Exploring the Streaming Space: Where Marketers Dare to Go

Exploring the Streaming Space: Where Marketers Dare to Go

Who among us hasn’t binged 12 hours of Netflix? Whether you care to confess it or not, there’s no question that streaming services have permeated the viewing culture, fueled in large part by the pandemic. By June 2020, 48% of US online adults had subscribed to at least one streaming service.  And there they’ve stayed. Now, over two-thirds of US households have more than one subscription to a video-on-demand (SVOD) service.

Advertisers are taking note of this accelerated growth in streaming services — as well as the opportunities they open. Given the volatility and unpredictability of the current economic climate, marketers are more focused than ever on measuring ROI to make sure they’re getting the most from their ad spends. The question is: is streaming the best place to spend those marketing dollars? Let’s dive into that.

Navigating the World — and Vocabulary — of Streaming

But before we do, it’s probably worth clarifying some key terminology. Most marketers are already familiar with traditional or linear TV, in which content is delivered via satellite or cable. Then there’s CTV (connected TV), also known as traditional TV viewing, which refers to basically any home entertainment device that is connected to or embedded in a television that supports video content streaming. Think Apple TV, Roku, or PlayStation.

The various types of media content that users stream over the internet on CTVs is referred to as OTT (over-the-top), because it’s delivered over the top of cable, satellite, and broadcast TV systems. OTT can be served up on a TV, but also on a smartphone, tablet, or computer.

While linear TV advertising is still the go-to platform for many marketers, streaming ads are quickly gaining ground. In the third quarter of 2022, ad spends on connected TV had gone up almost 40% year-over-year across all product categories — reaching $926 million, compared to $664 million last year.

Why the increase? Simple: CTV ads demonstrably work. In one recent survey, 43% of marketers reported spending more on CTV because it supports their performance marketing goals. In other words, it delivers measurable results and achieves goals. Because CTV is quickly becoming ubiquitous, its reach is also alluring to marketers. Around 85% of households today have CTV, which many of them use to view ad-supported streaming content.

Which brings us to our next term: streaming. Streaming is not to be confused with TV, or even CTV. Rather, streaming refers to the content itself that is viewed on devices such as, desktop, laptop, mobile and tablet — reaching audiences wherever they consume media, regardless of platform. As such, it’s important to remember that streaming content isn’t confined to TV.

In fact, data indicates that 59% of US adults stream videos on connected devices other than TVs, including mobile phones, desktop computers, tablets, and eReaders.  Half of adults watch video on their phones every day, and 83% of young adults (ages 18 to 34) are most likely to watch streaming content on non-TV devices.

Streaming viewing is so widespread now, that in 2022 it surpassed linear TV viewing for the first time, with a leading 34.7% share followed by cable at 34.4% and broadcast at 21.6%.  That’s a whopping 22.6% jump year over year.

So Are Streaming Ads Where It’s At?

Many streaming services are supported by advertising: the user enjoys free or low-cost access to their streaming content in exchange for being exposed to ads. Around 37 million internet-connected US households use at least one ad-supported streaming service.  And these households are paying attention to the ads they see when streaming their content. In one study, 23% of users of ad-supported streaming services reported that they frequently click on ads, with around the same percentage saying that they often buy products or services they see advertised.

Along with a captive, receptive, and click-ready audience, streaming is prime for optimization and precise targeting. The explosion of ad-supported streaming has enabled marketers to fine-tune ad spends based on a wealth of data to meet changing consumer preferences and local market dynamics. This in turn allows them to make sure their ad dollars are reaching the right audiences and drive ROI. In addition, streaming ad spends can be directly linked to business results — for example, an increase in sales.

It gets even better. Marketers can also gauge the effectiveness of different streaming ad campaigns with different audience segments — Generation Z vs. Millennials, for instance. This data can then be leveraged to determine which ads are more successful, when and where to run certain ads, and which ads need more fine-tuning.

Linear TV and Streaming: You Can’t Have One without the Other

All of which raises the question: Given the rise of streaming services, should you invest your ad dollars in connected TV, or stick with good ol’ fashioned linear TV? The answer is: both. Linear TV and streaming are the ideal complement to each other. And if you want to reach the full landscape of consumers wherever they are and whatever they’re viewing, you’ll need to have a presence on both.

While streaming shows no signs of slowing, streaming ad buys still play a back-seat role to linear TV ad buys. According to a recent survey, more than 51% of advertisers plan their linear TV buys first, followed by a secondary CTV ad buy. And only 15% of marketers buy their CTV media before they buy linear TV ads.

Increasingly, however, marketers are realizing that they should be giving equal weight to both CTV and linear TV in their ad spends. In the afore-mentioned survey, 34% of marketers say they plan linear TV and CTV spends together, to support each other.  At River Direct, we see the wisdom in this strategy.

For starters, linear TV isn’t going away — by any stretch of the imagination. Even with the growth in streaming, over 60 million US households still have pay TV. And there’s no question that linear TV remains a giant in terms of attracting massive audiences. So, there’s a very strong case to be made for continuing to invest in linear TV media buys.

These days, most US households have both a linear pay TV subscription and a streaming one, which means they’re getting their content through streaming and traditional means. What’s more, viewers spend different amounts of time watching either linear TV or streaming content, depending on the individual and the circumstances. The Big Game or a celebrity-studded award show will drive linear TV viewership through the roof, while the much-anticipated season finale of a beloved Hulu show will send those streaming numbers rocketing. Invest too heavily on one over the other, and you’re likely to miss out on a significant number of eyeballs either way.

Performance Marketing Plus Lower Costs? Yes Please.

This hybrid viewing behavior is likely to stick around for the foreseeable future, and marketers are advised to adapt accordingly. Because hybrid viewing patterns can be complex, fluctuating, and hard to predict, a unified approach to linear TV and streaming ad buys is the best way to expand your reach, maximize your ROI, and make sure you’re not missing any opportunities. Finding the right partner to help you create that effective mix is key.

Whether you invest in linear, streaming, or a blend of both, performance marketing makes sense. At River Direct, we’ve perfected the art (and science) of performance marketing to deliver sales and conversions — with each linear TV channel you advertise on, down to the airdate purchased. Now we’re applying the same focus on performance marketing in our recently launched streaming division.

In addition to ensuring measurable results, we also have a strategy for lowering the costs of streaming ads. Streaming is typically purchased on a CPM (cost per thousand) impression basis — referring to the amount it costs to purchase a thousand opportunities to expose your ad to viewers. While many advertisers use costly DSP (demand-side platforms) to manage advertising across multiple networks, at River Direct we do things a little differently.

In addition to using a DSP to execute streaming buys, we create relationships and IO (insertion order) deals for ad placements directly with publishers to significantly drive down CPM rates. For a taste of what those savings look like: a DSP-only streaming ad buy may run between $30 and $40, while our blended or direct IO deal on a streaming buy costs in the low teens or even single-digit range. A lower price point means you get more impressions and exposure for your ad, which in turn increases chances of success for your campaign.

Now here comes the best part: We take this lower-cost/high-impression streaming strategy and combine it with our traditional linear TV performance-based strategy to expand your reach across the entire landscape of TV and online video audiences. So not only are we unifying your linear TV and streaming strategies, we’re maximizing the ROI for each. Win win.

If you’re wondering whether you need to invest more in streaming or better balance your marketing mix, let’s talk. If you’re interested in staying up to date all on things direct-to-consumer marketing, sign up for our Current newsletter.

Direct-to-Consumer Marketing During a Recession

Direct-to-Consumer Marketing During a Recession

You’ve no doubt heard the doom and gloom around the economic downturn headed our way. Financial guru and prognosticator Jamie Diamond has been leading the chorus, predicting an almost-certain U.S. recession in the next six to nine months.

We’ve been here before, just a few short years ago. In 2020, the U.S. experienced the worst recession since the Great Depression. You may have blocked this out, but recall that in March 2020, the Federal Reserve lowered fund rates to virtually 0%. The U.S. economy shrunk a record 31.2% in the second quarter after falling 1.5% the previous year, prompting stock markets to plummet.

In April 2020, our country saw 20.5 million jobs disappear, ratcheting the unemployment rate up to 14.7% where it stayed in the double digits for months. All of which compelled the U.S. Congress to come to the rescue with billions of dollars in aid. And while the economy did rebound with a 33.8% growth in the third quarter, it wasn’t enough to fully recover from the tremendous hit it had already taken.

When confronted the threat of another recession, businesses naturally respond by tightening belts and slashing budgets — including their marketing budgets. They certainly did just that during the Great Recession of 2008, when the U.S. ad market declined by 13% as businesses reduced their ad spends. All indications point to companies doing the same this time around.

A new survey from the World Federation of Advertisers (WFA) and Ebiquity reports that nearly 30% of the world’s biggest advertisers are planning to cut ad budgets in 2023. We’re already seeing signs of this, with a 4.6% drop < https://www.mediapost.com/publications/article/378942/us-ad-market-falls-for-fourth-consecutive-month.html > in the U.S. advertising marketplace in September compared to the same month last year — rounding out four straight months of decline.

To Cut or Not to Cut

While cutting ad budgets may feel like the safe move to make, research and experience say otherwise. Previous recessions show that companies who reduce their marketing spend during a slump are also likely to see a drop in incremental sales as well as customer acquisition and engagement. Marketers who decide to spend less on advertising must rely on existing customers, in place of reaching new ones.  None of this is good for business — in the short or long-term.

And while marketers may be inclined to slash ad spends significantly during a recession, consumers reduce their spending at a much lower rate. In other words, your customers are still buying products — just not from you. Brands who disappear from view for 12 to 18 months in an attempt to wait out a downturn usually see sustained losses in market share. Once a customer leaves you for another, who’s to say they’ll ever come back?

A Case for Continued Ad Spending

While it may go against every instinct you have, continuing to invest in marketing during a recession can mean the difference between struggling, surviving, and even thriving. In fact, research shows that 60% of advertisers realized a higher ROI by actually spending more during past recessions.

But wait, there’s more. Research done by Harvard Business Review indicates that companies who did not cut their marketing spend, and who even increased it, during a downturn have bounced back with more strength post-recession. And, products that are launched during a recession have a better chance at long-term survival and higher sales revenue.

Believe it or not, recessions present unique opportunities for innovative marketers. This is especially true for direct-to-consumer brands, for a number of reasons. First and foremost, customers want direct-to-consumer products. In fact, 50% of consumers prefer to buy directly from the manufacturer. During the pandemic, 52% of direct-to-consumer brands saw demand for their products soar. The same trend can be expected during a recession.

In our experience, we’ve weathered two recessions as well as the pandemic. In these downturns, we’ve seen direct-to-consumer brands fare well and even grow. Remember that 2020 recession we mentioned earlier? During this time, River Direct clients ran at an average 13% higher profitability compared to the same time frame pre-pandemic. This performance can largely be attributed to the fact that our clients spent on average 34% more on advertising, while running on higher ROI.

Another reason our clients made gains during tough economic times? Simple: Their products we sell on TV actually save people money. Pay less for skin and hair care products, and save on the cost of a salon visit. Purchase cooking equipment and cook at home rather than going out to eat. Stock up on home cleaning products instead of hiring a housecleaner. Invest in exercise equipment and cancel that expensive gym membership. You get the idea.

Your audience is out there, ready and willing to buy your products even — especially — during a recession. How you reach those direct-to-consumer customers in terms of creative messaging and medium will be key. While other marketing firms may focus on digital and omnichannel marketing, there’s a powerful case to made for linear TV, streaming TV, and a convergence of both.

Reduced Ad Rates

Rather than halting your ad spend altogether, consider how best to redirect those funds to get more bang for your bucks — like into TV. When economic downturns cause sales and profits to fall, one of the first things general-rated advertisers slash is their advertising budget. During COVID-19, we saw a wave of general advertisers pull away from linear and streaming TV. When this happens, stations then turn to lower-paying advertisers like, you guessed it, direct-to-consumer brands. Intrepid direct-to-consumer marketers snap up those available slots at lower costs.

At the same time, viewership during COVID-19 soared as socially distanced households hunkered down in front of TVs and screens. As such, direct-to-consumer marketers were also capturing more eyeballs for their spend. While pandemics and recessions may have some differences, we expect to see much of the same opportunities and behaviors should the economic downturn become a reality.

Tracking ROI

In the midst of a recession, you want every cent you spend on marketing to do the most work for you. Linear TV, streaming TV, and converged TV that combines both offer built-in metrics that let you track lead generation and sales to determine ROI. This in turn allows you to focus your precious marketing dollars on programs that are demonstrably working, and eliminate marketing waste.

Direct-to-consumer advertisers know how their commercials are performing, with the ability to see if the rates are low enough and if people are in fact purchasing their products. This measurability is key. Like we’ve always said at River Direct, we have our finger on America’s pulse, and can tell you if customers are buying or not buying.

Mind the Gaps, and Fill Them

As companies cut their marketing budgets, you have a fantastic opportunity to fill the void and boost your market share. Your competitors may very well decide to pull back from linear TV and streaming TV, leaving you perfectly positioned to swoop in and scoop up their customers. With fewer competitors vying for attention, your ads are also likely to stick around longer in consumers’ minds. And once they do have money to spend, they’ll remember you.

Adjust Your Messaging

The success of your direct-to-consumer marketing efforts during a recession will rely heavily on having the right creative and message. People turn to direct-to-consumer products in large part because of their pricing. A cost-savings message becomes especially attractive to discount-seeking consumers during a recession and inflation market.

So be sure to capitalize on that driver, by emphasizing the value of your product. Consider focusing on a cost-savings offer, rather than a branded message, but proceed with caution. Companies will often cut their pricing only to increase prices again to make up for the loss in margins, then yo-yo back and forth between the two. Being consistent versus erratic in your pricing will do more to drive consumer confidence.

Keep Calm and Market On

As the threat of recession looms, remember that this too shall pass. The economy will eventually bounce back, and you’ll want to be well positioned to ride that recovery to increased sales and growth. What you do now with your direct-to-consumer marketing can have a huge impact on how well you weather the downturn, and how well you succeed on the other side of it.

Looking for more tips on building your direct-to-consumer recession-proof strategy? Take a moment to subscribe to The Current newsletter below!