DTC Adoption Will Help Make TV A Performance Medium

Lance Neuhauser headshot

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

Today’s column is written by Lance Neuhauser, CEO at 4C Insights.

To maintain incremental growth, today’s direct-to-consumer (DTC) darlings are looking to expand beyond the digital sandbox where they grew up. After years of slathering on the search and Facebook ads, DTC brands are approaching a saturation point in these channels.

Now these brands are preparing for their next phase of growth, which includes a focus on realizing the same performance outcomes in TV as they have seen through digital channels. DTC brands are traversing deeply into the media territory of incumbent brands, and there’s every reason to believe they’ll be successful.

Convergent TV – through a combination of advanced linear TV, premium digital video and over-the-top (OTT) inventory – is combining the targeting, personalization, attribution and performance of digital with TV’s big-screen sight, sound and motion. It’s also bringing key elements of audience targeting, spend, scale, premium inventory and brand safety.

In other words, it’s the branding power that advertisers have always adored in TV, communicated directly to select audiences at an individual and household level. That’s a direct fit with the DNA of today’s DTC brands.

In the OTT landscape, budget economies of scale cease to matter the way they did in linear TV. Data is the new economy of scale in media. Not only do DTC brands have data that rivals their larger competitors, but they are also in many ways more comfortable running in-house operations that leverage data management and media facilitation technology across the convergent TV LUMAscape.

As Terry Kawaja recently observed in his State of Digital Marketing 2018 at LUMA Partners’ Digital Marketing Summit, DTC’s need to expand into TV is coming at the precise moment that the medium has transformed to perfectly align with their strengths and defining characteristics.

The result, Kawaja noted, is “the greatest opportunity in marketing’s history. Period.” He called OTT “nirvana for DTC brands,” and he’s right.

The other side of convergence

But it is critical for us to realize that this is a two-way trend. DTC brands will realize new growth through converged TV, yes, but converged TV stands to benefit just as much from these disruptors’ forays into its territory – and not just by virtue of the ad revenue. As performance-minded DTC marketers ramp up spend in converged TV, they will accelerate video’s transformation into a performance medium that impacts all stages of the marketing funnel.

The convergent future before us will be marked by the proliferation of immersive content and integrated commerce, bringing convenient entertainment and relevant, targeted product offers closer than ever before. The brands that win in this environment will be those that connect their messages to the commercial intent of audiences at key moments during content consumption.

Just as content consumption is no longer linear, the customer purchase journey is long, winding and fragmented across platforms. Premium content is now available via satellite, cable, internet or cellular connection for access on televisions, computers, tablets, phones and smart speakers. Meanwhile, the ability to conduct commercial transactions is built into every step. And DTC brands have the ability to measure sales immediately and reconcile against the media that delivered them.

For marketers, future economies of scale will not come from buying more spots and getting better rates but from gaining and applying more comprehensive data. This leverage will enable marketers to identify new audiences and learn the preferences of customers and prospects more deeply than ever before. From there, brands can make better decisions by tying all budget, creative and media decisions to actual business results.

For the supply side of converged TV, brand dollars will flow to the opportunities that deliver against performance outcomes, integrating seamless commerce into personalized and relevant creative. At some point in the next decade, I expect brands to become truly integrated into the video content itself. Until then, ad formats such as commercials and stories will reign.

Follow Lance Neuhauser (@LanceNeuhauser), 4C (@4Cinsights) and AdExchanger (@adexchanger) on Twitter.

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