A Roadmap for Discovery-Driven Advertising - CHRISTOPHER VOLLMER - JANUARY 2020 - MediaLink
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J AN U A RY 2 020 A Roadmap for Discovery- Driven Advertising CHRISTOPHER VOLLMER
Executive Summary
F
or the media, advertising, and technology industries, 2019 was a
banner year for the strategic shift to streaming video. The current
commercial momentum is poised to accelerate in 2020, as multiple new
and existing video streaming services jockey to acquire, retain and monetize
users migrating away from conventional pay-TV offerings. The undeniable
conclusion is that streaming video is the future of entertainment and media
growth. But as the subscription business model has become the increasingly
preferred choice for many consumers as well as suppliers, the place for
brands and advertising in the premium video ecosystem has become
less certain.
For many compelling reasons, the emerging advertising-supported
streaming video ecosystem deserves more strategic attention. In these still
early days of video streaming, there is a massive market opportunity to re-
architect the advertising experience around the user via new ad formats
that move beyond the current limitations of interruptive advertising and
perishable time and space. In a largely on-demand viewing environment,
seizing this opportunity requires developing ad formats that are not only
participatory, targeted and measurable, but also discoverable.
Last year brought a number of promising examples of ad format
experiments from companies like Hulu, NBCUniversal, ESPN, Roku and
Google’s YouTube TV. In 2020, even more innovative efforts like these will
be required given the converging tensions between user expectations for
fewer ad breaks and lighter ad loads, media supplier needs for revenue
growth, and brands’ desire to access the premium viewing environments
that attract high-value consumers. Moving forward, this suggests a
strategic agenda for all players in ad-supported streaming video that
focuses on:
•• Taking a holistic view of the user’s streaming video experience in order to
identify where, how and why advertising can enhance different aspects of
the user’s streaming video experience, from sign-on to sign-off.
•• Considering four specific factors – user preferences, observed behavior,
interactivity and integration – to prioritize the most attractive ad formats
in terms of form, function and utility.
•• Developing and scaling those ad formats that are grounded in the
capabilities and realities of video streaming by leaning into: user-centric
design, investment in creativity and innovation, standards, measurement,
and automated buying.A Roadmap for
Discovery-Driven
Advertising
CHRISTOPHER VOLLMER
T
he strategic shift to streaming THE UNDENIABLE
video dominated the headlines in CONCLUSION: STREAMING
entertainment and media throughout VIDEO IS THE FUTURE OF
2019. This evolution became visible in MEDIA AND ENTERTAINMENT
earnest on April 11, when Disney’s GROWTH AND
executive leadership announced its MONETIZATION
aggressive growth plans for the global
launch of Disney+, a subscription video To a degree, all of these companies are
service that was regarded by many industry chasing Netflix, the global pacesetter in
observers as “the most important product streaming video. Netflix has built what all
launch in the company’s history.” It of these companies crave: a compelling,
became even clearer seven months later on on-demand premium video offering with a
November 12, when Disney+ debuted, price-value equation superior to pay-TV, a
garnering a reported 10 million user direct-to-consumer relationship that
sign-ups on day one. Just two weeks drives habitual usage and appealing long-
earlier, Apple unveiled its long-awaited term economics, and a platform
entry into streaming video services, experience that is designed for scalability
AppleTV+, with considerable fanfare. And and personalization. Most of all, Netflix
in between, virtually every major has singularly elevated the importance of
entertainment and media company “user experience” to achieving growth with
articulated strategies and hatched business the modern media consumer.
plans for streaming video – from
behemoths like AT&T’s WarnerMedia and From sign on to sign off, Netflix has
Comcast’s NBCUniversal to niche players invested enormously into making video
like AMC Networks. consumption simpler, easier and more fun
for its users and therefore preferable to
2 | A ROADMAP FOR DISCOVERY-DRIVEN ADVERTISINGother offerings that compete for their
screen time. A viewing environment
Marketers are slowly
entirely free of interruptive advertising, losing access to the
monetized by subscriptions, has
contributed significantly to Netflix’s
best entertainment
growth and consumer appeal. The global content, as well as large
success of Netflix with approximately 160
million “members” has convinced many of portions of the most
the industry’s major players – Amazon,
Disney, AT&T’s WarnerMedia and Apple –
valuable audiences
not only to mimic its heavy emphasis on – particularly young
the user experience but also to make
subscriptions their primary
adults and the affluent.
business model.
BRANDS’ PLACE
For many consumers, IN THE PREMIUM
VIDEO ECOSYSTEM
video streaming has IS UNCERTAIN
become synonymous
Based on their current trajectory, these
with greater choice, more developments – that potentially reduce the
control and better value. prominence of advertising in the premium
video ecosystem – create challenging
circumstances for marketers, media
companies and, potentially, users. As more
The ascendancy of the subscription video consumption shifts to subscription
business model in video has been streaming, marketers are slowly losing
predictable, but also problematic. There is access to the best entertainment content,
little doubt that many viewers who once as well as large portions of the most
endured 12 to 14 minutes of interruptive valuable audiences – particularly young
advertising per hour of traditional TV are adults and the affluent.
now spending more of the entertainment
time with content-rich streaming services
that are either ad free or have much lower
ad loads. For many consumers, video The emerging advertising-
streaming has become synonymous with
greater choice, more control and better
supported streaming
value. The resulting digitization of video video landscape deserves
consumption has led to more cord-cutting,
the aging of the pay-TV subscriber base, more strategic attention.
and lower linear ratings – all of which have
negative implications for the
approximately $70 billion U.S. traditional Media companies have benefited
TV advertising market. As billions of financially from the multiple revenue
investments flow into premium video streams associated with traditional
content as well as the marketing for television – advertising, affiliate fees and
existing and new streaming video services, syndication – which, in turn, has fostered
these trends are all likely to intensify a sustainable level of re-investment in the
in 2020. production and acquisition of premium
video content. The “winner-take-most”
realities of digital platform economics will
MEDIALINK | 3likely not be as generous to as many television. Much of streaming viewership
industry players. Finally, there are signs occurs on larger screens, where video
that consumers may tire of subscribing to advertising is more consumer-friendly via
an expanding number of a la carte and lower quantity ad loads. Ads in connected
potentially expensive, in total, streaming TV actually get watched, too. According to
offerings in order to watch their Extreme Reach, they enjoy completion
favorite shows. rates of about 95%, because they are
challenging to skip. And marketers get the
For these reasons, the emerging benefit of an advertising environment
advertising-supported streaming video where they can place their messages next
landscape deserves more strategic to premium content that looks and feels
attention. Video streaming has become like TV but behaves like digital in terms of
mainstream as Nielsen estimates that 72% data, targeting and addressability.
of U.S. TV households have at least one
connected TV device. According to the
Leichtman Group, 31% of these U.S. TV
households are streaming video daily via a The future of
connected TV device. Today, ad-
supported streaming is growing rapidly off
advertising needs to be
of a small base and is largely concentrated participatory, targeted
in consumer offerings like Disney’s Hulu,
Google’s YouTube and Roku. In 2019, ad- and measurable.
supported streaming, defined as
advertising that appears on connected TV
devices, grew 37.6% to $6.9 billion in the Fewer, better, but still interruptive
U.S according to eMarketer. This is where 30-second ads have powered ad-supported
younger users, many of whom are cord streaming’s growth so far. Simply
cutters and cord nevers, increasingly following this playbook, however, cannot
consume their video. The median age of a be the preferred long-term solution for
Hulu viewer is in the early 30s compared media companies, marketers or
to the early 50s for most of traditional consumers. Users have already been
FIGURE 1 | U.S. Advertising Spending Trends (2018-2022)
Source: eMarketer
4 | A ROADMAP FOR DISCOVERY-DRIVEN ADVERTISINGtrained to expect fewer ad breaks and THE GOOD NEWS: HULU AND
lighter ad loads. This “traditional” shelf OTHERS ARE LEADING BOLD
space is inherently constrained AD EXPERIMENTS
in streaming.
With ad-supported video streaming, there
is a sizable market opportunity to re-
architect the advertising experience
IT’S NOT GOOD ENOUGH around the user. Hulu, the streaming video
FOR ADS TO JUST BE service that Disney has controlled fully
GOOD ANYMORE – since May 2019, provides a glimpse of what
THEY MUST PROVIDE this more user-friendly future looks like.
VALUE TO VIEWERS For years, Hulu has led the industry’s
efforts to develop ad units that give users
With competition increasing from more more control and choice and make
ad-free services, viewers will not tolerate commercials more appealing and engaging.
longer, more frequent sessions of Pioneering a Madison Avenue version of
advertising – even if those interruptive “choose your own adventure,” Hulu’s first
spots are more relevant or more varied. wave of ad innovation enabled users to
Online advertising and its “Tokyo at Night” determine whether they would rather
bombardment of banners, pop-ups, auto- watch a longer video ad upfront in
play ads, prestitial ads and screen exchange for consuming content
takeovers that overwhelm users and subsequently ad-free. Another format
burden the industry with enormous supply enabled users to select the ads they were
chain complexity are an important most interested in viewing.
reminder of how not to move forward. The
industry’s focus needs to be on expanding More recently, Hulu has expanded its
the supply of advertising units that advertising products by rolling out new
enhance the user’s experience, rather than units tailored explicitly to users’
increasing those that tax it. Recognizing streaming behaviors. Recognizing that
this dynamic is key if ad-supported many Hulu users like to “binge watch”
streaming aspires to absorb the inevitable (according to Hulu’s own data, about 50%
migration of ad dollars from the of viewing sessions on its platform consist
traditional TV market and to attract of three or more episodes of the same
incremental spending from digital and series), the company has beta-tested an ad
other advertising budgets. unit with brands like Kellogg’s Cheez-Its
and Beam Group’s Maker’s Mark that
Incremental improvements to broken enables marketers to target users with
systems cannot be the aspirational goal for occasion-driven messaging while they are
those in media and advertising leadership in “binge mode” and reward them with
today. The future of advertising needs to more ad-free viewing or relevant
be participatory, targeted and promotions. Hulu plans to make the
measurable. In a largely on-demand “binge unit” available to all of its
viewing environment, it also needs to be advertisers in the second half of 2020. The
discoverable. User experience innovations “pause ad unit” is another behavioral-
from Netflix and others have succeeded in driven Hulu ad innovation that is viewer
creating massive commercial value from initiated and designed not to disrupt the
reimagining the viewing experience. Now, video experience. Both of these efforts are
that same level of creativity, investment part of Hulu’s strategy to generate half of
and strategic focus needs to be applied to its total advertising revenue from
advertising, specifically to build and scale “non-intrusive ad formats” by
those ad formats that are explicitly approximately 2022.
designed for the capabilities and realities
of streaming video.
MEDIALINK | 5FIGURE 2 | Examples of New Video Advertising Formats
Source: Hulu, NBCUniversal
Hulu’s “viewer-first” approach appears to “ShoppableTV” ad units that give viewers
be resonating with consumers and the ability to purchase products while they
advertisers. Today, Hulu reaches about consume their favorite video content.
70% of its 29M subscribers through its ad-
supported plan. According to a 2019 Experiments of different kinds are
analysis completed by Second Measure, beginning to proliferate across both linear
Hulu’s one-year customer retention rate and connected TV. Fox, ESPN and NBC
– a key barometer of user satisfaction with Sports are all exploring how to manage
the platform – is second only to Netflix’s their on-screen real estate differently for
among major streaming offerings. Brands live sports. Rather than running
have steadily invested more video dollars traditional ad breaks, these companies
with Hulu, too, as its advertising revenue have used screen wraps, virtual graphics
has grown from 2017’s $986 million to and split screens to show ads that do not
2018’s $1.5 billion. Hulu is anticipated to force viewers away from live action during
end 2019 with around $1.8 billion in baseball pitching changes, football referee
advertising revenue, according to some huddles or additional sequences featuring
external estimates. their favorite golfers.
Other major players are recognizing the Roku has introduced interactive ad units
strategic importance of commercial that encourage viewers to set reminders
innovation and the associated need for for content sponsored by the same
new ad formats. NBCUniversal has pledged advertiser. And Google’s YouTube TV has
to pull advertisers in, rather than push launched “YouTube Masthead,” which is an
them out, when it launches Peacock in audio-visual home page unit greeting
April 2020 as a primarily free, ad- users precisely at the high value moment
supported streaming service. The media when content discovery meets
giant has further telegraphed its video consumption.
intentions by emphasizing that Peacock’s
viewing experience will be user friendly,
“one that users can enjoy and trust,” and
will create value for brands. Some of
Peacock’s ad innovation playbook may
already be visible in linear television,
where NBCUniversal has introduced
6 | A ROADMAP FOR DISCOVERY-DRIVEN ADVERTISINGIT’S TIME FOR VIDEO start to finish. Video streaming’s emphasis
ADVERTISING TO BECOME on control and choice requires that users
DISCOVERY-DRIVEN discover advertising on their terms and,
therefore, make it part of their media time.
These efforts represent just the beginning The core drivers of what constitutes an
of the innovation required if incumbents engaging ad remain unchanged. The best
and disruptors expect to maximize the advertising connects with users when they
advertising opportunity in streaming perceive that messaging as useful,
video. The new streaming video ad units enjoyable and valuable. What’s different
being introduced by Hulu and others all with streaming video is that there are new
appear worthy of experimentation from activity-based moments that are either
agencies and marketers. Yet, these efforts initiated by users or where users signal
just scratch the surface of what is possible their interests, where advertising can be
when ad experiences are liberated from additive and tailored to the user’s
the rigidity of linear television. On the video experience.
buy-side, brands need a stronger ad-
supported solution from their media
partners. Most brands view video
streaming as essential to recapturing the STREAMING SERVICES NEED
viewers that are leaving traditional TV and TO CREATE AD REAL ESTATE
to improving the quality and performance BEYOND MID-STREAM
of their audio-visual ad messaging. The
supply-side has a burning need for ad Most of the ad innovation to date has
innovation, too. As consumer interest and focused on formats when users are in
consumption in streaming video “watch” mode (i.e., consuming a given
accelerates, it is doubtful that content episode). There is likely just as fertile
providers can achieve their “revenue per ground for new ad formats that help users
hour of video engagement” goals absent with discovery when they “start” viewing,
more imaginative and expansive when they transition between and among
approaches to ad formats. program options as they “make another
selection,” and when they finally signal the
“end” of a viewing session and move to exit
the streaming platform. For those in
A reimagination media and advertising, the key is adopting
of streaming video a user-focused mindset and asking
incisive questions like “what user need is
advertising as this ad format addressing?” and
“how will this ad format compel users
“discoverable and to engage with it?”
desirable” is precisely
Moving forward, there are four key factors
the North Star that should guide the development of new
that the media ad formats in video streaming:
and advertising •• The first factor is user input, taking full
advantage of the identity- and interest-
industry requires. based information that streaming
services typically ingest when they
register new users. Many streaming
For publishers, platforms and agencies, services already use profile data to
the starting point must be to re-examine inform their content recommendations.
how advertising formats should evolve Just as users have content preferences,
based on their potential to enhance a they have advertising preferences, too,
user’s streaming video experience from in terms of categories, brands, quantity,
MEDIALINK | 7length, frequency and formats they rewarding experiences and positive
consider desirable. For example, reinforcement. Interactivity also leads to
households with young children at home greater user engagement. The best
might self-select or opt-in through their digital applications draw users in by
profile and user preferences to engage knowing where, when and how to trigger
with ads for minivans, kids apparel, atavistic motivations for entertainment,
family-oriented travel or life insurance. information, community, recognition
and achievement. Some do this so well
•• The second factor is observed behavior they become habit forming. A discovery-
from how users act on- and off-platform driven ad ecosystem should operate on
and analyzing their engagement patterns the same principle. Ad formats should
to predict when, where, why, and which not seek to interact with users by
users are most likely to initiate ads. Key interrupting or delaying activities
areas include: viewing (i.e., shows related to their core purpose for being
watched, re-watched, paused, tagged for on the service – viewing. Rather,
later or abandoned, as well as show interactivity (i.e., gamification, rewards)
ratings shared), platform navigation (i.e., is most impactful where it streamlines
Where do users spend time on a core platform activities, adds to viewing
platform? For how long? When do they experiences by making them more
watch? What is the duration of their interesting, and forges positive
viewing sessions? What kinds of imagery emotional connections with users. For
and graphics attract the most user example, a film studio might encourage
attention? What do they search for?), and users to view and share a movie trailer
user journey (i.e., What devices are users in exchange for an offer that can be
using? What is their IP address and redeemed at the local cinema. Or, an
location? Where do they go online auto brand might encourage users to
before and after accessing the take a virtual test drive within an ad unit
streaming service?). or test their knowledge of Ford or
Ferrari, with the best scores receiving an
•• The third factor is interactivity. The invitation to test drive the latest car
human brain is wired to seek out models at a local dealership.
FIGURE 3 | Key Considerations for New Streaming Video Advertising Formats
Source: MediaLink
8 | A ROADMAP FOR DISCOVERY-DRIVEN ADVERTISING•• The fourth factor is integration between today’s on-demand world of streaming,
video and advertising content. the rules of engagement between users
Streaming video services need ad and advertisers have changed dramatically.
formats that fit contextually and Users now determine what they want to
functionally with how stories are told watch. Growing ad fatigue, increased
and consumed on their platforms. When multi-tasking, dwindling attention spans,
a user makes a viewing choice in ad blocking plus ad skipping and lingering
streaming, they are defining the content privacy concerns all make it harder for
experience that they want to enjoy. For brands to get their advertising in front of
advertising to be discoverable in the consumers. The proliferation of
on-demand world of streaming, it likely subscription video services only increases
needs to be correlated in form, content this challenge. For all these reasons, a
and function with the video users reimagination of streaming video
are watching. advertising as “discoverable and
desirable” is precisely the North Star
Multiple research studies have shown that the media and advertising
that matching ad design to the viewing industry requires.
environment leads to greater
engagement. The steady ascension of
digital native advertising is another
proof-point that reducing the distinction Moving forward, it is
between ads and content works. Today,
native advertising represents 62.7% of
possible to imagine
U.S. display advertising and has grown users selecting full
38% (CAGR) from $16.7 billion in 2016 to
$43.9 billion in 2019, according to rosters of categories,
eMarketer. NBCUniversal’s AdSmart brands, and types, as
Context platform, which uses machine
learning to match advertisers with the well as quantities of
right content and storyline moments, is
a promising step in this direction. Video
advertising that they
streaming services should be even more are willing to dial up
target-rich for innovations like this one,
especially if they provide the profile data or down based on
and formats that enable ad experiences their interest level.
that amplify and augment content
consumption, rather than distract
from it.
New ad formats – imaginative
combinations and mixtures of machine
IN THE FUTURE, learning, creativity, and design thinking
CONSUMERS WILL COME – are the magic tricks needed to conjure a
TO TV ADS ON THEIR OWN powerful new species of advertising that is
TERMS; THIS MEANS valuable, enjoyable, useful and seamlessly
BRANDS, AGENCIES AND embedded into the user’s streaming
MEDIA COMPANIES NEED video experience.
TO GET REALLY CREATIVE
How media companies incorporate these
When audiences were captive to linear four key factors – user input, observed
television, they were compelled to focus behavior, interactivity and integration –
their time and attention on advertising in into the development of their streaming
exchange for viewing sports, ads will surely evolve as their testing and
entertainment and news content. In learning accelerates. Our expectation is
MEDIALINK | 9that their exploration of new ad formats is include “re-watching” (where users
likely to be shaped and inspired by have viewed content more than once),
the following: “skimming” or “fast-forwarding” (where
users skip through portions of a video),
User-Driven Ads “exiting” (when a viewing session is
•• Hulu and other video streamers have abruptly ended) and “saving for later”
incorporated some elements of user (when users place content on a watch
control into their advertising list). All of these moments could have
experiences. On some occasions, potential for advertising relevant to the
viewers can pick which advertiser they user situation.
want to hear from. In other cases, a user
can opt for a handful of long-form ads
from one brand over multiple ads from
multiple brands. Expect to see related
•• Moving forward, it is possible to imagine
users selecting full rosters of categories, innovations in streaming
brands, and types, as well as quantities
of advertising that they are willing to
video as ad formats
dial up or down based on their interest emerge that connect
level. This is an extension of a concept
that exists today in Pinterest advertising,
video content to relevant
where users actively determine which quizzes, games, interactive
“promoted pins” flow into their feeds
based on user-defined tastes and videos and Easter eggs.
preferences. Ad type, ad content, and ad
load could all be informed by user input.
UX and Navigation Ads Gamification and Rewards-Based Ads
••As interruption in TV advertising •• It is quite popular in video games for
becomes less welcome, brands will need marketers to “gift” users virtual goods in
to take advantage of other prominent exchange for watching or engaging with
real estate within streaming services to ads. Similarly, Spotify is upfront with
connect with users. This means creating people streaming its free service –
ad formats for home/start pages, asking them to watch a 30-second ad in
navigation menus, recommendations exchange for 30 minutes of listening.
and other “in-between-content” screen •• Expect to see related innovations in
spaces that put brands in position to streaming video as ad formats emerge
help users discover the next great that connect video content to relevant
program to watch. quizzes, games, interactive videos and
Easter eggs. These ad formats will
Behavioral Ads enable brands to further encourage user
•• This is where Hulu has focused with its engagement in their advertising
“binge” ad format that specifically messaging through loyalty points,
targets users who are watching discounts, free products, invitations to
multiple episodes of a given show. unique events and potentially other
•• Hulu has also introduced a “pause” ad special offers.
format, where static brand imagery
appears on screen once a user Unlock Ads
pauses viewing. •• Single sponsor shows have been around
•• AT&T has tested a different “pause” ad since the early days of television and the
concept within DirecTV, where a video Texaco Star Theater in the 1950s. In the
ad runs after the user takes a break early 2000s, Ford Motor Company was
from the content viewing session. the only sponsor for the season two
•• Other streaming behaviors to explore premiere of Fox’s 24, which aired
10 | A ROADMAP FOR DISCOVERY-DRIVEN ADVERTISINGentirely commercial-free. continue or revert to a mix of more
•• With streaming video, it is easy to conventional messaging.
imagine that brands may “pay” to
sponsor and access the fan bases of On-Screen Commerce
specific shows in exchange for enabling •• The convergence of television content
a less interruptive viewing experience. and shopping has long been discussed as
By watching the ads upfront, registering the next big thing. Streaming platforms
with the brand, or playing a brand/ are well-positioned to finally make the
content related game, users effectively dream of “selling Jennifer Aniston’s
“unlock” the content for sweater” a reality.
entertainment consumption. •• NBCUniversal has already introduced
•• Similarly, streaming services may also “ShoppableTV,” which is a QSR-driven ad
be looking for brand partners who can format. Here, viewers point their
help promote and drive trial for new smartphones at the on-screen QSR, and
programming offerings that are critical they are then directed to the brand’s
to keeping users engaged. ecommerce site to purchase the product.
•• Finally, it is possible to imagine, given •• Hulu has also developed transactional ad
the plethora of pricey services hitting formats that support on-screen
the market, that brands might “pay” to purchases, like buying movie tickets or
let more users behind the velvet “pay” ordering from a restaurant.
rope. Want to watch the premiere of the
latest Star Trek series on CBS All Access?
It’s free, thanks to Samsung or GE. In the
glory days of pay-TV, MVPDs ‘What user need is
periodically gave subscribers free
weekend access to premium services like this ad format
HBO and Showtime. In the streaming
era, there may be opportunities for
addressing?’ and
brands to do the same. For example, this ‘How will this ad
weekend of ad-free viewing is brought to
you by American Express or Cadillac.
format compel users
to engage with it?’
Story Ads and Contextual Ads
•• In 2010, Unilever created a series of
video vignettes set in a 1960s ad agency
that ran during breaks of AMC’s Mad Social Ads
Men. While this was a highly customized •• TV viewing of any kind (linear or
effort, the streaming ad world needs to streaming) remains a social experience.
find equally creative ways to make About 50% of all TV consumption occurs
long-form advertising compatible and in groups and 72% of young adults (18-34)
relevant with premium video. For are most likely to choose streaming as
example, streaming services could offer their medium for co-viewing video.
formats with creative assets and data •• Here, there is an opportunity for
and insights that originate from their streaming providers to create formats
programming to advertisers, so that that enable brands to facilitate social
brands can tell more integrated, connections and “co-viewing”-like
contextually relevant stories. experiences between users. Imagine
•• Similarly, streaming services could watching a favorite series or movie and
create ad formats for brands that enable being able to share a favorite scene that
a multi-episode storytelling experience was just viewed with another user
over the course of a user’s viewing courtesy of Coca-Cola or Frito-Lay.
session. Here, the user could also decide
at certain junctures whether the brand
episodes were interesting enough to
MEDIALINK | 11Split Screen Ads (for live content): THE RECIPE FOR
•• We saw some examples of split screen THE PATH FORWARD
ads during the World Series, as well as
the English Premier League. Instead of If the bar for tolerable video ads is high,
sending viewers to an unwanted break, think about the bar for ads that users view
networks like Fox, ESPN and NBC Sports as helpful, enjoyable or valuable. That is
have started showing ads during down why the industry needs to make big bets
time in games, without leaving the on new ad formats. Very big bets. The
action entirely. ecosystem transformation from
•• With NBC Sports’ “Playing Through” ad interruption to discovery is a journey
format for golf, brands like Callaway where fortune favors those that are bold,
have seized the opportunity to develop not incremental.
and execute creative designed
specifically for this ad experience. Those media companies, agencies and
marketers, who are intent on moving
Automated Brand Integration towards ad formats and ad experiences
•• As streaming companies spend billions that are designed for the capabilities and
on content, they are looking to offset realities of video streaming, will lean in
costs by selling brand integrations when heavily to the following areas:
they control content production. But
these deals are time-consuming, pricey, 1. User-centric Design: those leaders, who
and, most of all, static. are intent on monetizing video
•• Just as how digital signage, on-screen streaming through advertising, have to
video insertions and digital billboards begin by asking challenging questions,
have made in-stadium advertising, live such as: “What user need is being
sports broadcasting and outdoor addressed via this ad format? “Why will
advertising more dynamic, variable and users be motivated to seek out that ad
at times even virtual, the streaming experience?” “How will that ad format
video industry should experiment with positively impact their video session?”
AI-automated processes that could Asking hard questions like these is
enable more dynamic brand integrations essential to identifying, developing and
across multiple shows at scale. prioritizing the ad formats that users
•• This is a potentially rich opportunity for will want to engage with as streaming
those with content libraries to video becomes a larger proportion of
rejuvenate the value of aging their video consumption. In an on-
programming by injecting more demand world, discovering the right
contemporary brands that remain answers depends on putting the user,
aligned to storylines. not the advertiser, at the center.
As a result, media companies, agencies
and brands need to embrace the
problem-solving mindset associated
Now is the time for with user-centric design. They need to
the industry to create pursue deep analyses of human desires,
needs, motivations, abilities, constraints,
something new, and overall behavior. New ad formats
need to be rigorously evaluated based on
something that aspires what is desirable, viable and feasible.
to be even better than Developing prototypes as well as active
testing and iterating based on actual
its predecessor. user-oriented inquiry and feedback will
help to challenge existing assumptions
and uncover new strategies and
solutions. Most innovation efforts fail.
12 | A ROADMAP FOR DISCOVERY-DRIVEN ADVERTISINGThis is the outcome all the industry’s
constituents should hope to avoid. The
In an on-demand world,
best ideas nonetheless emerge from the discovering the right
thoughtful examination of real users. It
is hard to imagine any new ad formats
answers depends on
becoming successful without making the putting the user, not the
user the center of attention. That’s why
the industry needs to foster a user- advertiser, at the center.
centric design approach to seizing the
ad format opportunity in
video streaming. 3. Standards: Imagine if in the early days
of the TV upfront in the 1960s, NBC was
2. Investment in Creativity & Innovation: selling 30-second ads, CBS was selling
the media and advertising industries 60-second ads and ABC was only selling
find themselves today at the dawn of the custom sponsorships. How quickly
video streaming era, both in need of new would the television advertising industry
sources of consumer growth. Virtually have grown? The answer … it would have
all of the major players agree that the likely sputtered amidst too much cost
traditional ad-supported television and complexity. The 30-second spot
ecosystem, despite its historical success became the workhorse ad format for the
and admirable longevity, has to be industry, because agencies could make it
reimagined and remodeled beyond the once and then use it many times on
current conventions of perishable time every television network.
and space. Recognizing that streaming
represents an opportunity to remix the Every scaled form of advertising needs
relationship between premium content standards. Ad-supported video is no
and advertising as well as between user exception. There is simply no scenario
and advertiser, now is the time for the where ad-supported streaming
industry to create something new, inventory generates the desired
something that aspires to be even better impressions or advertiser spending on
than its predecessor. the basis of a handful of bespoke or
small scale, niche ad units. In short, the
Achieving this aspiration and the industry needs new ad formats, but it
associated breakthroughs in new ad needs just one, not two or three versions
formats requires both the investment of the “pause” ad.
and the culture to support greater
creativity and innovation across content, Establishing new standards in media and
UX, technology, data and advertising technology can be a messy process;
sales. More experiments are needed. however, standards play a critical role in
“Let’s try it, let’s test it” needs to be the reducing the non-differentiating
rallying cry. The innovation journey is complexities that represent creative or
also rarely a quick one or one dominated technical obstacles to adopting new ad
by wins. Thomas A. Edison, the famous formats at scale. Here, media companies,
inventor, once commented, “I didn’t fail agencies and industry associations like
1000 times. The light bulb was an the IAB, VAB and MRC need to together
invention with 1000 steps.” Edison’s begin articulating common guidelines
words highlight the importance of and specifications for new streaming
playing the long-game, making many video ad formats. This process needs to
attempts at problem-solving and staying commence before video streaming
committed to getting to the answer. becomes littered with too much ad
Media and advertising leaders would be format heterogeneity.
wise to emulate Edison’s
creative persistence.
MEDIALINK | 134. Measurement: new ad formats are not like Google’s DV360 and The Trade Desk
likely to conform to current industry are evolving into centralized,
norms and practices for measurement. omnichannel buying platforms for
For those in media and advertising who connected TV, display, digital video,
bemoan the current state of media native, digital audio, digital out of home,
measurement, that may be itself cause to and likely more. As more controls have
rejoice. However, many new ad formats been introduced and sophistication
struggle to gain commercial adoption levels have increased, premium media
without the presence of defined and suppliers have also benefited from
accepted measurement tools, accessing new demand, as well as from
approaches and providers. Everyone has avoiding the cost and workflow
heard the refrain “you don’t buy what you complexity of labor-intensive
cannot track,” even if that saying reflects direct sales.
more acquiescence than confidence in
the underlying metrics. Among major video streaming
companies, Hulu has been out-front in
Today, each ad-supported streaming this area, operating a private
offering has its own metrics, and users programmatic marketplace (“PMP”) in
consume video across multiple devices, addition to direct sales. From the digital
platforms and services. This makes it side, Google, Facebook, Snap and Twitter
complicated for brands who want to have all trained the buy-side to leverage
spend against their target users. their marketplaces to purchase their ad
Furthermore, multiple streaming formats. This is the primary way they do
offerings (as mentioned earlier) are business. And it’s how and where they
developing their own portfolios of new introduce new advertising formats to the
ad formats. Therein is the potential for a buying community.
suboptimal advertising Tower of Babel
for buyers. As users consume more ad-supported
streaming video and more premium
In spite of this fragmentation, supply becomes available, it is not
measurement providers and streaming surprising that the advertiser spending
services have made progress in through programmatic channels,
validating video streaming impressions overwhelmingly via private marketplaces,
and providing more unified views of is surging. For this reason, ad-supported
campaign performance. Now there is a streamers need to position their new ad
window to push for what the market formats for automated selling sooner
really wants – metrics that focus on rather than later. In the early days, there
business outcomes, not only viewership will of course be instances when this
and engagement. With new ad formats new-to-world ad inventory will be
imminent from several major players considered too special, too strategic or
– many of which are likely to have too unknown to be monetized effectively
interactive elements – streaming via machines. Yet, with potentially
players and advertisers need to align significant increases in “digital-like”
rapidly on the business outcomes that supply forthcoming, a buy-side
will equate to value, either online or embracing automated buying and facing
offline (e.g., purchases, physical store- continued cost pressures, the smart
visits, website visits, registrations, move for media suppliers would be to
downloads, etc.). “skate to where the puck is headed” and
use programmatic as early as viable to
5. Easy to Buy: there is a lot of momentum make their ad formats easy to buy.
in digital video advertising towards
automated buying because it is faster,
lower cost, and more effective for the
buy-side. Major demand side platforms
14 | A ROADMAP FOR DISCOVERY-DRIVEN ADVERTISINGThe ecosystem been altered. There is no going back. For
consumers, this means that ads are no
transformation from longer something to avoid, ignore, tolerate,
or just occasionally enjoy. Ads now have to
interruption to discovery earn their place in viewers’ streaming
is a journey where fortune video experience. In the on-demand
viewing world of the 2020s, ads will be
favors those that are discovered, because they are conceived
bold, not incremental. and designed to deliver benefits to users
just like any other kind of high-value
content or application.
Netflix changed the game in video by
IT’S A NEW DAY IN VIDEO putting the user, not the programmer, at
ADVERTISING – BUT THE the center of the video viewing experience.
CLOCK IS TICKING Now a similar shift needs to occur with
advertising. The user needs to be at the
“America runs on Bulova time.” The center of advertising consumption in
television advertising industry began on streaming video, too. This is not an easy
July 1, 1941 with these five words as the transformation for leaders in media and
voiceover to the first video commercial – advertising to embrace. Video advertising
then a new ad format – that aired during a should aspire to entertain, inform,
baseball game on NBC’s New York station. persuade and sell. These foundational
Television advertising, as a revenue model, elements of great creative still apply. But
was far from a certain success in those now, new elements need to be added.
early days. TV was the disruptor. However, Making advertising discoverable through
by 1949, television advertising had grown new ad formats requires a user-first
to about $60 million, large enough to be orientation, a commitment to innovation,
featured in McCann-Erickson’s annual a problem-solving mindset, an obsession
advertising spending survey. Nearly 70 with experimentation and testing and
years later, many regard the television other entirely new ways of operating.
advertising sector as the most powerful,
meaningful and influential ad medium In times like these, every leadership team
ever. And media companies, agencies, in media and advertising has a choice.
brands and consumers have all benefited They can try to preserve what they have,
enormously from television advertising’s play it safe and focus on the incremental,
growth and longevity. or they can bet big, imagine something
bold and new and go build it. Yes, the bar
Just like those first days of television for advertising has been permanently
advertising, we are now at the beginning raised; consumer expectations have
of something new. The media landscape is evolved; and the winning recipe for new ad
transitioning from the era of pay-TV to formats is today unknown. But, the
video streaming. Consumer behaviors and rewards have the potential to be enormous
preferences are once again evolving for those who develop this new discovery-
rapidly. New video competitors now based advertising ecosystem. In 2019, the
directly challenge the supremacy of the growth narrative in the media industry
television-age incumbents. New services moved decisively from television networks
are being launched. And the revenue to video streaming services. Chapter one
models that will drive the next wave of has concentrated on the so-called
media monetization are being defined. “streaming wars.” As 2020 begins, the time
is now to create the discoverable ad
With the rise of video streaming, it is clear formats that will make the “rebirth of
that the advertising paradigm perfected by advertising” the central storyline of
traditional linear television has forever chapter two.
MEDIALINK | 15About the Author
Christopher Vollmer focuses on growth strategy, capability
building, and business transformation for leading global media
and technology companies. He was previously the global
entertainment and media practice leader at Booz & Company
and PwC’s global advisory leader for entertainment & media.
Based in New York, he is a Managing Director with MediaLink
and a senior member of the firm’s global leadership team.
chris@medialink.com
16 | A ROADMAP FOR DISCOVERY-DRIVEN ADVERTISINGAbout MediaLink
M
ediaLink is a leading strategic advisory firm operating
at the intersection of media, marketing, advertising,
entertainment, technology and finance. Unlike any other
company in the strategic advisory space, MediaLink provides
counsel for navigating the age of digital disruption in the core areas
of data and technology, investor strategies, marketplace
development, partnership optimization, talent and organization, and
transformations. Founded in 2003 by Michael E. Kassan, MediaLink
employs 165 professionals in New York, Chicago, Los Angeles, San
Francisco, and London. MediaLink is an Ascential company.
www.medialink.com
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