New Monetization Tools Will Power Next-Gen TV

Traditional cable TV has been dying for years now. But what comes next is growing clearer on the horizon. Many observers suspected that cable’s replacement would look a lot like Netflix, or might even simply be Netflix. But following the Flixcopalypse’s fragmentation of the market, and the struggles of new SVOD services in its wake, the idea that everyone will be able to build their own Netflix and cash in is no longer viable.

Changing consumer behavior in response to both the new landscape of the television industry and a shifting economic norm are actively reshaping what the future of television will look like. With mainstream television spread across dozens of SVOD apps, none of them is able to make any money. Shrinking libraries and fast-rising prices only make matters worse. FAST and AVOD services, on the other hand, are growing rapidly as consumers seek refuge amid not only video service price hikes, but high overall inflation and lingering economic uncertainty.

But to boil the entire industry down to subscriptions, ads, or some combo of the two is an oversimplification, especially as we move forward and new technologies make richer experiences for consumers and more lucrative opportunities for advertisers possible.

Branded and Sponsored Programming

Free and low-cost television products are certainly going to be a part of the TV ecosystem of the future, and they present unique opportunities for smaller content creators. There are dozens of FAST services out there, each with hundreds of channels. But while they may be the size of large cable bundles, the actual channels are very different. Some of it is assembled from existing libraries of content, while other channels feature content from smaller content providers. The lower barriers to entry mean that content creators of all sizes can join the ecosystem, and thus it’s not hard to put together a collection of hundreds of channels.

These low-cost and easy-to-create channels present an opportunity for brands, who may find it cost effective to create branded content or even sponsor an entire channel. This may resemble programming from the early days of television, where a sponsoring company or product would be highlighted within the content and not merely relegated to commercial breaks. Below is an image from mid-century game show To Tell the Truth with sponsor Geritol featured as prominently as the name of the show. Even the term “soap opera” comes from the manufacturers who would sponsor such daytime programming in hopes of appealing to stay-at-home mothers and wives.

As television enters a new era, advertisers are looking for new ways to engage with potential customers. Tying a brand in with the content is one way to do that, allowing the advertiser to be featured in a more appealing and memorable way. While certainly traditional ad spots will still have their role, savvy advertisers will increasingly be looking for other opportunities to feature their brands and marketing within new television.

An example we frequently give is that a baking channel could be sponsored by a company like Pillsbury. This is not only a positive engagement for the brand, but a targeted niche channel like that is a great opportunity for advertisers. Makers of cookware, baking supplies, and other goods related to the programming know they’re reaching viewers who are likely to be interested in their products by nature of the content. With low production cost channels on FAST services, a big brand’s marketing dollars could create something far more unique and valuable than an ad spot on a national network. And this is the sort of opportunity that never would have been possible in the past, where creating a channel on cable or broadcast TV would be prohibitively expensive, and face direct competition from established channels like the Food Network.

Legacy Brand Revivals

The TV industry isn’t the only one that’s seen disruptive change. While every space has its household names and stalwarts, go back 20 or 30 years in any industry, and you will find popular and storied brands that no longer exist, or at least not in the same capacity.

Many of these brands have tremendous good will, name recognition, and value associated with them. As an example, the Sears department store chain is a notorious example of once-great company’s fall, but their Craftsman tool and Kenmore appliance brands were still worth billions even as the retail business faltered.

While these brands may live on, others lie dormant. Applying that branding to video content in the new television era could be an opportunity to tap some of the value in those brands and give a boost to content that would otherwise struggle to stand out in a crowded space. There are thousands of defunct consumer brands, retailers, print publications, websites, and more.

Leveraging these brands allows their names, identities, and reputations with consumers to be put to good use. Nostalgia has often been a powerful force in marketing, with many large companies reverting back to old logos from years past or retro-inspired designs. Not only can these familiar brands lend credibility to content, but they can also be built around with further ecommerce efforts. RadioShack and Circuit City aren’t coming back as retail brands, but a channel or program bearing one of those names could feature reviews of tech products, and an associated online storefront could offer deals on the products featured in the programming. It would generate commission revenue without any of the overhead or challenges operating as a full blown retail or ecommerce brand.

Interactive and Multi-Screen Advertising

One issue that has always been a challenge for advertising, is that even the most targeted and relevant ads still necessarily interrupt the content in which they appear. On traditional television, commercial breaks are usually when viewers turn their attention away from the TV to something else, a snack run or bathroom trip, etc. For much of the history of streaming, ad-free experiences were the standard. Now, an ad-free experience is a premium, and the rise of ads within content consumers already pay a subscription for has been an unwelcome development.

While streaming has meant new opportunities for better-targeted ads than those on traditional television, there are trade-offs. Interacting with these ads further interrupts the viewing experience, which may be undesirable from the consumer or programmer’s perspective.

The scramble for struggling SVOD providers to turn their products profitable has led many of them to turn to more frequent and more invasive ads as an alternative to, or in coordination with, further price hikes. This is a negative trend with limited capacity to wring more money from existing user bases, and the further it’s pushed, the greater the risk that consumers will reach their breaking point and start looking for alternatives.

Fortunately, new technology on the horizon may present a better option. Building on branding and product placement, future ads could be seamlessly integrated within content. A character’s outfit or other products featured within a show or movie could include more subtle and less disruptive prompts for consumers to purchase the same items. If advertisers take a greater role in funding the creation and distribution of content, this could be a revolutionary shift, creating an entirely new category and paradigm.

A multi-screen strategy must be part of this development as well, and fortunately that technology is advancing as well. Knowing what device a consumer is viewing content on will impact how they interact with an ad. A user viewing from a smart TV or set-top box will have limited ability to interact with a clickable ad whose call to action is a link to a website. However, many of these viewers will have a smartphone or tablet near by which could be used to allow them to interact with an advertiser’s content or call to action without interrupting the content on the screen.

For viewers viewing from a smartphone or tablet however, there can be no such assumption of a handy second screen. Ads on these devices must be designed with the awareness that calls to action will occur on the same device, but potentially at risk to the content experience.

While technology provides answers to many of the big challenges in the ad space, adoption and implementation is the real problem. And that problem, like so many others, stems from the fragmentation of web television. These technologies cannot gain traction if they’re only used by one or two of dozens of streaming products, if third parties must design to accommodate too many different systems, or if it’s the advertisers themselves who are left to navigate a confusing web of products and services.

The same way FreeCast promises to unite content in a single experience for consumers, FreeCast’s model can help enable unified infrastructure to power next-gen ad tech as well. This is yet another way an aggregated streaming television solution would provide a triple-benefit to consumers, content providers, and advertisers alike. The ad experience for consumers would be superior, there would be more diverse and more powerful options for advertisers, and content providers would see greater revenue opportunities.