Are advertisers changing their views on ad-supported streaming?

As consumer habits change and evolve, advertisers who traditionally invest in television understand that reaching the same audience now as compared to three years ago is nearly impossible. As a result, they are rethinking their broadcast strategy.

According to research from GroupM's Consumer Eye report, TV ads still rank number one across the region as media that gives a positive opinion on brands, but agencies are helping advertisers transition to over-the-top (OTT) platforms.

This transition is happening as OTT services increase and TV undergoes an addressable transformation, and more opportunities become available to advertisers. Platforms like Netflix have announced that they will open up an ad-supported tier, while Disney+ and YouTube have also launched extended advertising options.

Advertisers are using various strategies to benefit from the precision of data and the power looking at a big screen holds. For example, in April 2022, Grab, and Viu Indonesia became one of the first companies in Southeast Asia to launch a long-form brand-funded entertainment series.

Indonesia was one of the worst-affected countries during the pandemic in Southeast Asia, and in the face of calamity and hardships, this partnership featured stories of everyday heroes whose spirit of resilience helped them overcome the worst. Titled Cerita Tentang Percaya or 'Stories of Belief', the six-part series was a collaborative effort of marketing and advertising advisory firm The Academy Consulting (TAC), Iron Hill Media (IHM), and Passion Pictures. Each of the 22-minute episodes streamed on Viu focused on a different story of survival during the pandemic.

"Every brand today is talking about [how it wants] to do something distinct, different and disruptive, but meaningful," Anwesh Bose, founder of The Academy Consulting and the former chief executive of Havas Indonesia, tells Campaign Asia-Pacific. "Viu and Grab wanted to do this because no brand in Indonesia, and at least in Southeast Asia, has done branded entertainment at this scale. We are using consumer stories to form this branded entertainment where both parties own 100% of the content's intellectual property. Viu used a fair amount of inventory to promote the series, and the campaign was driven organically by the platform."

Alexandra Lowes, vice president of client engagement and growth, APAC, at Finecast, observes that other advertisers are adding OTT to traditional linear plans to help build reach. They are also using data to build out specific audiences and location-based campaigns to drive the relevancy of messages in an area or drive footfall.

She notes that across markets, Finecast is also seeing clients who have not considered TV before. Considering brand-building strategies as OTT can provide better commercial flexibility and speed-to-market versus traditional TV planning and buying.

"Growth in OTT viewership is driving creative innovation, and those clients that want to be part of the TV transformation journey can now consider formats not traditionally seen on TV. Shoppable ads and dynamic creative opportunities can now be ingredients of an OTT campaign—forming an omnichannel creative strategy," she tells Campaign Asia-Pacific.

The growth of ad-supported streaming

In a price-sensitive region like SEA, most OTT services that have done well so far offer subscription and ad-supported options. For these services, it points to the fact that consumers here are generally price-conscious and want more choices with that in mind.

Ad-supported viewership is multiplying across the region. There are 116 million viewers in SEA who have embraced ad-funded content, according to The Trade Desk's recent Future of TV report.

An overwhelming majority of these viewers are ad-tolerant, with nine in 10 (89%) willing to watch two or more ads in exchange for an hour of free content.

Mitch Waters, senior vice president of SEA, India and ANZ at The Trade Desk, says it is also worth noting that moves such as those from Netflix and Disney+ inspire the brands competing for consumers' limited attention. He explains that the fact that Netflix and Disney+ are moving towards an ad-supported model proves that OTT has established itself as a credible channel.

"I anticipate more brands will be keen to learn how they can reach their audiences by running campaigns on these and other ad-supported platforms, including regional players such as iQiyi, Viu, and WeTV," Waters tells Campaign Asia-Pacific. "Importantly, with more ad-supported services, we will see a shift over the next five years—brands will spend first on premium content platforms instead of the user-generated content platforms of YouTube and social."

Agreeing with Waters, Lowes adds that ad-supported acceptance varies between regional markets as consumers have different preferences regarding accessing media and absorbing ad content.

For example, Malaysians, Filipinos and Thais prefer free access to services with ads, but Indonesians would opt for paid subscription on-demand services without the ads.

"Ad-supported streaming services take viewers back to how they used to watch TV 15 years ago, but with more advanced advertising capabilities. Ultimately it should be a better ad experience for consumers, like having the choice to watch content on their favourite streaming services with relevant ads," she explains.

A personalised viewing experience

To create a personalised experience for every consumer, OTT service providers need to understand the how, what, where and why their viewers watch any given piece of content. Understanding viewers' habits requires a detailed analysis of data spread across multiple platforms, allowing advertisers to work with online video service platforms with the intelligence to gather the critical insights needed.

For instance, Korean content remains popular across SEA, particularly in a market like Indonesia, where over a third of people claim they watch it very often. This means that a one-to-one approach that supplies viewers with the kinds of content and advertising suited to their preferences is essential to keep them loyal to the OTT platform.

Lowes explains that understanding a target audience's location and viewing habits will allow advertisers to create messages aimed directly at them. For example, Finecast and Amplified Intelligence's research out of the UK shows viewers pay 20% more active attention per second to OTT ads than linear.

The platform has the most significant impact on how much attention was paid to the ad. This impact means that even though OTT and UGC will result in higher levels of brand recall, OTT will most likely outperform UGC if metrics like attention are used to measure success.

"Consumers choose OTT because of quality, control and variety; we see consumers have a more favourable opinion of brands within broadcast quality content services versus video sharing platforms," says Lowes.

"Creative innovation is starting to thrive again within the TV industry. The SEA region is on the cusp of seeing more ways for audiences to interact with brands within a premium TV environment. These may include shoppable ads or dynamic creative ads that allow consumers to have bespoke offers. The bridge between TV and digital allows for more impactful campaigns that enable consumers to interact with brands more seamlessly than we have seen in the last five years."

There is also a correlation between OTT platforms' growth and content investment, according to Lowes. For example, the top three commissioners across the region are iQiyi, Tencent and Zee Entertainment—according to research from Ampere Analysis—demonstrating that regional players are taking content development very seriously.

iQiyi, for instance, spent US$3.13bn on content in 2018, nearly matching the total content spend of China’s top six broadcaster groups. It produced more than 250 pieces of original content that year, with exclusive content making up 10% of its total catalogue.