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SMS marketing is blowing up

With search and social becoming ever more congested, churn rate going up and performance of email marketing flattening out, DTC marketers are branching out.

And SMS marketing is blowing up.

As a channel, it’s still nascent but it’s been growing steadily in the last 18 months.

In an interview with Digiday, Digishop Girl’s CEO told that 70% of their clients are already using SMS to find new ways to reach and engage customers.

In the same article, an investor and advisor to the DTC brand Judy explained that SMS campaigns are getting around 70% CTR and upwards of 25% Conversion Rate.

I gotta say that’s pretty impressive considering Mailchimp’s average open rate is 21% and CTR is less than 3% which isn’t too far from other industry benchmarks.

SMS can be a very personal and intimate communication channel.

I’m a bit torn, to be honest.

SMS and text messages are by far my favourite way to reach out to friends and family.

I was 28 when I finally gave in to talking to people on the phone and taught myself not to get anxious anytime my phone buzzed.

It seems that DTC marketers know how big a deal it is when someone signs up to receive as SMS and they’re being mindful of that when planning their campaigns.

You can check out many examples of SMS marketing in use here and here.

For the time being, it seems that SMS marketing is working for DTC brands but it remains to be seen if and to what extent other consumer brands can use it as well.

Past surveys have shown that people do want to receive service-related information such as an appointment reminder but will they like brands to bombarding them with SMS marketing. 

I have my doubts.

One thing is certain. There are new opportunities for brands that embrace empathy and offer personalised experiences as people continue to reward them with loyalty and engagement.

That said if you’re really serious about using SMS as a way to have ongoing conversations with your customers, you need to look for ways to prove the value of the service before you press send.

The slow revival of TV Advertising from Netflix to Google

In half the time it took Netflix to become synonymous with binge-watching ad-free content, we have more streaming services than we know what to do with, and the industry is on the verge of another transformation.

In this newsletter, I will be using some industry jargon, so let’s get those definitions out of the way first.

1. Streaming Video On Demand (SVOD):

Services such as Netflix, Disney+ and Amazon Prime are known as Streaming Video on Demand (SVOD) services. These services offer ad-free streaming services and provide a collection of original and licensed content.

2. Ad-Supported Video on Demand (AVOD):

Services such as Hulu and Peacock (possibly HBO Max in 2021) that offer lower-tier subscription models in exchange for showing ads to the viewers are known as Ad-Supported Video on Demand.

3. Over the Top (OTT)

These are streaming services that users can access directly through the internet. Services such as Netflix, Amazon Prime, Hulu and others are known as OTT.

4. Connected TV (CTV):

Connected TV or CTV is any television that is connected to the internet and where users can stream content directly from the internet. Smart TVs that are connected to the internet or TVs that are connected to gaming consoles and other devices that enable streaming are called CTVs.

Now on to the exciting stuff
 

Netflix, Disney and Amazon

In the streaming business, keeping paying customers isn’t cheap, and most streaming services are struggling to keep subscribers past the first 6 months.


Source: Bloomberg

Here’s the understatement of the year: Maintaining an attractive streaming service in 2020 isn’t cheap.

Streaming services need to maintain a healthy mix of evergreen TV shows (think Friends, Seinfeld etc.) that are licensed from other producers to keep people paying month after month. But it’s the exclusive original content that attracts new subscribers.

And no one spends more on creating original content than Netflix. Last year Netflix spent $15 billion on creating original content compared to Amazon’s $6 billion.


Source: Reelgood

At the moment, Netflix, Disney+  and Amazon Prime are the three largest streaming services vying for a share of your wallet.

In addition to competing with each other, they also have to contend with an ever-increasing number of services offering cheaper ad-supported subscription plans.

Netflix, being the most expensive of the three, is already seeing their growth in the US plateau with analysts expecting an increase in subscriber churn in the near future as consumers struggle with more choice and limited budgets.

Churn isn’t a Netflix problem alone.

The tale of two business models

The streaming industry is at a crossroads. On the one hand, there’s the incredibly high upfront cost of producing original content and spending on marketing to retain subscribers to offset that investment in the long run.

On the other is the ad-supported model.

And the latter is increasing in popularity. Several surveys in the US and the UK already show that people prefer it to the more expensive streaming services.

But that’s not the only reason.

Other reasons include getting access to a much larger pool of content (think Hulu) and being able to find content that isn’t currently available on larger streaming services.

Things get even more interesting when you start accounting for hundreds of national and regional media producers, creating their own apps for ad-supported online streaming.

According to IHS Markit report, new AVOD services and improvement in adtech are driving increased interest in CTV advertising, and the market is expected to grow at CAGR of 11% between 2018 and 2023.

Would you like ads to go with that Netflix and Chill?

If you’re anything like me, you take pride in avoiding ads at all cost, and you’re unlikely to be convinced to watch any ads when streaming your favourite content willingly.

The whole promise of Netflix is the uninterrupted binge-watching bliss. I mean, many of us take offence to Netflix showing the ‘Are you still watching?’ notification. 

Of course, I am! Stop judging me and play the next episode, smart ass.



I digress.

The ad-supported model doesn’t work for Netflix, and that’s because they taught us that we shouldn’t have to watch ads when we subscribe to Netflix.

That doesn’t mean that Netflix hasn’t tried.

Perhaps you remember the 2018 A/B test when some viewers were shown non-skippable ads for Netflix’s own content in between episodes. You can probably guess how well that was received.

But just because Netflix has to look for other venues to continue its growth and contend with more aggressive competitors, doesn’t mean that ads don’t work for streaming services.

Advertising on CTV

A survey conducted by Unruly in the UK discovered that as many as 21% of respondents were willing to try out ad-supported streaming options. It turns out that people want to watch ads as long as AVOD services offer flexibility, control and personalisation.

That takes care of the viewers, so what about the advertisers.

For advertisers, the added benefit of advertising on CTV besides the cheaper cost, you can run large campaigns at a tenth of a cost of linear TV, is better memorability.

The same study found that people remembered the ad much better and had a much more positive experience when the ad matched their mood and the context of the content they were watching.

Hulu and other AVOD streaming services

 According to industry estimates, over half of Hulu’s (owned by Disney) users subscribe to the ad-supported model.


Source: eMarketer

According to another estimate, 20% of the Upfront budget in 2019 went to Amazon Fire TV and Roku, both of which offer advertising options. In 2020 that number jumped to 25% with Disney, NBC, Amazon and Roku bringing more advertising revenue to their AVOD services.

Comcast’s has also announced providing 10 different ad-formats including shoppable ads on Peacock and HBO Max is rumoured to introduce an ad-supported model next year.

Samsung Smart TVs to the rescue

 With online video blowing up as it is, a mere 5% increase YoY doesn’t sound like much of an improvement.

And it really isn’t but not without a good reason.

For advertisers, success in video advertising is about efficiency and scale

And the current fragmented landscape of CTV advertising isn’t built to deliver either. 

First, there are no standards on how ads are sold across different platforms, which leads to the second challenge of accurately measuring what content people are consuming as they hop between multiple services.

This is where Automatic Content Recognition or ACR comes in.

Think of ACR as facial recognition for content being displayed on a screen.

ACR takes pixels from the content being viewed on the TV screen and matches it with an existing library to determine whether a viewer is watching Star Trek or exploring the shores of England aboard a biking ship in AC Valhalla.

Samsung Ads – the advanced TV advertising arm of Samsung, is using ACR to gather this data from 50 million Samsung Smart TVs in the US. Samsung recently announced that it would also start selling its ad inventory across its smart TVs programmatically.

Besides Samsung ad-tech provider Zephyr is partnering with Iris TV to make CTV advertising more attractive and friendly for advertisers.

If you’ve come this far, you’re probably wondering that all this takes care of making linear TV more addressable and digital but what about the undisputed king of streaming video, YouTube?

Google and YouTube

Content views on CTV grew more than any other device for YouTube this year.

And now Google is setting the stage for attracting TV budgets to its streaming platform.

YouTube is already well-known for on-demand video content. There’s YouTube Originals and YouTube TV that offer content from other streaming services, channels, live sports events and unlimited DVR storage.

While Samsung Ads and others are sorting out the linear end of CTV transformation, Google wants to continue its dominion over the web.

But there’s a slight hiccup in its plans.

Advertisers still haven’t come around to viewing YouTube as a replacement for TV.

Can you really blame them, though?

For a long time, YouTube has been positioning itself as the solution to linear TVs troubles. While your investments in branded advertising and massive national campaigns on linear TV were difficult to measure, YouTube offered you measurable performance and addressability.

Brand safety has always been a bit of an issue online, but for the most part, advertisers haven’t been too bothered as long as the ads are shown next to content that’s not too inappropriate. 

Content on YouTube hasn’t really been on par with the production quality we’ve come to associate with TV. As a result, advertisers have been satisfied focusing on reaching audiences based on their interest.

Advertising on TV takes a bit more than that.

In addition to brand safety, advertisers also focus on brand suitability when advertising on TV. 

Brand suitability is finding the right inventory mix as well as the right shows that match the sentiment your brand is looking to establish. Unsurprisingly ensuring brand suitability is much easier when buying ad-inventory directly from a TV channel than with CTV at the moment.

New and improved ad-offering on YouTube

Attracting TV-style branded campaigns to YouTube is a must-win battle for Google for maintaining its market leadership in online advertising.

And YouTube is Google’s best bet at offering much more attractive cross-media advertising options for both branded and performance marketing campaigns spanning all formats and devices.

Amidst the recent brand safety concerns on YouTube, Google extended an olive branch to advertisers by offering Google Preferred inventory advertising program to include YouTube TV as well.

Going one step ahead, YouTube has been gathering aggregated data from brand lift surveys across YouTube TV, which it plans to share with advertisers in the form of Do’s and Don’ts of CTV advertising next year.

As CTV viewership grows, Google is also building the infrastructure around YouTube to position it as the strongest online video streaming service for CTV. Starting next year, Nielsen will include ads running on YouTube in its Digital Ads Rating system.

This is yet another step that will move YouTube higher up in the brand advertising food chain.

What did we learn from all of this?

There are three different types of business models that we need to pay attention to:

1. Born digital.
2. Born offline but transformed into digital.
3. Offline but augmented by digital.

Any changes across these three types have the power to shift industries and disrupt existing ways of getting things done. 

Linear TVs transformation from offline to online has been in the making for a long time, and now it’s reaching critical mass. 

To all the media planners, entrepreneurs and advertisers, keep your eyes peeled because this phase of TV’s transformation to digital is going to be an exciting one!

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The battle for short-form video

I’ve been a little distracted by the political drama surrounding TikTok. 

But as entertaining as it is to see Trump’s antics and Microsoft rushing to meet the September 15th deadline, the bigger picture here isn’t just about the politics.

It’s about who will own short-form video – and with it the attention of today’s teens and twentysomethings.

As the experts put it, Gen Z’ers are not only trying to get their parents to buy them stuff, but mom and dad are listening to their opinions on what to buy for themselves. And these opinions are, in turn, influenced by YouTubers, Twitch streamers and TikTok creators.

The future of influencing is short-form video.

And everyone’s got their play.

Yesterday Facebook officially launched Reels in 50 countries.

Instagram’s Reels is TikTok in every way, except it only lets you make 15-second videos – so you know not exactly the same.

Facebook is no stranger to copying features from smaller apps. It’s not like they can buy them off, not with the antitrust authorities breathing down their necks.

Still, the timing of this launch couldn’t be perfect.

For a long time, nobody was quite sure what TikTok was all about. And just as advertisers were warming up to it, their troubles in the US started. 

Enter Instagram. It’s familiar, your fans are already there so, why not give Reels a go instead?

Instagram is quickly turning into Facebook’s super-clone-app. But I still like Instagram and as Sara Frier wrote in Bloomberg, Instagram has what Facebook does not, which makes it Zuckerberg’s best bet at staying relevant.

Snap Chat’s attempt at giving uncertain TikTok users a new home.

Last week Snap Chat introduced a new feature that, just like TikTok, allows users to add music to their snaps. 

I’m excited to say that they didn’t stop there. As TechCrunch reported, users will be able to swipe up to view the ‘album art’ and even listen to the whole song on their favourite streaming app.

See, Zuck, it’s really not that hard.

Before TikTok came along, Snap Chat was the app for teenagers. Although they have a large userbase outside the US, they reach more teenagers and twentysomethings in the US than Facebook, Messenger and Instagram combined.

“Snapchat says its music feature, however, will allow fans to form deeper connections with artists and music. It also spoke to its strength in being a tool for close friends, which gives it more influence — largely because of how its younger user base values friend-to-friend recommendations.” –  Sarah Perez, TechCrunch

Have you heard of Quibi?

There isn’t much to say about it since not much has happened since it’s launch earlier this year. Quibi is a short-form original content streaming app that offers original content in ‘10-minute or less’ chunks. 

It’s still early days and there’s some controversy around how successful its launch has been. 

You know, I do like the idea of original content that’s designed to entertain me in 10-minutes or less but I don’t know if I’ll pay for it. At the moment the future looks uncertain for an app designed for commuters and launched at the worst time possible for commuting.

And then there’s Microsoft

I know they don’t own TikTok yet but their play for its US business is worth mentioning.

While they do own Xbox, Bing and LinkedIn, for the most part, they’re a business-to-business company. And we all know how it turned the last time when they went into video streaming business.

To be honest, when I first read the news I was all ‘hold on a minute, they wanna do what now?’

But after reading Tim Peterson’s explanation, I think it might just be the right move for Microsoft.

This purchase is going to be costly and their expenses won’t end there. But TikTok will bring Microsoft closer to Gen Z and give it proper legs to stand on against the Facebook-Google duopoly.

Publishers have had it rough this year

New York Times reported that smaller publishers relying on ad revenue for survival have already gone bust.

Both The Guardian and the BBC have announced redundancies. Even BuzzFeed readjusted their expectations for 2020.

Google killing third-party cookies. COVID. BLM keyword blacklists. Reduced marketing budgets. And just last week Google made AdSense policies better but also stricter for publishers.

It’s not easy being in publishing these days.

For better or worse, many publishers still rely on ad revenue to deliver quality journalism to us.

Marketers who portray themselves as ‘purpose-driven’ saying that they want coronavirus coverage to be free while at the same time pulling their ad spend from publishers isn’t helping to keep that content free and accessible to all.

Marketing can be a power for good.

But we gotta put our money where our mouth is. We can channel our ad spend on supporting free and independent journalism.

And while we’re at it, we can demand that those publishers do better. Because they’re more likely to listen to constructive feedback once their existence isn’t teetering on the brink of destruction.

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The Telegraph introduces cookie-free adtech

Loss of advertising revenue is a crushing blow to publishers.

Since Google’s decision to kill the third-party cookie, many publishers are ramping up their subscription models while testing new ways to keep advertisers interested.

The Telegraph is showcasing one such solution.

Digiday wrote, “The effort, called Telegraph Unity, has the publisher and advertiser separately uploading their first-party data to what tech provider Infosum calls a ‘bunker’ so no other party can access it. Infosum’s tech then adds a tiny statistical error to the anonymized data sets, making it impossible to reverse engineer back to the originals. It then overlays a statistical model to find matches.”

I gotta say. This is an inspired solution but not without its challenges.

The biggest being the advertisers’ lack of first-party data. After GDPR most advertisers simply don’t have enough of it.

But there’s a larger opportunity here as well.

A solution like this could be a stepping stone for publishers to start offering a competitive, albeit niche, alternative to Google and Facebook, especially when advertisers want really local or granular audiences.