Over the Top
At the end of June, at the annual Cannes Lions Festival, speaker Dallas Lawrence spoke about the future of OTT and digital advertising and what the biggest brands, agencies and technology companies are planning for the year ahead.
Over the top (OTT) is a term used to refer to content providers that distribute streaming media as a standalone product directly to viewers over the Internet. Netflix and TVNZ OnDemand are good examples.
As Lawrence said, “Everyone recognized we are on the precipice of a major sea change in consumer engagement that will see massive shifts in budgets away from legacy linear platforms to where consumers are now spending large portions of their time.”
Along with this trend, consumers are moving their eyeballs to digital channels like YouTube, Snapchat, Twitter, Facebook etc. but have New Zealand advertising and media agencies got their communal heads around the significance of this sea change or are budgets still directed at broadcast television providers like TVNZ, Three and Sky TV?
The US streaming video market is on the cusp of big expansion, reports Fierce Video, “with players like Apple, Disney and Warner Media joining the fray – and it’s going to fuel explosive growth for the global market”.
PwC released its latest Global Entertainment and Media Outlook report, which highlights how those new OTT video entrants will challenge the dominance of services like Netflix and Amazon, who will, in turn, shift their attention to international markets to maintain subscriber growth. The growing competition for TVNZ, Newshub and Sky TV, must be of concern to the local broadcasters, whose revenues are under threat. The global OTT video market is projected to double in size between 2019 and 2023 to $72.8 billion.
Back in February, TVNZ reported its half-year revenue was up $3.1 million. The rise, up 1.8 percent on the previous year to $173.5 million, “was driven by stable TV advertising revenue and double-digit growth in online advertising revenues,” the broadcaster said. But the threat to revenue is growing.
The top six threats for television broadcasters according to Media Guru are the rise of alternative media channels, content and network security, changing viewer behavior and preferences, content protection and piracy, mismanaged content, and lack of quality content.
To my mind, lack of quality content and the consequential change in viewer preferences are the major threat to local broadcasters. We have already seen the descent into hours and hours of reality TV, which, after the novelty is seemingly wearing thin, is facing the prospect of alternative novelties, not to mention quality offerings.
“Users no longer consume what is being offered to them but choose from a host of options available to them anywhere, anytime across multiple channels,” Media Guru says.
Recycling legacy content and catering to local interests are two of the ways local broadcasters can differentiate from the explosion of available content, but it’s an uphill battle. If viewers migrate to other options, advertisers will rapidly follow.
With Millennials starting to have babies, marketers are already having to start thinking about how they communicate with Generation Alpha, also called the iGeneration, which is already being touted as the most influential generation of the 21st century.
Generation Alpha are children born from 2010 to 2025. “By 2025, which is the year when the youngest Alphas are born, Generation Alpha will account to 2 billion of the global population. As Interested Engineering tells us. “Generation Alpha is considered to be the most technological-infused demographic up to date.”
Alphas can’t imagine a world without smartphones and “interacting with artificial intelligence and voice assistants is simply natural”. Alphas are also swayed by online influencers, so advertisers will need to communicate to them through Alexa, Siri, and their YouTube and Instagram celebrity peers.
“By 2025, Generation Alpha will number 2 billion globally. It will be the wealthiest, most educated, and technologically literate in history,” says Robert Hannah, chief operating officer at Grant Thornton UK.
A survey conducted to 8,000 parents of Alpha children across the world revealed that eight is the age parents think their kids’ knowledge of technology outstrips their own. 27 percent of parents think their child values their iPad or iPhone more than anything else.
As the first group of millennials’ children starts enjoying their primary school days, this Generation Alpha is about to grow into a lucrative consumer market. A 2016 Cartoon Network New Generation study found that Australian children aged four-14, “have, through pocket money, spending power running into billions of dollars”.
1,000 individuals, comprising children aged four-14 and their parents were surveyed, to gain insights into kids’ media habits and trends. The results reveal: Australian children have an average annual income of $556; 92 percent of children watched TV during the past month; TV is the top media consumption activity for kids; the number of kids watching and posting videos online has increased by 33 percent; 86 percent of children have jumped online in the past month, up 12 percent; Social media usage is found to increase with age, multiplying by five times as children grow from seven-nine years old to 13 years of age; Facebook is the most popular social media platform, while Snapchat is quickly gaining momentum
Alpha kids are also expected to have a strong influence on the shopping behaviour of their millennial parents, who are willing to spend a lot on their children. So, advertisers need to get their collective heads around this important new market segment.
Frivolous or vexatious
How many advertising complaints are initiated by competitors? This question came to mind when I saw the complaint to the ASA about Whittaker’s chocolate, where the complainant, A Mezei, said: “The advert states Porirua is the chocolate capital of the world, this is not true as I could not ratify this on any website.”
Now I don’t know whether A Mezei is a real person with a real gripe about where should be considered the “chocolate capital of the world” but the complaint does sound frivolous and was treated as such by the Advertising Standards Authority.
Perhaps the complaint was in retaliation to a complaint laid against Cadbury three weeks earlier when complainant J Turner said about a television advertisement for Cadbury showing a girl in the local dairy while her mother is outside, “It offends against good taste and decency by using images of homeless or poor children or family member as all requiring chocolate but unable to pay money. It also misrepresents vendors of chocolate being as if they give the product away without charge, as if being a likely or real occurrence. It is a sham.”
In this case the ASA also rejected the complaint, saying “No Grounds to Proceed”.
It’s hard to believe there are members of the public who have so little going on in their lives as to take the time to waste the ASA’s time, so my only conclusion is that Whittaker’s and Cadbury enjoy pulling each other’s tails. Am I wrong?
Guilt by association
Last week I wrote: “According to Forbes, 48 percent of people blame a brand if their ads happen to appear near hate speech, violent, or inappropriate content.”
This week, marketing and media consultancy Ebiquity, in partnership with zulu5, released a study, ‘Brand Safety in the UK: Willing to risk it? A report on Brand Safety and advertiser preference’. The study, reported in Mobile Marketing magazine, found that “65 percent of the UK’s top advertisers had been exposed to potentially non-brand safe environments – risking long-term brand damage or commercial harm”.
The interesting take-out was that different categories are affected in different ways. For example, “health and fitness and finance brands were most likely to be exposed to placements alongside extremist content, while eCommerce brands were most likely to be exposed to sexuality and nudity content.”
“As Facebook, Google, YouTube, Twitter and other ad-driven tech platforms weather scandal after scandal, the people who run major brands feel increasingly adrift. They need to make gut calls about where to spend their money, about what their brands should stand for, and about how to navigate sensitives like race and gender inclusiveness in a world ruled by social media outrage. That’s where the schmooze, consultants, middlemen and intuition come in: to help companies make high-dollar gut calls about data.” – Farhad Manjoo breathes in the high-end schmoozing at the 2019 Cannes Lions Festival.