How Video Advertising Can Remain On Top in the Post-Cable Era

Almost since its inception, television has been the “big guns” in the advertising space. A video commercial, just 30 seconds to a minute or two long, can be costly to produce and to air, but the value of doing so has been undeniable.

In the arsenal of the advertiser, a TV spot is a carpet bombing campaign, relying on the power of numbers. Millions of eyeballs, whether across the nation or across a specific geographic area can see a commercial, and with Nielsen’s demographic numbers as a guide, advertisers can even hone in on a target audience.

But as television undergoes a dramatic shift, so too must this advertising world, which has not seen this sort of disruption in decades. There’s no longer a Nielsen-style key to getting the right ads in front of a target audience. In fact, the more numerous possibilities for greater targeting actually make it more challenging for advertisers to find the right opportunities than merely going by demographic.

Perhaps the greatest mistake in this new era of video advertising is assuming that the shift to digital only opens up new opportunities for the same old “impressions” based advertising.

Leads Trump Ads

FreeCast now has technology that goes beyond dynamic ad-insertion, which is able to match a consumer with the most relevant (and valuable) ad, based on data on that viewer. We’re able to take that to the next level, creating not just a passive ad, but a lead, with much greater value to both the advertiser and the potential customer.

Currently car dealerships, personal injury attorneys, real estate and insurance agents, and other such businesses involving high-dollar transactions depend largely on broadcast advertising. For all of these services, a buyer is not likely to travel a great distance. A buyer may drive to an adjacent city to save a few thousand dollars on a new car, but they’re going to travel to a different state. And so for this fact alone, the geographic specificity of broadcast networks has been the best bet.

With new technology, FreeCast can take a more direct and hyper-targeted approach, connecting a potential car-buyer with a dealership, or a lawyer with a client who has a potential case for them. This is a true leads-based product, not merely a targeted ad that depends on a numbers game, hoping that thousands of impressions across a target group will lead to some number of actual transactions. While not every case will lead to a sale, there’s a one-to-one relationship between the advertiser and the potential customer, and that’s what makes it unique.

Put in more concrete terms, this is also what makes the opportunity more valuable. Rather than paying for impressions (most of which will not lead to a sale), advertisers can pay for direct leads that have a much higher chance of leading to an actual transaction. This offers a much greater return on ad spend (ROAS) than even targeted ads delivered via dynamic ad-insertion.

More to Come

This is merely one example of innovations that will and must come. The consumer transition to streaming is nearing completion, but the transition of advertisers, or rather, the transition of the entire economics of media, is still in its early stages. This is because there was much resistance to this new model for many years, and only now, at the late stages of the consumer transition, has it become obvious that the future is here and there’s no going back.

Monetization strategies must change for a handful of reasons, but three in particular stand out:

Demographic-Based Targeting is Becoming Obsolete: In the old days, using Nielsen numbers to target a demographic group was the best way to get an advertisement in front of a target audience. Often this meant going without measurable results. But Nielsen has little data on streaming audiences, so their ratings numbers increasingly reflect a smaller and smaller slice of the total available market, those still using traditional TV. Their efforts to capture connected TV audiences and their digital content viewing has been slow and continues to capture only a small and likely unrepresentative sample. Thus, the “shotgun” approach of putting an ad in front of millions of viewers with some confidence that your target audience is within that blast can no longer be taken for granted.
Consumers Manage More of the Experience: With cable TV, a consumer paid a fixed price, and got hundreds of channels, creating a simple experience for them, while managing the economics largely happened between TV providers and content creators. Now that we’re in a direct-to-consumer era, consumers have a much more active role. Rather than Comcast or Charter striking deals with Disney and Paramount, it’s consumers themselves deciding which services they will subscribe to and how much they will pay for each. In addition to the economic question, there’s now also another element to be managed, which is the consumer’s mental bandwidth for that management process.If it’s too much work to manage too many different services, that can drive consumer behavior in unexpected ways. Paid and subscription-based services are also competing with ad-supported alternatives, leading to trade-offs between consumer out-of-pocket media spending and willingness to put up with ads.
Web-Based Ad Technology: Television ads were straight forward. Consumers would see a commercial, and this would encourage them to purchase a product, typically either in a store or online. But there was no interactivity with the ad on the television, and its placement was predictable. The shift to streaming opens up countless new possibilities for ads that are more targeted, more interactive, and that can appear in more different places. Dynamic ad-insertion means different viewers can see different ads within the same ad break, and viewers on PCs or mobile devices can even click through and purchase a product, an entire process that is trackable, in contrast to traditional impression-based advertising. This makes targeting ads and measuring their effectiveness a much more complicated endeavor. Worse yet, it’s all relatively new ground that an industry which hasn’t had to adapt much is now forced to figure out quickly.

These three factors combine to create a more challenging environment for media companies. The “easy mode” once enabled by Nielsen ratings is no more. There’s a new dimension of consumer experience complexity that must be managed independent of the traditional economic factors, and maximizing revenues from subscription and ad revenue is vastly more complicated than it ever has been.

Mission Critical

The television industry has been battling many of the same factors for years now: streaming is simply less profitable. Despite the direct-to-consumer relationship, content providers earn pennies to the dollars they once made off cable distribution deals. This has long been a disincentive to invest in streaming at all.

But now the whole industry recognizes that we’ve passed a tipping point. The industry is changing, and like it or not, the training wheels once provided by lucrative cable contracts alongside early streaming efforts are coming off.

For this to be anything but a financial catastrophe for the big media empires requires that they solve the streaming puzzle and figure out how to achieve sustainable high margins via streaming, and likely in the absence of cable and satellite TV distribution deals, or at least very different deals from those they’re used to. There are two pieces to this puzzle. One is to figure out the economics of subscription streaming, and the other is to master and maximize revenue from advertising. And of course, the latter is the whole game for AVOD and FAST services, both of which have grown rapidly in popularity.

This has been the core of FreeCast’s mission from the start: a world where online distribution is both as easy for consumers as traditional television was, as profitable for programmers, and as valuable for advertisers, if not even more so.

In order to do so, FreeCast has tackled all three of the aforementioned problems. We bring together the industry’s best collection of streaming viewership data, an aggregated guide to help consumers find content, and cutting edge ad-tech. All three of these legs of the stool are needed for success, and no other company, even the multi-billion dollar media giants, have assembled them together the way we have. The insight to do that is the fruit of over 10 years at the forefront of streaming technology, and our company was founded by one of the pioneers of online video.

Perhaps most importantly, the work is not done. Innovation continues in the streaming and ad-tech spaces, while consumers and programmers alike both continue to alter their habits in response to the new media landscape. With already daunting challenges, having to keep up with these moving targets makes them each all the more difficult to tackle alone. That’s why a partner like FreeCast is such a powerful asset right now: we allow the programmers and advertisers out there to do what they do best, while we laser focus on these deep industry challenges and build an ecosystem where all can still thrive.