In the matter of "adding advertising", Netflix Disney is still too rudimentary

Deep Sound Original · Author|Lv Yue

Today, long-form video platforms around the world are inseparable from the model of making money from advertising.

Needless to say, the major long-form video platforms have relied on advertising to make profits since their birth. Even after expanding its business layout and increasing its paid membership business model in the following ten years of development, advertising is still an important pillar in the revenue composition of the platform.

Overseas, because Netflix, an "industry legend", has won a lot of attention, so that most people inside and outside the industry naturally think that overseas streaming media is a paid subscription and ad-free video watching. But in fact, there are also platforms that have been based on advertising revenue since their inception, such as Hulu, a joint venture between NBCUniversal and News Corp in 2007 (Disney currently holds 60% of the shares). There are also many platforms that have embarked on the road of ad-containing + ad-free parallel business model in recent years, such as Peacock, Paramount+, HBO Max and Disney+.

Platforms want to allow users to watch ads "by the way" when watching dramas, and at the same time be stimulated more quickly, which is actually a matter that needs to balance user experience, their own business and advertisers' demands. To this end, domestic long-form video platforms have innovated in advertising technology, innovated in advertising types and styles, and even a simple interstitial advertisement is trying to integrate it into content, so as to efficiently narrow the distance between the brand and the user.

So, in contrast, how do overseas streaming media platforms advertise? What are the similarities and differences compared with domestic counterparts? Are there more innovative ideas and models that can be learned?

Positioning, implantation, two-hand grasping

Netflix's advertising strategy embraces data- and algorithm-led "targeted advertising" (also known as "addressable advertising") on one hand and "product placement" that requires ad creative-led advertising on the other. In fact, the major overseas streaming media platforms are also dominated by these two types of advertising.

Positioning advertising, if simply from the form of presentation, is patch, interstitial and other exposure advertising. This is actually a continuation of the traditional TV advertising form, the brand around the content, can put the picture with the logo on the homepage, and the advertising short film at the beginning, middle and end of the series variety show. The content of the advertisement is mainly produced by the brand itself, of course, the platform can also participate in it, such as co-producing the advertising film with the brand, putting the brand logo on the series poster, and so on.

As far as video ads are concerned, the current advertising time on Netflix, Disney+, HBO Max, Peacock and other streaming platforms is not much different, basically 4-5 minutes per hour. Since Netflix is still new and still needs to balance user experience and ad load, the platform only adds intro ads for new movies, and movies that have been on the air for a while have intro and interpolation. Disney+ is also more cautious, with shorter ad runs than some of its competitors, mainly because of its more children's content and its family-friendly features.

Source: Netflix

Of course, since it is called "targeted advertising", the focus is on how to "target".

Back in 2006, Comcast experimented with advertising based on the geographic location of different home TV users; In the current era dominated by streaming media, the platform has more elements and tags that can be used to target ads to make ads more "thousands of faces" on the big screen, such as watching the same episode of a TV series, pet users may see advertisements for pet breeding products, and pregnant women may see maternal and baby products. A digital marketing analyst at a car dealership group who runs targeted ads on Hulu mentioned that by targeting by location, you can ensure that the person seeing the ad is close enough to the dealership store to go offline to understand and place orders.

The realization of this "accuracy" depends on the various types of information collected by the platform. For example, Netflix will make precise delivery based on the type of content viewers are watching, the location of the IP and some demographic data provided by users when registering. Other platforms are basically the same as Netflix's approach, the main difference is only that the platform's advertising business start time and the volume of active users are different, resulting in different data accumulation levels, and there is a gap in the types of tags that can be used for targeting. The more dimensions of targeting tags there are, the more types of customers streaming platforms can attract, and small and medium-sized businesses with limited budgets, smaller businesses and a local focus will be able to fully see the available value of this brand advertising.

Source: Peacock

At the same time, targeting ads are not complicated for advertisers – they can be efficiently achieved with programmatic delivery platforms.

Programmatic targeting is almost the default in the US digital advertising market. According to Insider Intelligence, more than 86% of U.S. display ad spend in 2019 was programmatic, and this will exceed 91% by 2023.

As a newcomer to advertising, Netflix chose to cooperate with Microsoft to use the Xandr platform that Microsoft acquired from AT&T to do programmatic launching. On the one hand, the Xandr platform is an SSP with a long history in the industry and a large overall business scale, with mature technical capabilities, eliminating the problem of Netflix's self-built programmatic delivery system in a short period of time; On the other hand, there is no direct competition between Netflix and Microsoft.

Although Disney already has a mature streaming media business like Hulu, it has also chosen to partner with The Trade Desk to support Disney+'s advertising. Jeremy Hefland, executive vice president of Disney's advertising platform, media, entertainment and distribution, said the partnership with The Trade Desk could help Disney achieve its goal of 50% automation of its advertising business by 2026, while programmatic delivery can also be used across all of its endpoints, which means enabling multi-platform ad delivery.

In addition to targeting ads, platforms are also preparing "product placement" to be a common type.

Traditional product placement is not uncommon in movies and TV series, such as Nike shoes in "Forrest Gump", Aston Martin cars in the 007 series of movies, etc., Hulu also applied product placement ads to the series as early as 2016. Compared with the interstitial ad that suddenly interrupts the story, allowing the protagonist to drive a certain brand of car and eat a certain brand of food at the table when traveling, this kind of advertising integrated into the plot and scene will reach the target audience relatively more naturally.

However, doing this kind of product placement is actually challenging: advertisers need to predict in advance whether the work will become popular, which is extremely uncertain; Content producers have to take into account content integrity and brand marketing appeals, which actually involves multiple links. Therefore, many big brands will choose to directly reach long-term cooperation with streaming media platforms to grasp the available content resources in advance. For example, General Motors recently announced a partnership with Netflix, and the brand said it will embed its own car products in a series of new shows and movies and TV series this year.

Of course, if brands still think this kind of implantation is too difficult, platforms also have new technology to solve this problem - using "virtual placement".

Virtual product placement allows brands to digitally render products, billboards or brand logos after filming a TV series or variety show. Domestic Youaiteng has also launched similar product placement advertisements, such as iQiyi's "Video-in" advertisement, which can use AI technology to implant standardized picture materials provided by advertisers into the implantation points of content such as dramas, variety shows, etc. Overseas, Amazon, Peacock and other streaming platforms are also doing, for example, last year Amazon said it had used it in a series of original works, including the TV series "Breaking Detective", "Jacket Lane" and so on. Among them, "Breaking Detective" has Samsung and Krispy

Products from brands such as Kreme Donuts, M&M's, and Flat Tire appear in the episode.

Desktop M&M's is a virtual implant

In addition to the two main categories of advertising that are regular targeting and placement, there are other innovations in streaming platforms.

For example, Hulu's GatewayGo advertisement will display a QR code in the advertisement, using the way of interaction between large and small screens, users can scan the code to enter the brand-related page or get preferential information. Compared to just ad clips or images, this type of advertising significantly increases the likelihood of retaining consumers and increasing conversions. NBCUniversal plans to launch a shopping feature on Peacock this year, which allows advertisers to directly place their main products in the form of a list on the side of the TV screen for users to choose and place orders.

It is not difficult to see that the innovative ideas of these advertisements are generally closer to the current marketing industry's pursuit of "product and effect synergy". By superimposing more personalized recommendations and user interaction on top of basic advertising, streaming advertising can change the long-term limitation that TV can only measure the value of advertising by viewing exposure, which is also one of the important factors that can continue to win the favor of advertisers in the era of digital marketing.

Overseas streaming or becoming a Chinese apprentice

From the above-mentioned advertising types, advertising methods and innovation directions, overseas streaming media platforms do not seem to be different from domestic long video platforms. However, if we consider the development background of the platform and the general environment of the platform at home and abroad, overseas streaming media and domestic long video platforms are actually on two different paths——

The domestic long video platform was born on the PC side, and then went from the PC to the mobile side, and the platform has always used the idea of "Internet advertising".

This makes the platform's advertising types and marketing gameplay quite complex and diverse as a whole, patches, implants, and information flow ads may all exist on the same screen, and brand advertising, performance advertising and customized marketing activities may also be connected and integrated together. At the same time, now Youaiteng also emphasizes "IP full-link marketing", and will simultaneously launch online and offline multimedia, multi-channel advertising and marketing gameplay for high-quality works.

For example, when Heytea cooperates with "Menghualu", it is more about the back-link, using IP to do offline theme exhibitions and pop-up activities, etc.; Snowflake's Brave World Super X and This! is street dance" cooperation, not only has implantation and interstitial advertising, but also allows digital virtual spokespersons to appear in the show; When Du Xiaoman cooperates with "Kunlun Divine Palace", he will appear in various forms on the broadcast nodes set by these platforms themselves during the finale screening period and the closing period of members, which are almost impossible advertising forms and marketing games on overseas streaming media platforms.

Overseas streaming media advertising, in fact, from TV advertising to CTV (Connected TV) advertising, this development path.

It is the difference in public viewing habits that creates this difference: the domestic public is more concentrated on the mobile side, but the viewing scene of overseas streaming media is more on the TV side. The inherent advantage of large screens is strong exposure and weak interactivity, so overseas streaming media advertising is also dominated by exposure brand advertising. The increase in interactivity basically allows the audience to use the remote control to make choices, simply fill in the information, and will not do shaking effects like using mobile phones, clicking links to jump and so on. The positioning and programmatic delivery that platforms value are more prominent upgrade points than the previous evaluation effect of only looking at ratings.

However, domestic Youaiteng has also been involved in the field of TV large screens, and the gameplay of advertising by each company is much richer than that of overseas streaming media. Even if it is more exposure advertising, domestic players will have a lot of forms such as boot advertising, naked-eye 3D, brand area, etc., and strive to improve and innovate in visual effects; Even if it is mainly based on long video content, short video content will be added to the large screen, so as to develop in-feed advertising on the large screen; In addition, the long video platform also directly superimposes the shopping function through cooperation with e-commerce platforms, which is convenient for users to complete the entire process from watching content to buying the same model with the remote control.

Domestic long video platforms have a lot of experience in how to superimpose as many ads as possible, how to innovate traditional advertising, and how to expand beyond the platform. In contrast, overseas streaming platforms are more conservative and cautious.

For example, Netflix emphasized that it will have a "fairly strict frequency cap" to limit the number of ad repetitions, and when its advertising business was just starting, it only allowed a few large brands to be the launch advertisers; Even for big brands, platforms will have certain requirements for the quality and creativity of each ad. Disney+ focuses on children's and family content, and it also has to be cautious in terms of advertising format, frequency, and branding.

Other streaming media platforms with more mature advertising business, although not too conservative, but because their basic models are subscription systems that require users to pay, coupled with extremely fierce market competition, this makes the platform must consider the user's cognitive threshold and user experience. Therefore, on the whole, each platform has a relatively simple and clear division of packages with and without ads in terms of subscription price, available rights and restrictions.

Source: Netflix

The domestic long video platform is so "full of eighteen martial arts", in fact, it is also caused by the environment. Nowadays, what major domestic platforms need to do more is to find new opportunities in the existing market, such as continuously optimizing platform advertising technology and winning the investment of advertisers by focusing on improving efficiency; It is also necessary to find new possibilities, such as taking into account OTT large-screen advertising, from content derivation to e-commerce consumption.

But overseas, the situation is very different, and streaming platforms don't have to "rack their brains" to advertise to foresee the growth space available to them. Because in all kinds of video advertising, CTV advertising has always been quite strong, coupled with now Netflix and Disney + as the two giants of the industry have also opened their content resources, these unreached high-quality content, hundreds of millions of users, now advertisers can have access to, which is equivalent to opening up a huge traffic pool. When analyzing the development trend of the digital advertising market in the United States, Insider Intelligence expects that streaming advertising will rise strongly this year, achieving an overall growth of more than 27%.

Source: Insider Intelligence

In the short term, a large number of released content resources and a large number of new advertisers' "encounters" on streaming media will be the main reason for the platform to obtain an expected report card. In the long run, advertising will continue to exist as an important "food and grass" for the development of overseas streaming media platforms.

The business model of advertising is quite mature, there are countless experiences to refer to, and it is easy to find feasible solutions, and there is no reason why players should not focus on doing it in the context of user growth pressure. The innovation and rich experience of domestic long video platforms will also inspire overseas streaming media platforms in the future.