The media business is killing itself. FX Networks research reports that nearly 500 scripted original series were produced in 2018, up from 266 in 2011. And then there is unscripted programming, and don't forget sports coverage, and news, too. It is safe to say that viewers have more choice now than ever before. Great, right? Except ...
This explosion in choice has led to fragmented and declining viewership for networks and media companies. Declining viewing means declining revenue. So what did networks do? They increased the ad load! The result? Increased clutter that makes it harder for marketing messages to break through, and even worse -- it totally discourages viewers.
Ad overload drives more viewers, especially the most valuable viewers, to ad-free services like Netflix and Amazon Prime. This further reduces ad-supported viewing, putting even more pressure on media companies to increase the ad load in order to preserve revenue. Not to mention, an increasing proportion of the highest-quality creators and content -- the stuff that's winning Emmys and Golden Globes -- are on platforms that run no ads.
And around it goes. Stay on that path and ad-supported TV is in a self-inflicted death spiral.
The good news is that the industry is slowly waking up to this reality, fumbling for the light switch of innovation and a way out.
The way forward starts with a simple insight: Create more value. More value for marketers. More value for media companies. More value for consumers. We have to unwind the short-sighted decision-making, where one part of the ecosystem (media companies) benefited at the expense of the others (consumers and marketers) and respect the important role each constituency plays in making the industry healthy.
The industry has historically not done a great job creating value for all parties. Media companies, ad tech providers, agencies and marketers have hoovered up consumer data while also subjecting the audience to ever-increasing ad loads, and in some cases creepy ad targeting practices. It's no wonder that consumers, especially the savviest and most affluent, have been voting with their feet and moving to ad-free services.
So, what to do? Rather than trying to fix a broken system in small increments (does a consumer notice, let alone change their viewing behavior as a result of seeing 10% fewer ads over a year?) we should be investing in innovation that develops a new paradigm to benefit all parts of the ecosystem. This isn't easy, but it can be done.
Value Exchange Engagement Ads
As described in a recent IAB (Internet Advertising Bureau) publication, value exchange ads offer consumers a choice: something of value in exchange for engaging with the advertisement. Not surprisingly, this is getting real traction. Pandora, for example, worked on a custom opt-in ad experience with HP that it reports led to a 34% lift in purchase intent. YouTube ran a campaign for NBC's The Good Place where viewers who didn't push the famous "Skip Ad" button were rewarded with an exclusive clip from the show's upcoming season.
Our company true[X] pioneered opt-in engagement ads. Viewers are given a clear choice to engage with a brand and give better attention in exchange for removing an entire pod's worth of ads. The IAB put it best in their opt-in value-exchange playbook: "For this type of advertising, in exchange for opting-in, the value exchange for the consumer is directly related to accessing the media experience that the user intended to access at that destination."
Think about all the value that simple choice creates. Viewers get something they desperately want - control over the ad load they receive. Brands get the halo of providing viewers with that control, and guaranteed attention to their message every time. Media companies can substantially reduce the number of ads they show (this isn't smoke and mirrors; over the last three years our parent company increased content viewing 22% while reducing ad time by 2.5M hours), and by providing a more valuable advertising model to marketers, also maintain their monetization rates. How much more value are marketers getting? On average our engagement ads deliver 5x more brand lift than standard full-episode video ads.
This is what we mean when we say it doesn't work unless everybody wins. The media ecosystem is a delicate balance of marketers, media companies, and consumers. All three have to feel like they are getting more value.
The concept of value exchange is at the core of this innovation, and the best way to ensure consumers are getting their share of a fair deal. Over the last three years we've served over half a billion engagement ads, heartening news and a good indicator that the ad industry, buyers and publishers in particular, are finally starting to notice what consumers have known for a long time -- that we can actually do more with less.
This is Part 1 of 2. Tomorrow we will address how the concept of a value-exchange can be applied to the industry's measurement challenge.
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