If there’s one thing that is always predictable in the online media business, it’s that next year will be different from last year. For 2016, that means the end of the cable bundle.
For almost fifty years, the cable providers have determined what channels they will allow on their networks, and therefore what content we will see. However, the switch to mobile has upended all of that. The new world of video will not be like the old world of TV, where the power was with the major networks. It is now possible to see premium video content outside of cable, via apps like HBO Now or Showtime. We are watching our video content on everything from Vine, Instagram, YouTube and Facebook to Amazon, Netflix, and Hulu.
While Netflix is a pure subscription model, YouTube and Facebook are ad supported, except for YouTube Red. and Amazon and Hulu have options: if you pay for Amazon Prime, you get certain programs included with your subscription, while for Hulu you can pay a more expensive subscription price to lose the ads.
This unbundling of video content cannot go on forever. Consumers paying subscription fees will quickly rack up costs similar to the cable bundles, and whether ad-supported or subscription, it’s now a real challenge to find the “TV Guide” for this new system.
Thus, new bundlers will emerge. Perhaps it will be Neflix, Hulu and Amazon, perhaps YouTube and Facebook. These new “publishers,” because they aggregate content as well as produce it, are already platforms of a sort. Where will the content come from? Well, in the case of Facebook, You Tube, Periscope and Vine, it will come from us. The largest platforms will monetize our eyeballs, albeit in different ways.
Pre-roll. Pre-roll will not be the source of most video ad dollars, because it simply doesn’t scale. It comes in limited supply, and consumers hate it. Consumers are already running ad blockers against it, and people like the CEO of Pepsi have decried it as unworthy of his brand.
Native. What is Pepsi doing instead? It is paying to have its brand written into the script of the hit series “Empire,” which is available both over conventional TV and on Hulu. And when we say written into the script, we mean the making of a Pepsi ad is part of the show’s plot line, in which one of the main characters actually becomes a spokesperson for Pepsi and gets paid a lot of money.
This is a new kind of native advertising far beyond mere product placement or branded content produced by Pepsi itself. It is fully integrated into “Empire’s” content.
Branded content. Sites like Buzzfeed and Vice, which produce high quality shareable content, are producing it through their in-house agencies for major brands like GE, and these campaigns are running on all sorts of social platforms–though sometimes not even on Vice and Buzzfeed themselves.
Outstream. Video ads appearing on non-video sites, outside the usual stream. An example of this is our inArticle format, which produces the highest CPMS for our publishers.
2016 is likely to be a period of trial and error transition as video leaves the confines of the TV screen and accompanies the consumer into the supermarket and on to the subway. As in the past, the dollars will follow the consumer, for obvious reasons.
One thing we know, dollars are already certainly leaving traditional TV advertising for video at a very rapid clip.