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 Video Data Platform?
Video Data Platforms are emerging as an essential tool for businesses within the video streaming market.
But why?
For users, video streaming is ideally a seamless experience in which the videos play with excellent audio and visual quality. Several teams and many technologies work behind the scenes to cultivate this experience. These teams work to maintain and enhance Quality of Experience (QoE) metrics across the board.
How do they do it?
By analyzing relevant video data to gain insights and base decisions on their findings. However, the process has its limitations and can make it difficult for businesses to maximize the data they find. That’s why businesses are turning to video data platforms. But is it the right choice for you and your business?
If you’re considering a Video Data Platform for your business needs, here’s everything you need to know about Video Data Platforms and the benefits they can offer your business.
What’s a Video Data Platform?
Video streaming has taken over the internet, and we now consume more content through streaming services than we do through traditional cable, and consumption continues to grow at an impressive rate. Streaming has also expanded beyond news and entertainment, and now is being used by education, healthcare and corporate communications markets. And the growth in video consumption is not exclusive to the U.S.– Across the world, video streaming platforms have shown increasing video consumption rates. So it’s not surprising that Video Data Platforms are having their moment.
Video Data Platforms help provide data to understand what happens from the time a video file begins the multi-step process to be prepared for streaming at the “first mile” to the final consumption of the chunked video file on an end-user’s device at the “last mile.” The challenge is thow to make a video file available (and provide a high-quality experience) to users around the world, on any device, in any place, and at any time. As simple as that seems, it takes a lot of work behind the scenes to make that happen. Data, analytics, and insights power that work.
Video Data Platforms are dedicated to collecting analytics and data related to various steps in the end-to-end process that enables video streaming. This data provides vital insights about the actual performance and status of the systems and technologies used. These insights guide product, technology, operations and business decisions. Generally, data from these platforms is shared in real-time so that streaming video business, and services supporting them, can make manual or automated updates and changes to the end-to-end workflow and improve QoE.
For example, if your Roku app experiences video glitches or audio sync problems, your IT team will want to fix these issues for viewers as soon as possible, or risk losing viewers and revenue. A Video Data Platform collects data needed to perform a root cause analysis, which reduces the time spent by product, engineering, and operations teams to figure out what to fix, and thus minimizes opportunity loss. Moreover, this data can be shared with your support, marketing, and business teams, who can be prepared for incoming customer calls, draft a quick statement on your site’s status page, and many any necessary updates KPIs tracking business and revenue goals.
Why Your Business Needs a Video Data Platform
If you and your team are committed to providing a high-quality video streaming experience, then you need a comprehensive data solution to back your efforts. A Video Data Platform is one of the easiest ways of gaining access to the necessary data in real-time. However, the benefits of video data platforms don’t end there. Here’s a breakdown of the biggest advantages video data platforms offer:
One Comprehensive Solution
Having data to provide context from multiple systems in a single place blows the experience of switching between dashboards and reports to identify patterns and correlations out of the water. A streamlined approach begins with consolidating all the data you need into a single standard, and on a single platform. That’s why Video Data Platforms are emerging as the best solution to support the real-time nature of the streaming video business.
Creating Shared Understanding
Furthermore, its critical that that everyone in the organization speaks the same “data language.” This is as true for defining metrics as it is for the underlying data behind the calculations. Video Data Platforms provide a cleaned and standardized data set to use, and that means that although your team might use different tools, everyone can leverage the same data to drive critical decisions. With a majority of data scientists spending most of their time cleaning and preparing data sets vs analyzing data, Video Data Platforms provide a solution to increase efficiency and productivity to keep business moving forward.
Enabling Deep, Custom Analysis
Let’s say that one of your business goals is to deliver value to viewers — what KPIs should you use to measure that? Many might look at something like Active Users. But a better metric might be Engage Users, which you define as users who login at least 3x per week, and watched a total of at least 1 hour of content per week. Why 1 hour? Why 3 logins? Because you’ve examined your churn rates and you see that those customers who have subscribed the longest and return the lightest lifetime value meet those minimum qualifications. Joining this data with attribution data from your marketing campaigns can help you make smarter investment decisions with your marketing dollars.
Delivering Optimized User Experiences
Ensuring that your viewers experience a seamless and high-quality video is a challenging task due to the changing topology of the internet. What happens to your video stream when connectivity slows? What if someone gets in an elevator? Are they able to switch their stream from a mobile device to the big screen? Are embedded third party services, like advertising, able to adapt to the changes?
Having data in real-time enables a future where adaptation and automated changes can be deployed in real-time. Many CDNs and Cloud companies are investing in bringing compute and storage function to the “edge” — meaning closer to customers. The “edge” networks can be an intriguing solution to deliver adaptability in the video delivery workflow. A clean, standardized and real-time data set is tablestake to even begin testing these services, which will have only a couple of seconds or less to return a response.
Leverage Video Data Like Never Before: Datazoom
If you’re in the video streaming business, then you stand to benefit from a Video Data Platform. The earlier you make the investment, the sooner you can take advantage of the unique benefits and possibilities that your data can provide. However to maximize the value of your investment you need to choose the solution that best fits and adapts to your business, and that’s why you need Datazoom.
Datazoom is the first and most developed Video Data Platform to help you maximize and grow your streaming business. Our ecosystem of data collection, standardization and routing solutions are designed to support all streaming strategies. Want to learn more?
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Have questions? Get in touch, and we’ll get you the information you need — it’s what we do.