What the Future of Television Means for Advertisers
What Amazon, Google and Apple want, they get.
All three Fortune 100 companies are proud parents of streaming television devices. Streaming brings internet subscription services like Netflix, HBO Go and Hulu Plus to the television. More than 55 percent of Millennials use paid tv services for their content consumption (API), and that number is growing. Yet 1 in 4 are saying goodbye to cable (TechHive).
Amazon, Google and Apple may not be able to control the economic outlook in China, but they are shaping the way we consume content. They’ve got big bets on the future of content looking more like the subscription model than the programming model, and that means advertisers are going to have to get more creative about the way they market to viewers.
If Amazon, Google and Apple are right, advertisers won’t have a place for their marketing. With subscription comes the freedom from ads. To compete, advertisers will have to create their own content that audiences will actually choose to watch.
It’s not implausible. Plenty of big-name companies, like Chipotle, are already doing it. But it is a costly endeavor.
Advertisers aren’t the only ones struggling to adapt to the subscription model. Traditional television show providers have yet to figure out the online delivery model for past seasons of their shows, opting instead to give them to Netflix and Hulu Plus. It’s possible that traditional distribution houses such as NBC, ABC, and CBS, as they seek to create their own subscription-based platforms, will welcome advertisers as producers of more diverse content. “Content that connects with a passionate but niche audience becomes an asset,” Jason Hirschhorn wrote in a recent analysis of the future of Hollywood. If as a platform you can assemble enough shows that speak to a variety of niche audiences, like Netflix has done, then you give families a reason to subscribe.
As cable fades, it also creates a challenge for the television channels that already speak to one niche audience. Is that niche audience passionate enough to subscribe? Are there enough of them to make subscriptions profitable enough to stay afloat? Content providers like Food Network and the History Channel must navigate their future in the subscription world, or be subsumed by providers like Netflix who can offer more to subscribers to justify their value.
They might take a lesson from AMC. AMC rebuilt its brand by launching the uber-successful Mad Men and Breaking Bad. “Originals [are] essential to driving awareness, building a brand, retaining users, and generating profits,” Hirschhorn says. Similarly, HBO’s staying power is due to its ability to deliver many quality shows that justify a subscription.
Where do advertisers fit in? As show producers themselves? Perhaps. But I would start testing their storytelling strength now. Because if Amazon, Google and Apple have their bet on subscription television, then I do too.
Clara Ritger is an assistant producer at Green Buzz Agency. She writes and manages the GBA blog. She does not yet have a streaming connected TV, but her parents do. Find her on Twitter @clararitger.