How AVOD Services will Stabilize Heading in 2021
The state of today’s AVOD services has intensified dramatically. Users are streaming more than ever before, dropping out of cable subscriptions and adopting a mix of SVOD and AVOD services to replace their needs. This is particularly the case with families feeling the long-lasting economic stress that 2020 has inevitably left in its wake.
With the stress comes the opportunity to streamline. Some users are already replacing SVOD with AVOD services. Since the pandemic, 35 percent of users now watch AVOD content, while Nielsen reports that overall, AVOD has grown 3x since the beginning of the pandemic. With limits to the number of SVOD services someone is willing to pay for longer-term, AVOD services are here to stay. They fill gaps for fractured audiences looking for niche content, where SVOD is without.
However, it’s clear market turbulence has been a driving force to make AVOD companies find their profitability. When the economy took hits in April, advertising revenue was down 35 percent. The profitability mark for AVOD services is coming sooner than we think. We first saw AVOD services primarily offered by larger organizations who could use this as a loss leader to attract new audiences or mine data before the service itself hit profitability. More recently, the independent AVOD services which have come to market and have been swallowed up by larger enterprises and conglomerates. But now that we’ve seen how quickly the economy can impact advertising budgets, fewer newcomers will likely enter the market without the backing of deep pockets and investment.
Challenge
There’s an opportunity for AVOD services to be a key part of OTT and CTV streaming services, but first, we must address the value-recognition problem in ad-supported streaming.
The previous goals for launching an AVOD service was:
Get to market
Grow the audience quickly
Push for profitability
The problem there is when we go into an economic freeze, advertising budgets tend to be the first thing to get cut. Today, there’s more pressure than ever to reach profitability; do more with less.
Solution
Since AVOD revenue is subject to the swings of marketing and advertising budgets, we need to do a better job of matching supply and demand. Real-time bidding (RTB), which is a subset within programmatic advertising, enables advertisers to bid for an ad spot in real-time. Ultimately, the more bidders, the higher the price.
There’s an opportunity for “header bidding” within RTB to grow, but this will require more data collection, more data standardization, and more data sharing. The trade-off we make with moving to header bidding is reduced targeting capabilities and reduced control over the user experience than what you’d find using a primary ad server.
Focus on ad viewability
In comparison to an ad seen on linear television, a study by Unruly TV found that a user watching ad-supported Connected TV was 71 percent more likely to tell a friend about a brand, 53 percent more likely to search for a brand, and 48 percent more likely to have an improved opinion of the brand. Moreover, 52 percent were more likely to buy a product, and 45 percent more likely to visit a store or website.
Despite greater effectiveness, advertisers still prefer to advertise on broadcast television than digital advertising. Part of this could be due to the claims of CTV fraud and the inability to measure things the same way as linear television
Again, data is the only thing that can come to AVOD’s rescue. The ad viewability and verification are equally as important as understanding the audience. As a publisher, if you can differentiate your inventory by offering new metrics or providing direct access to real-time data, you’ll help your advertisers better measure their ad dollars’ reach. Placing a focus on providing more data for advertisers, which can, in turn, help them optimize their campaigns, can create a multiplying effect on CPM’s.
Using data to understand cost
The other half of the profitability is cost. Having the right data and using the right metrics is key to knowing why users stay and why they churn. It’s important to understand that you can add efficiency to costs. Asking questions like, “What percentage of leads from marketing watched the content?” Or, “What’s the cost of end-to-end delivery vs. CPM?” The need to connect attribution data to engagement data or content preparation and delivery data to users and sessions should take significant consideration.
In fact, granularly understanding of ad revenue needs to improve dramatically overall. You’ll want to understand how much money users earned you on X devices, watching Y content, in Z geography. What cohort of users earns you the most money and what about them is unique? If you can answer those questions, then you’ll want to learn how to optimize marketing, support, and operational budgets to protect those viewers.
If you’re detecting certain users, campaigns, or pieces of content are not delivering on the profitability targets, you could decide you may want to:
Prioritize bug fixes or improvements on those platforms
Make changes to your content library or content recommendations
Change the available bit rates
Optimize ad pod count, structure, and positioning
Shift marketing spends towards those places with the most ROI and decrease the spend on other platforms.
Glimpse in the future: Data will provide AVOD’s Moneyball Moment
Unless you can take effective actions to improve profitability with the metrics, then they’ll have to change, and you’ll need data to do it. It’s the key to targeting and is a rising tide that floats all boats.
Moneyball was a movie about how the same data, analyzed differently, led the Oakland A’s to a historic performance and changed the game of baseball forever. Data isn’t just for reporting anymore. More companies are defaulting to wanting access to data versus metrics because granular insights are what will enable greater optimization for the user experience and create more efficiencies across this end to end network.
Lastly, advertising will always be an ecosystem endeavor. Therefore, optimizations likely need to happen within and between multiple parties. This means that the future of advertising will include new types of data and data exchanges between different systems. Investing in systems today that enable the capture, standardization, enrichment and delivery of data will help lead to the more efficient and profitable advertising landscape of tomorrow.
Have questions? Get in touch, and we’ll get you the information you need — it’s what we do.
What Segment’s Acquisition Means and the Opportunity for Data Standardization
It’s likely you saw that Segment, the leader of the Customer Data Platform (CDP) category, is being acquired by Twilio in a 3.2B all-stock deal. This effectively doubles their valuation from their last funding round from a little over a year ago in April 2019. The thesis behind this acquisition signals the value behind companies focused on data standardization and reduction of data silos.
As someone immersed in this space, I can’t help but see the similarities between Segment and Datazoom: where Segment captures, standardizes, and routes customer data from end-users’ digital touchpoints, Datazoom does the same across video’s touchpoints, which includes the end-user’s application. While Segment’s data is primarily used by marketing teams to improve customer identification and segmentation, Datazoom is used by product, engineering, and infrastructure operations teams to improve observability and optimization efforts. Both are focused on leveraging data to make it actionable for their audience.
I’m so glad Segment has been recognized for the value they bring to customer data, but the opportunity for data standardization is still much larger.
The vision behind Twilio’s acquisition of Segment is to be able to gain a more complete understanding of the customer (Segment), and leverage that data to act intelligently based on those unique insights (Twilio). The challenge to apply what these two companies have built so far to the world of streaming video is that the relevant data needed to take action comes from an ecosystem that hasn’t been explored by Segment — it’s data created by video players, CDNs, ad servers, encoders and other pieces of an end-to-end system. Furthermore the actionability of video data extends far beyond only the content publisher – to really drive value and improvements with data in the video space will require not only data standardization but real-time industry alignment and coordinated actions across an ecosystem of third party vendors, cloud solutions, and internet service providers.
Additionally the volume of data created by these systems, and the speed at which this data needs to be leveraged, is best served using a different infrastructure and business model than the current CDP model. To be generous, a CDP might log 15 events per customer interaction. By comparison, you might track 120 events across the end-to-end video delivery for a 2-minute video. Twilio claims that they will be close to powering 1 Trillion customer engagements this year. By comparison, Youtube alone will stream 1.8 Trillion videos this year. That’s not including other industries incorporating video beyond media & entertainment, such as distance learning, remote work and telehealth.
With the OTT video market projected to reach $169.4 billion by 2023, better harnessing video data is critical to understanding viewers and content engagement, improving and measuring video advertising, and optimizing the end-to-end workflow for improved efficiency and streaming experience. And this is just the Media & Entertainment vertical. Video is becoming a service within other verticals such as Education, Remote Work and Telehealth.
Datazoom is well-positioned to tackle the ecosystem that needs to be created around video data in the same way that Segment has tackled the ecosystem around customer data. Segment’s announcement cements even further the unique market opportunity we have in front of us in the Video Data Platform market.
Have questions? Get in touch, and we’ll get you the information you need — it’s what we do.
What is a Data Collection Platform?
A Data Collection Platform is an essential tool for any business that relies on an application with multiple data needs to interact with its customers.
For users, every digital interaction—whether streaming a movie, placing a bet, or adding an item to a shopping cart—should be a seamless experience. Behind the scenes, multiple teams and technologies work to cultivate this experience. From product to marketing to engineering, these teams strive to maintain and enhance the Quality of Experience (QoE) to keep users engaged and drive business goals.
By analyzing relevant data to gain insights and base decisions on their findings. However, this process is often fragmented. Data is collected by numerous specialized tools, creating data silos, SDK bloat, and an incomplete view of the user journey. That’s why businesses are turning to unified data collection platforms. But is it the right choice for you and your business?
A Data Collection Platform acts as a universal data layer for your entire digital portfolio. It’s designed to capture event data from any application—web, mobile, CTV, or gaming consoles—and provide a standardized, real-time stream of information about what's happening from the "first mile" of user interaction to the "last mile" of conversion or engagement.
These platforms are dedicated to collecting, standardizing, and routing data related to every step of the user experience. This data provides vital, real-time insights into the performance of your application and the behavior of your users. These insights guide product, technology, operations, and marketing decisions, allowing teams to make manual or automated changes to improve the end-user experience and achieve business outcomes.
For example, if your e-commerce app sees a high rate of cart abandonment at the payment step, your teams need to know why—fast. A Data Collection Platform gathers the necessary data for a root cause analysis, reducing the time spent figuring out what to fix. This same data can be streamed to your marketing platform to trigger a real-time retargeting campaign, or to your support tools to enable proactive customer outreach, minimizing revenue loss and improving customer satisfaction.
Why Your Business Needs a Data Collection Platform
If you are committed to providing a high-quality user experience and maximizing the value of your digital assets, you need a comprehensive data solution. A Data Collection Platform is the most efficient way to gain access to clean, correlated, and actionable data in real-time. Here’s a breakdown of the biggest advantages these platforms offer:
Create a Single Source of Truth Having to switch between dozens of dashboards and reports to identify patterns is inefficient and leads to conflicting information. A streamlined approach begins with consolidating all the data you need into a single, standardized format on one platform. This breaks down data silos and creates one comprehensive solution that serves every team’s needs.
Enable a Shared Understanding It's critical that everyone in the organization speaks the same “data language.” This starts with the underlying data used for calculations and metrics. Data Collection Platforms provide a clean, standardized, and trusted data set for the entire organization. Even though your teams might use different tools for analysis or activation, everyone can leverage the same core data to drive critical decisions. This drastically increases efficiency, especially for data scientists who often spend most of their time cleaning and preparing data rather than analyzing it.
Unlock Deep, Custom Analysis Let’s say one of your business goals is to increase user retention. Many might look at a simple metric like Daily Active Users. But a better metric might be Engaged Users, which you define as users who log in at least 3x per week and interact with a key feature. Why? Because you’ve examined your churn rates and see that your most valuable customers meet those minimum qualifications. A Data Collection Platform allows you to easily collect the specific data needed to measure these custom KPIs and join it with attribution data from marketing campaigns to make smarter investment decisions.
Deliver Optimized, Real-Time Experiences Ensuring a seamless user experience is a constant challenge. What happens when a user's connectivity slows? How do you react when they abandon a sign-up flow? Are you able to personalize their experience based on their real-time behavior?
Having access to real-time data enables a future where automated, personalized actions can be deployed instantly. You can trigger a push notification after a user watches a certain type of content, enable a dynamic paywall when they reach a usage limit, or create a support ticket when they encounter friction in a checkout flow. A clean, standardized, real-time data set is the foundation for these powerful, in-the-moment activations.
Leverage Your Data Like Never Before: Datazoom
If you operate a digital business, you stand to benefit from a Data Collection Platform. The sooner you make the investment, the sooner you can unlock the unique benefits and possibilities your data can provide. To maximize the value of your investment, you need a solution that fits and adapts to your business—and that’s why you need Datazoom.
Datazoom is a Data-as-a-Service Platform designed to help you unify and activate your data. Our ecosystem of data collection, standardization, and routing solutions are built to support any digital strategy. By implementing a single, lightweight Datazoom SDK, you create a real-time, standardized data layer from which every business unit can draw the same trusted, clean data to drive results. Want to learn more?
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