It’s hard to predict what will happen next in the streaming wars. Just when the world was beginning to wonder if the market and consumers were approaching “peak subscription,” the pandemic hit and the streaming wars were given a new lease of life.
Netflix — arguably the biggest name in streaming — announced that it acquired 15.7 million new subscribers in the first three months of 2020, almost double the number it gained during the same period in 2019. More recently, its competitor Disney Plus reached 100 million subscribers just 16 months after its launch: a number that Netflix took 10 years to reach, albeit while pioneering the burgeoning streaming market.
It was an unanticipated but welcome boost. But it will be difficult to sustain this level of growth.
A Pain in the CPAs
Streaming services are caught in a marketing arms race. They are under immense pressure to grow their subscriber base and keep shareholders happy — but the wider they cast their net searching for prospective new users, the higher the CPA (cost per acquisition) typically becomes. This is clearly an unsustainable model for long-term growth. Like in any arms race, the consequences for those involved are often MAD, or mutually assured destruction.
Instead of attritional marketing warfare, streaming brands need to identify clever ways to decrease churn and increase engagement. And the best way to maximize efficiency is to craft experiences that leverage data-driven personalization.
Here are three things to consider when using personalization to make scaling subscribers more palatable and effective.
Leverage optimized landing pages and sign-up flows: Personalization within the streaming platforms is an effective way to reduce churn and it should define the experience from the very first touchpoint.
Landing pages should be at the forefront of this strategy. They should be customized and personalized to reflect a user’s unique journey. If someone arrives on a landing page after clicking on an advert for a specific show, then this show should be the thematic template for the page and define the copy and hero images used — with other personalized content suggestions orbiting dynamically around it.
The landing page should also have a close relationship with the sign-up process. Poorly signposted sign-up processes quickly spark friction and frustrate users.
The UX of the signup process is crucial. Brands should remember that:
• Visual progress indicators are more intuitive than text-based progress indicators;
• It must be clear what subscription tier users are signing up for;
• Keeping a consistent message across the platform for users with no active subscription is the best way to re-focus these users to sign up
Beyond this, streaming services should recognize that for customers, signing up doesn’t end with the payment form. New trial sign-ups should be optimize through personalized experiences, customer data mining and predictive modeling in order to execute more efficient media across platforms.
Personalizing recommendations: From Spotify, to YouTube or Amazon, consumers expect to be met with intelligent recommendations based on their preferences. Research from Accenture found that 91% of consumers are more likely to engage with brands that provide offers personalized to them.
Streaming services are broadly wise to the powers of personalization. In 2019, Netflix experimented with an AI tool which would edit trailers based on user data, so different users would see different trailers depending on their likes and preferences.
While personalized ads and landing pages may get users into your ecosystem, providing reliable recommendations is a strong way to build trust, and consequently longevity, between the streaming brand and the user. The services that can crack when and what content to present to each user will do better at retention.
Shifting the focus to LTV and predictive modeling of customer data: Streaming services also need to have a holistic view of their customers and their habits. Understandably each service sits on a treasure trove of data: what shows are being watched, did they complete or drop off, and what did they watch next?
The main point here, though, is not how much fancy data services have, but how that data is activated to make smarter decisions within their customer acquisition strategies. This should naturally lead brands to be more inquisitive and open to a lifetime value (LTV) based marketing model.
At this moment in time, every advertiser should be considering moving to an LTV model. It will help take a brand’s marketing strategy from short-term metrics to a long-term advanced approach to acquisition.
There are five steps to take here:
1. Unifying customer data
2. Data preparation and modeling
3. Understanding the drivers of LTV
4. Understanding customer clusters and audiences
5. Activation in audience and bidding
With LTV, brands can better target high-value audiences more likely to subscribe to their service. Campaigns, ads and keywords are measured by their LTV performance using a data-driven conversion attribution model, and the brand can optimize activity accordingly. The LTV metric can also be used for automated bidding, to get the right messages to the right customers at the right time.
This is a hyper-competitive moment in the streaming wars. To continue to grow, streaming brands will need to embrace marketing tactics that combat churn and engage new users — all without getting caught up in a marketing arms race. This means investing in understanding what customers are doing on their services — and crafting experiences that reflect these needs from the very first moment.
Kris Tait is managing director of the U.S. business at global digital marketing agency Croud.
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