What Linear TV And AVOD Sellers Can Learn As Their Worlds Collide
As TV networks launch or acquire ad-supported streaming services (AVOD), they have a big opportunity to reinvent the broken ad experience for both viewers and media buyers.
And while these networks have the opportunity to bring their AVOD learnings back to linear, the OTT networks can also learn a lesson or two from the linear world, like the importance of investing in relationships with buyers.
“Audience buying and platforms can only get you so far,” said Natalee Geldert, brand media director at performance agency PMG.
On the eve of NBCUniversal’s general market launch of Peacock, here are three lessons the TV marketplace can learn as linear and AVOD sales converge.
1. Bring AVOD’s lighter ad loads to linear
The “easy layup” to create a better viewer experience on AVOD is to lower the ad load, said Samantha Rose, SVP of video investment at Horizon Media.
“Consumers expect less advertising because that’s where things started [in streaming],” she said.
Hulu put a 90-second cap on ad breaks last year, and Tubi keeps ad loads under six minutes per hour and limits three to five ads per pod. These networks can balance lower ad loads with targeting and premium ad formats. Hulu, for example, launched Pause Ads and Binge Ads in 2019 to better align with the streaming experience, and Roku serves targeted pop-up overlays to make creative as up-to-date and relevant as possible.
Traditional networks are already experimenting with ad loads and formats in their AVOD offerings. NBCUniversal promises five minutes of ads or less per hour on Peacock, and is pitching 10 interactive ad units to buyers. At WarnerMedia, CEO Jason Kilar rejected HBO Max’s initial plan for an AVOD tier because the ad load was too high.
But their challenge is to translate AVOD’s light ad loads back to linear, where they must solve for an overly cluttered ad experience and inflated pricing.
“The days of the eight-minute-per-half-hour ad loads are going away,” said Andrew Hare, SVP of digital research and strategy at Magid. “It’s not sustainable for the long-term, based on the innovation we’re seeing in streaming.”
Lowering ad loads on linear, however, is a tough balancing act for networks as their ratings continue to decline. “How can they do that without taking a hit or passing that cost on to advertisers?” Rose said.
Buyers are hopeful that efforts such as Project OAR, which aims to make linear TV more targetable, and NBCU’s One Platform, which allows buyers to better allocate spend across the network’s properties, are steps in the right direction to normalize spending and distribution across linear TV and AVOD.
But a real conversation about moving from mass reach and frequency buying to advanced TV targeting on linear is still “two to three upfronts away,” said Mike Fisher, VP of advanced TV and audio at Essence.
2. AVOD has niche audiences, but think about branding opportunities too
AVOD allows more creative freedom than linear TV advertising, which has programming constraints.
Broadcast networks sell broad reach, and must create programs that appeal to mass groups of people to garner high ratings. They’re also confined to a live programming schedule with a two-hour prime-time window, leaving little flexibility to air shows that appeal to niche audiences.
By contrast, Netflix pours billions of dollars into content targeted to different cohorts.
“Next thing you know, they had 400 different series,” Hare said. “It allows creators to take more risks with their shows.”
CBS has embraced this thinking with its Star Trek reboot “Picard,” which runs exclusively on its streaming app, All Access. The thinking: While the show may not get broad reach on linear, it will be attractive to a smaller group of superfans.
“Find the right audiences to develop the shows for, and if they’re successful enough, put them on TV in the summer,” Hare said.
Networks should also program for binge viewing as they move into ad-supported streaming – and experiment with how to bring that experience back to linear TV. Networks can also apply their expertise in identifying branding moments – for example, The Super Bowl or The Oscars – back to streaming by curating content around moments, such as a scary movie package for Halloween or cooking shows during the holiday season, Geldert said.
“How do they make moments a brand wants to be a part of?” she said.
Pure-play AVOD apps can also learn a thing or two from traditional linear programming schedules. Pluto TV, for example, taps into nostalgia for channel surfing with linear-like channels. And certain genres, such as live news, look the same to consumers on AVOD as on cable.
3. Bring cross-channel measurement to linear – but don’t forget about your relationships
Advanced measurement and targeting offerings on AVOD will only increase buyers’ demands for the same on linear.
“Targeting, programmatic and advanced advertising solutions become the norm with ad-supported streaming,” Hare said.
Networks growing their AVOD offerings are trying to unify targeting and measurement across their streaming and linear businesses. NBCU’s One Platform attempts to accomplish that goal on its own properties, while other networks are licensing ACR data to manage reach and frequency across channels. WarnerMedia’s Xandr and OpenAP are also helping buyers target and measure the same audiences across networks.
“The networks can’t approach AVOD as selling digital video on a TV screen,” Essence’s Fisher said. “They need to approach it as TV, because that’s how people are watching it.”
Better targeting will allow networks to sell more efficiently across their portfolios, rather than artificially propping up prices as linear ratings decline. It can also lend them a more compelling story to tell buyers as viewers cut the cord, Hare said.
But networks shouldn’t go all-in on platform-based selling at the expense of their relationships with buyers. AVOD apps have a lot to learn on that front, as they’re less transparent about where inventory runs and often lean too heavily on automated selling, Rose said.
“OTT buys are starting to look more like content buys,” she said. “If we paid a high CPM, we want to know where it’s running.”
