There were several important trends that shaped and disrupted the advertising marketplace in 2015. These included the near-doubling of U.S. smartphone ownership in the last four years, the continued adoption of tablets, the rise of big-screen phones, the explosion of native advertising, the introduction of smart watches and the prominence of other wearable technologies.
And in our small but important corner of the universe -- we sell advertising programs for marketers tailored to affluent and influential cinema audiences at top U.S. luxury exhibitors and iconic independent film theatres -- several dramatic trends upended our world as well.
Targeted premium video advertisements took off
By far, the biggest trend in our business was the growth of targeted premium video advertising on our cinema screens. Targeted premium video ads are for advertisers who want to drive branding objectives while reaching a specific engaged audience with staying power, much like live event television viewership.
One of the many reasons that drove the surge of this type of advertising in 2015 was that advertisers sought more effectiveness in their television advertising.
DVRs and ad-free streaming activity create turmoil for advertisers who are increasingly seeking alternatives to the television platform. General Electric's CMO Linda Boff recently admitted to Business Insider that she's throwing in the towel on prime time television advertising and will only spend money on live television events. Essentially, that means live event television such as a sporting events or awards shows.
Cable and satellite subscription cord-cutting is another factor driving this decline. Half a million subscribers did not renew in the first half of 2015 alone. Another reason is the dramatic growth of ad-free streaming services such as Netflix, Amazon Prime and Hulu. Netflix alone has roughly 43 million subscribers in the U.S. And if you want a good barometer of the popularity of streaming, just ask Wall Street. Netflix was one of 2015's top performers in the S&P 500 and its shares were up about 150% for the year.
This trend created opportunity for Spotlight Cinema Networks and dozens of other media companies in 2015 with the characteristics advertisers' desire -- providing an environment comparable to live TV programming. Consumers don't want to miss the latest and greatest films so they can be more conversant at the water cooler or on social media networks. Cinema is “appointment viewing” at its best -- an impactful, engaging, DVR-proof environment delivering a targeted, coveted audience.
Experiential extensions and custom content.
In 2015, advertisers not only sought a targeted audience for their video messaging initiatives, but they wanted to extend and deepen audience engagement and interaction. Enter experiential extensions, which deliver advertising messaging that consumers can touch, feel, taste or view in a physical location.
While exact numbers about the growth of experiential marketing are hard to come by, marketers still spent more in experiential marketing expenditures in 2014 compared to 2013 and we see that trend continuing. More advertisers request experiential extensions in their RFPs. In fact, they are becoming the new norm in advertising plans.
Spotlight also saw an increase in experiential extensions and custom content development in the last year. For example, in 2015 we facilitated new partnerships between companies like Peroni (a Spotlight sponsor for a number of years) and the Los Angeles Film Festival (LAFF). In 2015 Peroni became the exclusive beer of the LAFF and the sponsorship allowed Peroni not only to receive significant branding exposure at the festival but also to provide sampling opportunities throughout the festival to more than 90,000 attendees.
Based on Spotlight's insights from 2015, we see experiential extensions as a 2016 growth area for companies in the targeted premium video space. In fact, we're bullish on all aspects of the targeted premium video space. All signs point to growth. Many companies -- including those from the automotive, hand-held devices, luxury, spirits and tourism categories -- are reaching out to us. Agencies are building targeted premium videos into their longer-range plans. That signals that premium targeted videos are less of a scattered marketplace and more of an Upfront marketplace.
In that respect, they are similar to traditional television but with less clutter, more engagement and higher recall. Targeted premium video companies are delivering what advertisers will be asking for in 2016.
The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillage.com / MyersBizNet, Inc. management or associated bloggers.