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Enhancing Digital Experiences Requires NSPs to Seamlessly Manage Mix of Subscription and Advertising Delivery Models

Enhancing Digital Experiences Requires NSPs to Seamlessly Manage Mix of Subscription and Advertising Delivery Models

28 April 2020 News

One of the results of sporadic shelter-in-place dynamics has been a significant increase in the time consumers spend at home – increasing the intake of streaming video, broadcast content and online gaming for entertainment.

As the appetite for content grows, it has become clear that consumers are enjoying a mix of subscription video, pay-TV and advertising-supported experiences. This represents a major opportunity for network service providers (NSPs). Moreover, the looming end of second and third-party “cookies” creates a new opportunity for NSPs to revisit and revamp their connection with subscribers while establishing new partnerships with the advertising community.

Success for NSPs in this new environment will hinge on the ability of consumers to have a seamless, intuitive and secure navigation experience. NSPs have an opportunity to leverage user interfaces and streamline content access while monetizing consumer “in-between” moments as they move from one content provider to the next, creating the potential to deliver the sector’s next multi-million dollar opportunity.

To explore the emerging environment’s opportunities for NSPs, advertisers, and consumers, we caught up with Pierre Donath, CPO and CMO for 3SS, and Emilia Ong, CRO for Hoppr.

Here is what they had to say:

Q: How has the relationship between consumers and service providers shifted with the rise in worldwide demand for quality streaming experiences?

Pierre Donath: Video streaming experiences have become a utility for many global consumers, not unlike electricity or water. Customers want to turn on streaming services and immediately access what they want, when they want it, regardless of the device they use.

The demand for unlimited access—to all content on all devices, regardless of connectivity—presents an unprecedented complexity for the telecommunications sector to manage to meet customer expectations. Customers now have access to a wide range of direct-to-consumer applications. As viewing and entertainment options grow, consumers are making interesting—and constantly changing—decisions about maximizing their access to experiences by investing in a mix of premium and ad-supported content.

Emilia Ong: I agree. That is why it will be important for companies that hope to succeed in this environment to communicate options to consumers—especially younger audiences—clearly, consistently, and impactfully. The good news is that many NSPs now find themselves uniquely positioned to expand their relationship with subscribers by offering a straightforward way to find, manage and consume subscription and ad-supported content.

Pay-TV providers and NSPs alike will have to stay agile in their business models to address today’s dynamic market. If NSPs are to implement addressable advertising as a means to generating new revenue and adapt their offering to diverse users, the time to act is now.

Q: Changing business models provide new ways for advertisers to connect with consumers. How do marketing tools – such as addressable advertising – play into the dynamics of customer engagement?

Ong: Though addressable advertising can be a broad brush, the monetization opportunities are tremendous. Research has consistently shown that consumer sentiment is significantly more positive when shown relevant or interesting content—including ads. Moreover, consumers are also much more likely to engage.

U.S. households are consistently increasing their viewing of advertisement-based video on demand (AVOD) services—up 9% from January to April of 2020—with the total number of users set to reach 3.3 billion by 2025. According to Comscore, OTT video advertising is on a similar track, expected to reach $119 billion in revenue by 2023—over half from AVOD services.

With this dynamic, brands and advertisers have a unique opportunity to connect with interested subscribers through targeted advertising to enhance that partnership. Advertisers can provide a high-quality user experience by eliminating inapplicable advertising and curating content.

The key to a good experience for users is to ensure that advertising is integrated and not interruptive.  Traditional ad insertion —such as commercial breaks— affect users very differently than interactive ad formats. Consumer expectations around advertising are evolving in such as way that seamless, integrated ad experiences are increasingly viewed as content. There is no shortage of empirical evidence proving that well-designed and established value exchange models will encourage customers to opt into ad experiences.

Donath: Until recently, NSPs typically bundled channels with other services. Their focus was on selling subscriptions, not advertising. Broadcasting partners were the driving forces of advertising, allotting resources to television advertisements that could reach a broad audience. Many smaller brands could not support the associated broadcasting costs, subsequently leaving this marketing method within reach only to the biggest brands.

It comes then as no surprise that the affordability of targeted advertising via free ad supported channels is a topic that is gaining traction. Platform providers are embracing this idea. It offers the opportunity to engage with consumers who don’t necessarily have—or want—a subscription model for all of the services they enjoy.

Pay-TV operators, streaming service providers, and NSPs find themselves in a similar boat. As a result, a growing number are focused on developing granular profiles of individual consumers through a deeper understanding of end-user data. By feeding contextual and demographic information into servers, marketing teams can curate the most relevant advertising material to display to each customer without negatively affecting the user experience while improving perceptions of the overall brand.

Q: How is first-party data utilized to manage the experiences consumers are receiving from telecommunication providers?

Ong: As third-party data disappears from the marketing landscape because of the cookie apocalypse over the next few years, advertisers will need to find alternative data sources to reach the right customers the right way at the right time. Collecting first-party data will become significantly more important.

As it turns out, cookies were never an ideal situation anyway. Cookies initially gained momentum because they provided a simple proxy for first-party data when it was rare and difficult to access. First-party data has always been the preferred option for advertisers.

NSPs and pay-TV operators are in a favorable position to offer a solution to an industry-wide problem by going to market with a competitive and unique ad product. With screen time at an all-time high—providing an endless supply of insight into customer preferences—these sectors are sitting on a goldmine of first-party data that has yet to be tapped.

Donath: The question for NSPs and pay-TV providers lies in what to do with the almost unlimited amount of first-party information collected on consumers. There are still difficulties in providing a streamlined experience across every device or platform to all consumers. Data is currency. Whoever owns the most can do the most with it. Fine-tuned data sets enable organizations—including NSPs and advertisers—to analyze information in new and innovative ways that may not only help them better engage with consumers but even elicit change within internal operations.

Ad experiences and programs that offer advertisers complete control on aggregated data—insight into how many people interacted with an ad and for how long—can be immediately applied to positively influence customers within the campaign. That information can maximize monetization, optimize provided services, and even guide decision-makers to focus their resources on the advertising expected to be most effective. 

Q: How are user interface technologies evolving to optimize market share opportunities for the telecommunications ecosystem?

Donath: Users once paid a premium price for providers to manage access and aggregate content quickly and seamlessly. But consumers who pay into subscription services expect to see less advertising, leaving less opportunity to present audiences with targeted advertising.

Today, many consumers have shifted attitudes about how they choose to invest in their streaming services. Some still favor paying with money, while others opt to trade their time or personal data. Customers who prefer to pay in data or time may forego highly personalized recommendations or ad-free content in exchange for reduced cost or even free access to streaming services

Free ad-supported streaming (FAST) channels provide an appealing system to those customers. As customer attitudes about paid subscriptions evolve, data collection will open the door for the FAST channel business. It will create new integration opportunities that lead to new service offerings and allow these channels to obtain market share. This, however, introduces complexity for consumers looking across many different content providers for their next entertainment experience.

Ong: For NSPs and pay-TV providers to stay competitive in today’s market, it will be imperative to properly align new services and products with in-the-moment consumer needs and demands. Strategic ad placements that include tailored formats and customer interaction will play a critical role in the ability to deliver on these services.

There are many ways to introduce advertising. Simply replacing existing advertising with targeted ads is unlikely to elevate the customer experience or drive engagement. That is why developing innovative and productive partnerships will be imperative.

At Hoppr, we have developed an ecosystem of industry partners to provide customer-facing advertising experiences centered around the user experience. This will create a triple-win situation: consumers will optimize ease of use and cost while streamlining their ability to find the content—or experience—they want; advertisers will have access to granular insights into consumer desires and behaviors; network service providers will have access to new highly profitable revenue streams.

To read the Q&A with Hoppr’s Emilia Ong click here.

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