Broadcast Bucks
Posted on Oct 25, 2024 by FEED Staff
The FEED monetisation playbook
As the media industry undergoes rapid digital transformation, new strategies and tools are emerging to maximise revenue and enhance viewer engagement
Words by Paul Bray
A veteran Tin Pan Alley tunesmith was once asked the secret of composing a hit song. His answer: a tune that’s similar enough to an existing song to sound warm and familiar, but different enough to sound exciting and fresh.
Perhaps this helps account for the growing popularity of FAST (free ad-supported streaming TV), which takes the familiar, one-programme-follows-another approach of conventional broadcast TV and catapults it into the digital age by telling broadcasters – and their advertisers – precisely who is watching.
“FAST channels mimic traditional TV’s lean-back experience while providing streaming benefits, such as analytics, addressable advertising and reaching new market segments,” begins Mrugesh Desai, VP North America at Accedo. “They present immense opportunities for video content owners to reach a wider audience, create new and diverse revenue opportunities and enhance the viewer experience.”
“FAST is an excellent way to monetise old or stale content and meets the needs of a large portion of consumers who don’t wish to pay for content,” adds Allan Nicholson, senior director for advertising solutions and strategy at Harmonic. “Traditional free-to-air broadcasting will continue to decline with the natural replacement life cycle of traditional TVs with smart TVs.”
“The ability to include targeted advertising makes FAST very attractive for established broadcasters, who see that if they can do good targeting, they’ll raise revenues,” says Cees van Versendaal, COO of MwareTV. “What’s valuable for FAST is the ability to measure the audience. Modern technology platforms have plenty of tools for audience evaluation, including new parameters around the quality of viewing.”
The AI effect
Artificial intelligence (AI) is often the enabler. “AI algorithms can analyse vast viewer data to create exact and granular audience segments, allowing for highly targeted ad placements,” notes James Smith, EVP for programmatic and ad sales at Amagi.
“AI can predict the adverts most likely to resonate with specific viewers, offering real-time analytics and insights into how they respond to different ads,” adds Sam Kamel, CEO of Bitcentral.
It can even interpret the content. “AI can understand sentiment, enabling advertisers to place their ad after something positive occurs on screen or when the content is contextually relevant,” notes David Dembowski, SVP of global sales at Operative.
We have now reached the point where AI can generate personalised ads in real time based on the viewer’s individual interests, according to Anne-Sophie Cornet, product marketing manager at Viaccess-Orca. “HKT’s Now TV uses our AI-powered predictive pre-fetching mechanism that introduces individually tailored live ads to viewers while seamlessly replacing existing ads,” she details. “This improves viewer experiences, driving new revenue and attracting advertisers for its IPTV service.”
Placement perfection
Ad-insertion technology has also advanced significantly in recent years, enabling ads to be carefully curated to fit both content and audience. “Ad insertion can be handled on either the server side (SSAI) or client side (CSAI),” explains Mathias Guille, VP of cloud platform at Broadpeak. “With SSAI, ads are stitched into the video stream on the server before delivery to the viewer. CSAI inserts the ads on the client device.”
“SSAI is good for the user experience as it eliminates buffering and latency, allowing the streamer to update ads in real time to make smarter decisions about ad delivery,” adds Dembowski. “CSAI allows advertisers to access data for personalisation,
giving them more control.”
Guille sees greater momentum behind SSAI as it is easier to use across multiple platforms. It’s also resistant to ad blocking because the ads are indistinguishable from the content.
“The best type of architecture is SSAI boosted by client-side ad tracking (CSAT), which empowers service providers to track the ads from the client’s perspective,” he says. “This allows for the highest monetisation possible; some demand-side platforms only bid on programmatic if the platforms use CSAT.”
SSAI also enables spot-to-spot replacement, which can replace individual spots within an ad break rather than the whole break, enabling an even more granular approach, Guille describes.
“In addition to collecting detailed viewer information – which can be leveraged to deliver highly targeted ad experiences – FAST platforms also collect in-depth analytics and metrics. This allows advertisers to track the impact of campaigns in real time and make rapid tweaks in response to viewer behaviour,” says Pawan Wankhede, UK managing director of LS Digital. “So, we’re likely to see a swathe of dynamic and programmatic advertising within
the FAST space.”
Progressive programming
Programmatic advertising automates the complex and time-consuming process of buying ad space, explains Dembowski. “Rather than manually agreeing on a price, programmatic advertising uses technology to make inventory available, bid on that inventory and ultimately serve the ad that won the bid.”
“In recent years, programmatic advertising has seen a massive increase in both inventory availability and marketing budgets,” comments Tanguy Van Ingelgom, CEO of Ted Jordan. “One of the main advantages is the minimum spend and scale. Previously, brands and marketing agencies had to book tens or hundreds of publishers one-to-one. With programmatic buying, smaller brands can appear on live television or VOD for their favourite shows or platforms on a much smaller budget, while targeting their chosen audience more effectively. For example, in France, using IP boxes for broadcaster TV (whether in segmented format or catch-up) allows targeting based on the owner of the IP box, their viewing habits, geolocation and more.”
“One of programmatic advertising’s key advantages is real-time optimisation,” adds Smith. “These systems can adjust ad placements and bids on the fly based on performance metrics, viewer behaviour and contextual factors, maximising ROI.”
SpoilT for choice
The array of FAST channels is broad and varied. “More than 250 local news stations in the US now offer their news feeds via FAST channels,” says Chris Ziemer, monetisation specialist for media and entertainment, games and sports at Amazon Web Services. “National news networks such as NBC, CBS and ABC have FAST offerings, and we’re seeing more FAST channels based on a single show. We’re also seeing more curated channels featuring content tied to a specific theme, such as nature or true crime – for example, Unsolved Mysteries, Judy Justice, BBC Nature and Tastemade. Multi-genre FAST channels such as Ebony TV by Lionsgate are gaining traction, while movie studios and national sports leagues also continue to invest in FAST.”
“In France, Endemol channels (Star Academy, Secret Story and Masterchef) are an excellent fit for FAST due to their rich and diverse content library, including popular reality TV shows, game shows and drama series with broad audience appeal,” points out Guille. “This allows Endemol to tap into the growing demand for free, high-quality entertainment while reusing old but still valuable content.”
“Live news and sports are emerging as critical components in FAST, enabling media companies to grow digital audiences and revenue streams previously out of their reach, such as younger, digital-first viewers who may have drifted away from traditional subscription services,” suggests Rick Young, SVP of global products at LTN. “The BBC recently announced the launch of its flagship BBC News channel on a range of FAST platforms across North America, adding to its existing FAST channel distribution portfolio. The introduction of always-on, live news programming represents a great example of taking a non-commercial linear channel and monetising it with advertising across new global markets via FAST.”
Squeezed household budgets and a more austere subscription market are playing into the hands of FAST. “With major streaming services raising their prices and clamping down on subscriptions, more customers are turning to FAST channels as they remove
the financial commitment and constraints,” argues Kamel. “This is reflected in their growing usage. In the US, according to Statista, 57% of TV viewers watched FAST channels in 2023, while Statista expects the global FAST market to generate revenue of $9.74 billion in 2024.”
Although FAST presents a linear stream of programming similar to old-fashioned broadcast TV, the stream does not have to be the same for every viewer.
“FAST has reached where it is today by replicating the cable experience, but for it to reach its growth potential providers will need to reimagine the experience,” warns Desai. “One of the most effective ways is through hyper-personalisation on a profile level to tailor the streaming experience to the viewer’s exact preferences. By considering their viewing behaviours, you can present a personalised channel consisting of a stitched-together linear feed of VOD content that the user will engage with long term.”
Readying for retention
FAST can be more than just a monetisation strategy; it can be a method for acquiring new paying customers, as streaming platforms exploit its wide audience appeal to cross-promote their subscription-based content or premium features. But as well as potentially pulling ad-supported free viewers upwards into subscription contracts, FAST is also exerting a downward pull, as some fully subscription services are being replaced or enhanced with a more hybrid approach.
“With increased competition from FAST – as well as a decline in viewers willing to pay for subscriptions – nearly every subscription-based streamer now sells ads on at least some of its content,” expresses Dembowski. “Many have introduced an ad-supported tier, which provides viewers with a less-expensive subscription option in exchange for watching some ads.”
A number of big names, including Netflix, Disney and Hulu, have already taken this route. “The success of these models hinges upon finding the right balance of ad load, strategic ad placement and competitive pricing,” remarks Kamel. “This ensures a smooth viewing experience while generating substantial revenue. Hybrid models attract a broader audience, benefit advertisers with access to premium viewers and provide viewers with affordable access to content. For instance, Netflix’s basic with-ads tier, at $6.99 per month, is $3 cheaper than its ad-free basic package. In terms of revenue, hybrid models can outperform fully subscription-based services by combining the strengths of both subscription fees and ads.”
Of course, nobody will make any money from streaming services if no one is watching. “Recruiting and retaining subscribers in such a competitive market requires broadcast and streaming companies to have a deep understanding of their audiences so they can deliver more personalised content and advertising,” observes Ziemer. “However, achieving a unified view of the consumer can be challenging between the explosive growth in digital data and data sources, evolving data privacy and consent requirements as well as constant changes in digital identifiers, including the imminent demise of third-party cookies.
“More broadcast and streaming companies are looking to AI tools that enable intelligent user segmentation, real-time contextual recommendations and optimised measurement metrics. For example, using Amazon Personalize, Fox can now recommend videos, articles and relevant marketing information based on user or content trends across all Fox properties. This can suggest content to viewers more accurately, with analysis indicating a 6% lift in average minutes viewed per recommendation as well as a 15% reduction in bounce rate compared to Fox’s legacy recommendation system.”
“Loyalty programmes are also being used to retain subscribers,” highlights Edmund Mullins, director of inventory and partnerships at Stackadapt. “These typically offer exclusive perks, such as early access to content, special discounts and rewards for long-term subscribers,” helping to reduce churn.
Another effective approach is to place fewer ads in a loyal customer’s feed, according to Van Ingelgom. “For example, TF1+ in France has a custom algorithm that lowers the number of ads a viewer sees the more they use the platform.”
Original content remains a major draw, and for Nicholson, a proven method of recruiting new customers is to obtain rights to an exclusive event. “When Peacock streamed an exclusive NFL game in May 2023, for example, it set new streaming records by delivering more than 16.3 million concurrent streams and obtained $3 million of additional sign-ups.”
Optimising the user experience is critical, according to Smith. “This includes cross-platform accessibility, allowing viewers to access their favourite content on any device, anytime and anywhere, in addition to new interactive features, such as choose-your-own-adventure stories or live voting during shows.”
“TF1+ provides a user-friendly experience with innovative features designed to meet viewers’ evolving needs,” continues Guille. “These include Top Chrono – which allows users to view real-time highlights packages – and Synchro, a content search engine tailored for co-viewing.”
The next big thing
Two other up-and-coming technologies are set to improve the monetisation of FAST and other delivery services: blockchain and interactive ads. “Blockchain will play an important role in minimising advertising fraud and maximising ROI,” says Wankhede. “It can create an immutable record of all ad interactions, tracking and verifying impressions, clicks and conversions. This will give advertisers confidence that they’re responding to genuine views instead of bots or fake conversations.”
Interactive advertising will be the next big thing in video streaming and CTV, believes Guille. It lets viewers interact with ads directly within video streams, receiving product information via notifications, texts or emails. “This drives real-time engagement, performance tracking and targeted ads, enhancing viewer experience and monetisation for service providers,” states Guille. “Providers can boost CPMs and attract performance advertisers, finally competing with Google and Meta for advertising budget.”
This feature was first published in the Autumn 2024 issue of FEED.
