The Over-the-Top (OTT) market is growing rapidly, with global revenue expected to reach $434.5 billion by 2027. OTT services deliver video, audio, and other media content over the internet directly to users, bypassing traditional distribution channels such as cable and satellite television.
The growth of the OTT market is being driven by a number of factors, including:
The increasing popularity of streaming devices: Smart TVs, streaming sticks, and game consoles are making it easier and more convenient for consumers to watch OTT content.
The rise of original content: OTT providers are investing heavily in original content, which is attracting new subscribers and keeping existing subscribers engaged.
The affordability of OTT subscriptions: OTT subscriptions are typically much more affordable than traditional cable and satellite TV subscriptions.
The OTT market is highly competitive, with a wide range of providers offering a variety of services. Some of the leading OTT providers include Netflix, Amazon Prime Video, Hulu, Disney+, and HBO Max.
Growth Trends in the Over-the-Top Market
A number of growth trends are emerging in the OTT market, including:
The shift to mobile: Consumers are increasingly watching OTT content on their mobile devices. In fact, mobile devices are now the most popular platform for OTT viewing.
The rise of live streaming: Live streaming is becoming increasingly popular, with consumers using OTT services to watch live events such as sports, concerts, and news.
The growth of ad-supported OTT: Ad-supported OTT services are becoming more popular, as they offer consumers a way to watch OTT content for free.
Opportunities in the OTT Market
Content production: OTT providers are constantly looking for new and original content to attract and retain subscribers. This presents an opportunity for content producers to create and sell content to OTT providers.
The OTT market offers a number of opportunities for businesses, including:
Advertising: OTT services offer a number of advertising opportunities for businesses. For example, businesses can advertise on OTT services through pre-roll ads, mid-roll ads, and product placement.
Technology development: The OTT market is constantly evolving, and there is a need for new and innovative technologies. For example, businesses can develop technologies to improve the streaming experience for consumers, or to develop new ways for OTT providers to monetize their content.
Conclusion
The OTT market is a growing and dynamic market, with a number of opportunities for businesses. By understanding the growth trends and opportunities in the OTT market, businesses can position themselves to succeed in this exciting market.
How do you insert ads into your content if you’re streaming video in a VoD environment? The answer is dynamic ad insertion, which lets you serve different ads to different audiences. How does dynamic ad insertion work for VoD? It’s a simple concept that relies on some sophisticated technology.
Quick Takeaways:
Dynamic ad insertion enables the insertion of different ads for different users into streaming video content.
Dynamic ad insertion uses server-side ad insertion (SSAI) technology to inject ads into existing streaming content.
Dynamic ad insertion lets advertisers target personalized ads to specific viewers.
Viewers benefit from seeing more relevant ads in VoD programming and experience a “seamless” stream akin to broadcast viewing.
Advertisers benefit from a more targeted audience and more efficient ad spending.
What Is Dynamic Ad Insertion?
Advertisers have long been able to insert ads into streaming video content, both live streams and video on demand (VoD). Dynamic Ad Insertion (DAI) expands on that concept by enabling advertisers to insert different ads for different viewers.
Lower revenue, poor advertiser quality, and lack of standardized measurement are top advertising concerns today.
Dynamic ad insertion in VOD content.
With the continuing growth of advertising-based video on demand (AVoD) services, advertising has become a critical part of the streaming video landscape. By using DAI, advertisers can target specific types of viewers based on viewer insights and their own campaign goals. DAI even lets OTT services deliver more ads to specific viewers of VOD content or different ads based on the viewing device. It’s all about delivering seamless insertion and personalization of the ad experience for each viewer.
The primary benefit of DAI is that, unlike traditional broadcast advertising, it doesn’t serve the same ads to everybody. DAI allows the microtargeting and mass personalization that viewers demand and that advertisers benefit from. Viewers get ads targeted to their interests and behaviors, while advertisers don’t waste their ad dollars on consumers who have little or no interest in what they’re selling.
How Does Dynamic Ad Insertion in VoD Work?
To deliver microtargeted ads in OTT programming, DAI uses server-side ad insertion (SSAI) technology. Unlike client-side ad insertion (CSAI), which embeds ads at the device and requires two players (an ad player and content player), SSAI intercepts content from the OTT provider and inserts selected ads into the existing stream. This provides a seamless transition between content and advertising and enables the insertion of dynamically selected ads. (in 2020, Pixelate estimated that 40% of streaming ads are delivered via SSAI. Today that number is significantly larger.)
This all works because streaming video assets aren’t usually single files, but rather a flood of small chunks of video. The chunks are sent over the internet from the OTT provider and then reassembled on the viewer’s computer, phone, or media streaming device. A streaming manifest describes the correct sequence for these video chunks, which also plays a key role in dynamic ad insertion.
Dynamically inserting streaming ads with SSAI is a multi-step process that involves several different entities. It looks like this:
How server-side ad insertion works.
The viewer selects a VoD program to watch.
The viewer’s media player sends a request for the VoD program to the OTT service’s content distribution network (CDN). The request includes information about the viewer to enable advertising targeting.
The CDN is configured to use an ad insertion service for its manifests rather than the content originator. It relays the viewer request to the ad insertion service.
The ad insertion service pulls the template manifest, including ad markers, from the content origin server. The ad markers tell the ad insertion service where to insert ads in the program.
The ad insertion service sends a request to the ad decision server. This request includes information about the viewer such as the viewer’s player, the number and length of each ad break, available demographic info, and so on.
The ad decision server uses the provided information to determine what ad(s) to serve for each ad break, then transmits the URLs for those ads to the ad insertion service.
The ad insertion service adds the URLs for the ads to the manifest and sends what is now a complete manifest (content + advertising) to the viewer’s player via the CDN. At this point, every viewer receives a unique manifest.
Playback begins on the viewer’s device.
The viewer sees the ad(s) as inserted into the VoD programming.
The ad insertion service or the viewer’s player generates data about the ad viewership. This data is then transmitted to the ad service for reporting purposes.
How Does a DAI System Decide What Ads to Serve?
One of the key attributes of dynamic ad insertion is the ability to serve personalized ads to individual viewers. It’s this ad personalization that offers value to all parties involved.
How does a DAI system know what ads to serve to what viewers? Ad targeting is part of the overall DAI process, based on information about the viewer provided by the publisher’s viewer’s subscription services on their devices. The OTT provider may know that viewers of a specific gender, age group, income level, and location want to watch a given program. That information enables advertisers, to attach highly personalized ads to programming that matches their viewer targets.
Bidding on specific ad slots is handled via programmatic advertising. Programmatic advertising uses machine learning and other technologies to automate ad buying and serve targeted ads to individual viewers. The State of Connected TV/OTT: Ad Supply Trends Report from Pixelate reveals that programmatic video advertising now reaches 72% of U.S. households.
The entire programmatic advertising process involves OTT providers, supply-side platforms (SSPs), demand-side platforms (DSPs), and advertisers. An SSP is an automated service that lets OTT providers sell their ad blocks to multiple DSPs. A DSP is an automated service that lets advertisers place ads with multiple OTTs via their SSPs. The OTT provider deals with one or more SSP, whereas advertisers deal with one or more DSPs.
The OTT provider tells the SSP what ad blocks are available and information about the program content and viewer demographics. The SSP transmits that information to one or more DSPs. The DSPs use that information to match available ad blocks to relevant advertisers, who’ve targeted the audiences that match what the OTT is transmitting. Advertisers can buy based on pre-determined pricing (Programmatic Guaranteed, DealID based) or, depending on the OTT provider, bid on available ad blocks via the DSP. In either case, the DSP will choose one or more advertisers to send to the SSP for consideration of inclusion in the ad break.
The result is that viewers see personally relevant ads seamlessly inserted into their VoD programming. They get an enhanced viewing experience while advertisers reach a targeted audience and get better value from their ad spend. This also benefits OTT providers, who generate greater ad revenues and keep their viewers more engaged during commercial breaks.
Contact us today to learn more about dynamic ad insertion and SSAI.
Industry Insights: New research shows that there is still plenty of headroom for OTT growth even in saturated markets, while we now have a better understanding of the composition of European OTT content libraries, and The DPP sets the industry mood music for the year.
Aggregation helps drive OTT subscriber numbers
While it is often tempting to think of OTT markets rapidly becoming saturated, study after study constantly finds headroom in even the most crowded marketplace.
As Rapid TV News reports, a new study from Parks Associates has found that 60% of Pay-TV subscribers, accounting for nearly half of US broadband households, are interested in streaming films and TV shows from an online video service as part of their Pay-TV subscription. What’s more, Pay-TV providers are responding to this demand, as the number of pay-TV consumers who receive online video services jumped nearly 50% in a year.
The average number of OTT services among households that have any OTT service was found to be 3.8, while the data shows households with Pay-TV services plus at least one OTT service subscribe to 4.2 OTT services on average.
“Parks suggested that pay-TV providers must keep offering their most valuable content, which includes live sporting and cultural events,” writes the website. “Additionally, it advised operators that they must offer access to streaming, target new services to their interested customers, and perhaps be willing to take a hit on pricing until this [current] chaotic market stabilizes.”
Meanwhile, and not unrelated, data presented by stocks analyst Trading Platforms shows that Netflix still has potential for growth in the US (and, by implication, elsewhere in the world).
The SVOD giant currently has 66m subscribers in the US, approximately one-third of its global total. Trading Platforms extrapolates that to 168.9m unique viewers per month and reckons that will grow to 182.2 by 2024, an 8% increase. Subs will grow in turn to 71% by 2025.
Amazon is currently the second-largest SVOD provider in the US and will remain so, increasing its subscriber numbers to 59.8m. Hulu’s growth is impressive too as the chart below shows, rising to 49.5 million.
But it is Disney that produces the most arresting figures, with Disney+ going from a standing start to 49.8 million subscribers by 2025. That is up 118% over its 2019 already impressive debut. By the end of 2020, 72.4 million people were already tuning in at least once a month.
And while we are talking about markets and subscribers, it is worth mentioning new research that shows insights into the behavior of SVOD subscribers through the lens of what sort of moviegoers they are.
“Cinema power users are subscribed to 50% more SVOD services than infrequent goers, rent twice as many new movie releases, purchase three times as many new releases, and are around three times as likely to pirate content from unauthorized sources,” writes Digital TV Europe.
That said, it’s worth noting the YoY change across the categories for piracy in particular. It is down for the power users but up 28% YoY to just under 24% of all cinema goers, a much larger number of users, and an indication that the problem of content piracy in lockdown has not gone away.
Mapping the European OTT industry’s content libraries
The European Audiovisual Observatory has just launched its latest round of figures and, for the first time, is including television content — both series and TV films — in its LUMIERE VOD database.
As its headline for its announcement of this says, it has uncovered the fact that 44,000 European films and over 12,650 European TV seasons are currently available on a total of 462 VOD services in Europe (138 TVOD and 324 SVOD catalogs). This is a lot of locally produced content, especially given the perception of US dominance in the OTT market. But it arguably gets even more interesting when you dig down into some of the details.
Here are our key takeaways from the figures.
The UK still dominates European TV
The European market has four main content producers, the UK, Germany, France, and Spain. However, the presence of UK-produced content is highly disproportionate to its size. The United Kingdom leads the pack with 44% of all content, followed by Germany (17%), France (9%), and Spain (6%). Together these four provide three-quarters of all available European TV titles on VOD.
A surprising lack of TV co-pros
While the film market featured 30% co-productions with other countries, only 12% of all European content was produced this way. The main secondary co-production countries are the United States and Canada.
Children’s content dominates
9 out of 20 of the Top 20 European TV titles present in catalogs were children’s animated series. Peppa Pig dominates, found in 69 separate catalogs in 20 countries, with the rather more adult-themed live-action Irish/Canadian co-pro of Vikings not far behind. The cultural phenomenon that is Lego enabled Denmark to snag four positions in the Top 20 with its Ninjago: Masters of Spinjitzu.
Age is no barrier
The average year of production for the Top 20 library content was 2011, though catalogs tended to trend much older than that and the average year of production of all TV seasons found on VOD in Europe was 1987. However, it’s worth noting that 60% of TV content was less than 10 years old, and it is largely outliers such as David Attenborough’s landmark BBC Zoo Quest series (1954) dragging the average down.
Assessing the mood of the industry
Some interesting insights into the year ahead come from the industry body, The DPP. Each year it considers five overarching themes, which it dubs the mood music of the year, that it thinks will inform media businesses in the year ahead.
In previous years when it has done this, you can detect a slow and steady evolution from one year to the next. Unsurprisingly, 2021 is a bit different, and the mood music selected for this year is in places wholly new.
Values
The articulation of business values, and the need to act upon them, is becoming increasingly necessary to attract, maintain and motivate employees on the one hand, and to stay relevant to customers on the other. Sustainability was the value that first broke through at the board level, but this is being joined by diversity and inclusion, wellbeing, trust, and social responsibility.
Data
Understanding the way the pandemic has reshaped the industry needs careful analysis, and companies are increasingly looking at data to provide far more nuanced views of business matters than before and inform the changes they need two make in the future.
Innovation
“Innovation is no longer a choice,” says The DPP, arguing that companies have to innovate if they are to maximize the opportunities that exist in the current slowly post-Covid market.
Adaptability
The DPP’s thoughts on this are worth quoting directly to pick out the subtleties over previous years.
“Over the years, we have seen the mood music theme of speed give way to one about agility. This refinement noted that going faster wasn’t always the appropriate response; sometimes the need is more to be highly responsive.
“That notion has been refined again this year. Many wanted to capture the widespread need for flexibility which has come with both difficult economic circumstances and the need to innovate. The notion applies both internally and externally.
Resilience
The ability to simply maintain business operations despite everything else currently going on.
The organization has also made some more straightforward predictions too, including the increased use of AI and automation and the growing importance of cybersecurity, and we’ll probably have a look at them in detail next time.
The rise of Targeted Advertising (TA) in 2023, with solutions like Sigma’s Targeted TV Advertising, offers a ray of hope amid the challenges faced by broadcasters and operators. While the industry witnessed record-high viewership during lockdowns, the revenue from advertising, a crucial part of the sector, took a hit.
Nevertheless, there’s a sense of optimism in the industry. TA solutions, which deliver ads tailored to consumers’ individual interests, even down to the household or individual level, are gaining mainstream acceptance. While TA’s share of the overall ad spending remains relatively small, its growth trajectory continues upward, despite the impact of the COVID-19 pandemic. Notably, eMarketer predicts that Connected TV (CTV) ad spending in the US will surge from $8.11 billion in the previous year to $18.29 billion by 2024.
2023 Vision — Targeted Ads come of age
While the United States is undeniably a significant hub for the growth of Targeted Advertising (TA), recent months have witnessed a surge in TA activity on a global scale, encompassing Europe, APAC, Latin America, and various other regions.
In the final months of 2023, Europe alone witnessed a flurry of developments: UK commercial broadcaster ITV unveiled its Planet V platform, FranceTV Publicité and Orange launched pioneering linear campaigns in France using TA, Molotov, a French OTT live and catch-up TV platform, introduced the new AVOD service Mango, and Movistar rolled out a TA service on channel #0 in Spain, with plans for expansion in 2021. Notably, similar initiatives were initiated by Mediaset in Italy, Proximus in Belgium, RTL in Germany, and a host of other projects globally.
Broadcasters across the world are either introducing standalone solutions or forging strategic alliances, such as the collaboration between rival Pay-TV companies Sky and Virgin in the UK. Simultaneously, ad tech companies are experiencing a comparable surge in activity. Samsung, for instance, made its Connected TV (CTV) inventory programmatically available through SpotX ahead of schedule in response to increased viewership during the Covid pandemic. LG, on the other hand, invested $80 million to acquire a controlling stake in TV ad data firm Alphonso, with the objective of establishing a first-screen, cross-device advertising platform complete with integrated analytics.
As previously mentioned, the interest in Ad-Supported Video on Demand (AVOD) has seen a substantial upswing as audiences seek fresh content without incurring premium costs. Projections from Digital TV Research indicate that the AVOD market is set to grow by 120% from 2019 to 2025, jumping from $24.3 billion to $53.5 billion, and contributing 32% of total OTT revenues.
With an ever-increasing number of viewers turning to Connected TVs (CTV), exceeding 50% in select countries, and a surging demand for AVOD-driven content, the structural dynamics of the broadcast industry are shifting towards streaming as the dominant mode of consumption. Consequently, advertisers are increasingly keen on replicating the successes they’ve achieved on digital platforms within the realm of television.
SpotX, a prominent player in the evolving ad tech industry, highlights in its Global Video Advertising Trends 2021 survey that ad spend is aligning with evolving consumer behavior, and it’s gravitating toward OTT and CTV at a pace faster than previously anticipated.
The challenge of complexity
The rich opportunity of Targeted Advertising
One of the limitations that operators face when looking to enter the market, however, is complexity. A research study in 2019 discovered that marketers have an average of 28 different technologies in their ad tech stack, with 70% believing that number would grow over the following three years due to the complexity of the advertising ecosystem. It would be hard to argue they are wrong.
Even narrowing the discussion down to the television space, there are a large number of competing technologies, standards, and solutions that operators can choose from. In most territories, there isn’t a clear market leader and the choices become complex.
An illustration of the difficulties here is offered by the efforts at industry standardization with at least one high profile project moving into a key phase. The DVB and HbbTV have been working together to build the forthcoming DVB-TA specification, and indeed we have been a part of these efforts at VO (you can see our recent presentation at the DVB Demos day in November last year here).
Currently, work on the DVB-TA specifications ecosystem continues within the DVB Project. This includes the implementation of SoME (Signalling on Media Essence), where audio and video watermarking are used to signal targeted advertising replacement opportunities present in supported legacy STBs via a broadband connection.
The operator opportunity in the ATV market
If that complexity can be addressed, and it can, targeted advertising provides multiple new revenue opportunities. The headline is of course the possibility of ad replacement in linear primetime, which allows operators to increase the number of ad slots without increasing ad load; charge premium rates for them; and decrease churn as viewers have been shown to respond more favorably to targeted ads.
But there are other significant opportunities as well, especially when you consider that, with their first-party data, operators have everything they need to start making money now.
Additional opportunities include:
Leverage the UI – Operators can increase inventory still further by serving ads within the UI of their apps. This can be further explored when the user is actively interacting with the UI, such as when browsing content.
Catch-up content – As we wrote in Time is Money: the hidden revenue potential of time-shifted viewing, operators can use TA technology to serve ads attached to catch-up content. With more viewers watching more minutes of catch-u every year this is a powerful proposition
Self-promotion – With many companies in the OTT sector offering triple-play services and more, TA provides a valuable route to increasing the efficiency of their own promotions, both for additional services and for specific content
Freemium to premium- Operators can offer free (or almost free) content access, backing it up with significant ad revenues, to increase their market penetration and OTT migration, and create leads that will become premium customers in the future
It’s also worth pointing out that there are solutions on the market, such as ours, that do not require the latest equipment to be installed in viewer’s homes to make this happen. 50% or more of viewers worldwide are watching television on legacy devices that do not necessarily support OTT services, and this is an audience that needs to be reached for maximum benefit.
Targeted advertising works both with and without inventory. Operators with existing inventory can offer creative monetization options enabling them to optimize between their different monetization channels and on top of that use AI-based insights to increase the efficiency and scope of their segmentation. This boosts reach and revenues as a result. For operators without inventory, an off-the-shelf smart infrastructure enables them to connect with various TV channels and support multi-ad servers. This allows them to leverage their existing first-party usage data to offer attractive segmentation to advertisers, while also supporting and measuring ad-insertion.
And with Sigma SSAI, in particular, providing a rich opportunity for the launch of new services to capture audiences hungry for increasing amounts of content, it seems there is no better time to adopt a technology that satisfies both advertisers and audiences alike.
How can targeted advertising make time-shifted viewing a revenue source for TV operators and broadcasters?
In recent years, more people have been changing the way they watch TV. They’re using something called time-shifted TV (TSTV). This means they watch TV shows at their own time using services like catch-up and network recording. This way of watching TV is becoming more popular all around the world.
For example, in the UK, people spend an average of 30 minutes each day watching time-shifted TV, which is about 15.6% of their total TV time. In the United States, people watch about 3 hours and 27 minutes of time-shifted TV every week, while they spend 26 hours and 5 minutes watching live TV. In France, in 2019, 7.8 million French people used catch-up services to watch shows, which is 13% more than in 2017. These numbers have likely gone up even more because of the Covid-19 pandemic.
As more people use time-shifted TV, the technology behind it has also improved. It started with things like VHS tapes, then came PVRs (Personal Video Recorders), and now we have cloud PVR solutions like the one made by Broadpeak. But one thing that hasn’t changed is that people still don’t like watching commercials, and this causes broadcasters to lose money.
New way to deal with this problem
Instead of just fast-forwarding through ads, we can use something called targeted advertising. This helps broadcasters make money without annoying viewers.
By using the right targeted advertising technology and a mix of client and server-side ad replacement and insertion, TV operators can show time-shifted TV with fewer ads or even no ads at all, and they don’t need to change the content. This lets operators offer different pricing options, like paying for an ad-free service or watching some ads to make the service cheaper. This is something a lot of people are okay with, as a recent survey showed that 53% of people are willing to watch ads to lower the service price.
The best part is that this solution doesn’t depend on the regular ad slots in TV shows. Ads can be put into recorded content without changing it. The usual pre-roll ads are still there, so there are more ads available overall. Event-based advertising, where ads show up when viewers do things like fast-forwarding or pausing, is another way to target ads. Advertisers like this because they know viewers are paying attention when these ads show up.
A winning formula
The introduction of targeted advertising in time-shifted television is a win-win scenario for various stakeholders in the broadcasting ecosystem.
Time is Money: the hidden revenue potential of time-shifted viewing
For broadcasters, it presents an opportunity to monetize content beyond its initial transmission, while also offering advertisers a highly rewarding means of audience segmentation. This is a significant attraction gaining momentum across the industry.
Operators, on the other hand, benefit from increased ad inventory and can extend valuable advertising slots to advertisers, opening up the potential for further revenue growth without alienating viewers with low ad tolerances. This approach is cost-effective, as it doesn’t require investments in costly on-premises or domestic equipment for subscribers. Instead, it can be implemented as part of operational expenditure (opex). This additional revenue stream allows operators to offer viewers more features and services at the same price or even lower their tier pricing, enhancing the overall value proposition.
For advertisers, this development provides access to a growing segment of viewers who engage in time-shifted television. Targeted advertising for time-shifted viewing, whether as pre-roll or conventional mid-roll slots, extends the reach of their advertisements. Advertisers can ensure their ads are actually watched, particularly pre-roll, which is often designed as “unskippable” by major SVOD providers and has gained consumer acceptance. Event-based advertising offers additional certainty that the viewer is actively engaged with the content during ad placement, further enhancing the effectiveness of campaigns.
Extending campaigns into the catch-up window offers advertisers flexibility for real-time campaign optimization, maximizing revenue growth.
As for viewers, they are likely to approve of this development. With fewer ads, thanks to targeted advertising, viewers are more engaged with the ads they do see, as the content is more relevant to their interests. This improvement in user experience and a reduction in ad load can lead to higher retention rates.
Furthermore, the ability to access ad-free services through a paid subscription, along with various options in between, adds value to the offering. This can increase viewer retention and reduce churn, as well as contribute to improved GDPR opt-in rates, as viewers appreciate the control and customization offered by these services.
When does an abundance of choices become overwhelming? Nowadays, with an almost boundless array of content options, the problem is no longer “there’s nothing to watch right now”; it’s more like “there’s too much to watch, how do I decide?”
For decades, TV channels followed a set schedule, broadcasting specific shows at specific times. However, the advent of Over-The-Top (OTT) services has given consumers the freedom to choose when, how, and on which device to watch.
In this fiercely competitive environment, TV service providers face the challenge of attracting and retaining viewers. Among various strategies, offering a personalized TV experience has proven to be effective. Consumers have grown accustomed to a high degree of personalization in various aspects of their lives. For instance, streaming music apps like Spotify and Pandora provide a personalized experience, recognizing users, making tailored recommendations, and allowing users to seamlessly resume a podcast, song, or playlist where they left off. These apps also curate custom playlists based on a user’s listening history and downloads.
Navigation apps such as Waze empower users to create profiles, input home and work addresses, and even earn rewards for reporting heavy traffic and accidents. Online shopping platforms cater to individual preferences, presenting each shopper with a personalized page showcasing previous purchases, product recommendations, and various other customized elements.
From the household to the individual
However, many TV packages are still geared to all users in their household and not to the individual. Most consumers find this approach dated. They expect a custom experience, with their own profile and standard features such as their name and profile picture at the start. They presume that the service will remember what they watched and enable ‘continue watching’ so that they can pick up where they left off.
They also expect appropriate recommendations based on their viewing habits; beyond suggesting content, they are looking for a service that really ‘knows them.’ This means that the service understands that they watch specific types of shows or movies and directs them to similar content at the right time. For example, someone who watches an action flick every weekend would appreciate knowing that a new action flick with their favorite actor will be available this upcoming weekend. However, someone who watches historical series nightly may appreciate daily updates about upcoming episodes.
Personalization, to be relevant, needs to go well beyond the content; to be implemented successfully, it must also consider the context.
AI and machine learning are advancing personalization
AI and machine learning are revolutionizing the realm of personalization, enabling more precise and scalable customization. These technologies excel in processing vast datasets, analyzing audience behavioral patterns, and producing insights at speeds and volumes previously unimaginable. With advanced machine learning and deep learning systems, personalization reaches a new level, as these systems can make predictions and decisions that enhance the personalization experience. They continually adapt as customer profiles and interactions evolve.
AI-driven technology leverages image recognition and natural language processing to scrutinize scenes in pre-recorded content, as demonstrated by initiatives like Channel 4’s “Contextual Moments” in the UK. This technology identifies “positive moments” within the content, which can then be aligned with specific brands for advertising purposes. The resulting ads are tailored for particular viewing audiences, offering a more engaging and relevant advertising experience.
Loyalty and Unified Experiences
How to Optimize Your TV Services With Personalization
Earning viewer loyalty hinges on various factors, and among them, trust plays a paramount role. According to Gartner, the crucial determinant for fostering customer loyalty isn’t solely how customers perceive a particular product or service, but rather “the level of trust they have in the organization as a whole and their likely intent to remain loyal.” Gartner also forecasts that “by 2020, more than 40 percent of all data analytics projects will relate to an aspect of customer experience.”
Providing a seamless and consistent experience across all devices and locations has become an expectation, extending beyond merely delivering high-quality video on TVs, phones, and other connected devices. Viewers now anticipate that their TV service will recognize them in various scenarios and maintain a consistent experience. Whether they’re halfway around the world or signing in from a different device in their own home, the TV service should readily identify their profile, remember where they left off watching a show, and offer the same familiar interactions that viewers have come to expect. This level of personalization and consistency is instrumental in nurturing trust and loyalty.
Monetization through Personalization
For TV service providers, personalization not only enhances the viewer experience but also unlocks monetization opportunities, particularly in the realm of targeted advertising. By leveraging data-centric strategies, TV service providers can seamlessly integrate advertisements that resonate with the viewer’s interests.
The growing popularity of digital advertising in television is attributed to three key factors. Firstly, advertisers can precisely target their messages to individual viewers, ensuring that people only see ads that are relevant to their preferences. Secondly, ad buyers pay for impressions that are measurable and precisely targeted, optimizing their return on investment. Lastly, the entire advertising value chain is streamlined and automated, reducing inefficiencies and enhancing cost-effectiveness.
Targeted advertising is an integral component of a comprehensive approach that thoroughly understands the viewer and personalizes the experience from the moment they sign in, throughout their viewing journey, including the ads presented to them. This level of personalization not only enhances the viewer’s engagement but also creates a more lucrative advertising ecosystem for TV service providers.
Promoting engagement by getting there first
Viewers who value their personalized TV experience are more likely to remain loyal to their current service. They understand that it takes time for the system to understand their preferences, and they are often reluctant to start anew with another service. Therefore, it’s paramount for TV service providers to be at the forefront of this new wave in order to attract new viewers and maintain their engagement. Given the high cost associated with acquiring new customers, businesses are well-advised to prioritize customer retention. Estimates suggest that acquiring a single new customer can be anywhere from 5 to 25 times more expensive than retaining an existing one.
In today’s fiercely competitive TV industry, viewer choices are heavily influenced by having a service that has established and sustained a warm and intelligent connection with them. TV service providers must empower their organizations to harness their data resources to the fullest and foster a strong, personalized relationship with viewers, ensuring continued loyalty and satisfaction.
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