotify because it’s the only way to make a Google Home work with it. So it’s function-led: a feature is added in the paid-for version that you don’t get in the ad-funded version, and that then drives a consumer behaviour.” 
 

“That actually demonstrates the point that the funding model is often tied to the distribution medium, but the content and the funding model should be divorced to a certain extent so that people are able to have a consistent funding model across the different content types and only pay for the things on subscription that they really care about.” 
 

Conclusion 
 
Despite some strong disagreements on points of detail, our leaders emerged from the conversation with a conclusion that, on the face of it, looked reasonably optimistic. 
They painted a picture of the world of advertising and video content that is currently messy and complicated. But they were also largely confident that current problems around measurement and analytics would be resolved, and that the understanding of consumers and how to serve them would get better and better as a result. At the same time, they argued, the range of models available to content providers – whether subscription based or ad-funded – would become sufficient to provide the revenue to create the content that consumers demand. 
In short, the relationship between advertisers and video content makers will be rebuilt – it’s only a matter of time. 
 
Or is it? 
 
Some of our leaders saw a potential sting in the tail. They argued that the current model could be reconstituted for the digital age – but only if the players move quickly enough to retain some control of their destiny. 
 

“Silicon Valley could kill us all. They do operate with different parameters from traditional companies, in terms of infrastructure, shareholder pressures, return on investment, and so on. They don’t have to operate within the same financial or regulatory rules. Let’s not kid ourselves.” 
 

“Global tech giants are able to cross subsidise. They don’t even need to make money from video. They can make money by selling us other things. And, actually, as consumers we are very happy to buy those things.” 
 
This apocalytic view among some of our attendees was tempered by their observation that there is also a third way: collaboration. In the UK, for example, broadcasters are already collaborating with the global technology giants; and the major US networks are collaborating with advertisers. 
 
There needs also, it was argued, to be greater collaboration around getting the metrics everyone can believe in – in getting the algorithms right, and standardised.  
 
But the case was also made for one other kind of collaboration: creative collaboration: 
 

“As experts in storytelling, how can content providers help advertisers to make video advertising work really well? “ 
 

“It’s not just about advertising though. The wealth of producers and writers from television companies are capable of making the best content in the world. It’s just that that skill over the past 50 years has been tuned towards television. So I think it’s quite simple: focus on harnessing the skills that are within the organisations now to make the best content for mobile. Be willing to make a little less revenue on some of the deals that you do. To take the analogy from advertising, do you want to play the long game around brand loyalty or to take the short term returns from television now?” 
 
If there is sufficient commitment to quality content in the true sense of the word – which means understanding who you are making for and in what environment – then the sum total of high value video will increase. If that happens, commercial spend around that content will inevitably follow. 
 

“Content will win. A 16-year-old now has closer affinity to new online brands than to established broadcasters. So when they’re 30 and they have money to spend, where’s that money going to go?”

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