As Programmatic Streaming Grows, The Ad Experience Has To Improve

Nicole Scaglione, global VP of OTT & CTV business at PubMatic

On TV & Video” is a column exploring opportunities and challenges in advanced TV and video. 

Netflix is planning to introduce an ad-supported model to attract new viewers, and chances are it will embrace programmatic advertising, too. Without the portfolio of strategic partners that NBC and Disney have, Netflix will need to catch up somehow. Programmatic is one enticing option for doing so.

As more advertiser demand moves to programmatic, it’s only a matter of time before other streaming players like Apple and HBO try it as well. The efficiency and new demand are a strong pull, and programmatic CTV capabilities are expanding by leaps and bounds. 

Programmatic provides a lot of appealing benefits for streaming players. But it’s still lagging behind in viewer experience. To truly become a compelling solution for Netflix, Apple and others, that needs to change.

Everything is awesome, except the ads 

The NAB notes that $230 billion will be spent on original content this year. And, today,  streaming video represents the highest-quality content that’s ever been shown on TV.  

Not only is the content high quality, but companies like Netflix and Disney also use data and insights to personalize recommendations and make the browsing experience just as good as the viewing experience.

Compare that to the advertising experience. The jump to an ad is choppy at best. Ads are often repurposed from linear or digital campaigns. Frequency is terrible. It simply doesn’t measure up.

Designing a new ad experience 

For a company with a subscription model, advertising is a tricky thing to get right. Netflix wants to preserve its subscriber base, so advertising needs to strike the right balance. It can’t be so intrusive that it annoys subscribers, but it has to be powerful enough to entice nonsubscribers to sign up.  

One study found that 79% of viewers feel that there are too many ads on streaming shows and that they are too repetitive. Some streaming companies have opted to deliver a lighter ad load as a result. Rather than interrupting a show at regular intervals, they show ads after a show is paused, or in between shows. Viewers have come to expect these less-intrusive advertising experiences.

But there are other issues. Despite the dramatic increase in streaming viewership in the past few years, high-quality demand still outstrips high-quality supply. The frequency problem is real. In the programmatic marketplace, there’s a variety of vendors operating at the same time. They all need to be monitoring and managing ads to maintain a specific frequency – but that often doesn’t happen.

Streaming ads creative is about to boom

We’re in the “golden age” of display advertising. Companies have created unique formats to fit devices, social platforms and specific websites and apps. People can interact with ads – play games, buy products, even try things on virtually using AR. Streaming ads are about to eclipse this era.

Streaming is a “lean back” medium, with a lot of action on the living room TV. Interactivity will be more limited compared to display, but there’s no reason why live shopping and similar concepts can’t succeed. 

Brands need to rethink the ad experience. They need to prioritize messaging that takes advantage of streaming’s unique attributes. Fabletics, for example, uses audience insights to purchase inventory most likely to reach their key audience. The brand tests creative to see what resonates best on the channel. 

As this kind of innovation heats up, prioritizing viewers and ensuring they have a positive experience is key. Programmatic for streaming is growing. Let’s make sure it works for the viewer. 

Follow PubMatic (@PubMatic) and AdExchanger (@adexchanger).

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