The Digital TV Disconnect

If you talk to younger generations about ‘traditional’ TV, they would probably laugh out loud (that’s LOL for those who haven’t got with the times) at the idea of checking listings in a print newspaper, writing out a schedule or remembering to tune in at a certain time. These are the same generation who post on social media about spending half an hour finding something to watch on Netflix only to proceed to ignore the show and stare at their phones while “watching” the program, writes Ben Davis from Marketing Week.

Just a few days ago, Foxtel confirmed the rumours that Australian Foxtel subscribers will now have access to content from US streaming giant Netflix. The Australian cable TV network’s CEO Patrick Delany confirmed the partnership at a press conference in Sydney on Wednesday.

Delany said the US streaming giant’s service will be “seamlessly integrated” into Foxtel, with subscribers able to access via a Netflix button on their remote control.

Delany also announced a new user interface for Foxtel and access to a “huge amount of on-demand” content.

11.5 million Australians now have a household subscription to Netflix, compared to around 5 million who still have Foxtel.

Research from Roy Morgan released on Tuesday shows just how dominant Netflix has become on the Australian media landscape. The updated research found 11.5 million Australians now have a household subscription to Netflix, compared to around 5 million who still have Foxtel. In addition, 3 million Australians have access to both Netflix and Foxtel.

Ad growth lags behind user growth

OTT services like Netflix and Stan (which viewers access over the internet, sometimes via their TV sets) have seen rapid growth. Not astonishingly, for the first time, pay TV revenues were in decline. In 2018, the Video Advertising Bureau said 71% of internet users in the US use an OTT service at least once a month.

There’s obviously still some inertia, though, from advertisers. For a medium that accounts for 29% of the TV, it only has a sad 3% share in the advertising. Netflix isn’t ad supported, so that partly explains this disparity, but it’s still a striking stat. Other estimates have OTT ad spend in the US at roughly 4% of linear TV ad spend. The Winterberry Group predicts that growth in US OTT ad spend will continue to drop.

Soon enough, the silos of digital and TV that exist among clients and in agencies will break down, and hopefully the so-called golden age of TV will also see a golden age of advertising, both creative and relevant.

Why the disconnect, given OTT seems to be maturing?

Considering digital is supposed to provide accurate targeting and tracking, measurement is a commonly cited difficulty as there are no consistent set of metrics across OTT services (which play across a range of devices that can’t all be cookied); contrasting with linear TV and its well-established Nielsen ratings.

Recent developments in the market certainly seem to be all about targeting in OTT, as a counterpoint to the sheer scale of linear TV. Adobe now allows customers using its Audience Manager and Advertising Cloud products to target first-party audience segments on Roku, the OTT platform.

Your TV sets may soon become the personally targeting device we know our computers to be capable of. Internet TV is still a TV and one of the most personally engaging device for a household.

How much is too much?

Frequency caps is a contentious issue in OTT. In a world of ever more adverts and ever quicker product turnover, frequency may be effective, if not expensive. This brings us to pricing, which is another issue in OTT. Frequency caps may be a contributing reason to unsold OTT inventory; but OTT being higher priced, supposedly to prevent broadcasters’ traditional TV advertisers switching to digital, isn’t helping.

Though there are lots of issues that seem to make OTT advertising complex, this the only advertising that people will willingly engage with.

With OTT exploding, both advertising and branded content are worth exploring before the stakes get even higher. If you’re still in doubt, wrap your head around this fun fact. People spend more than 200 million hours watching YouTube on TV sets, and also separating out TV inventory.

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