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OTT Customers Prefer Digital vs. TV Ads

New over-the-top services looking to get their message out to consumers could be better off focusing on their digital message as opposed to more traditional avenues to attract customers, according to Yahoo vice president and industry lead, entertainment Sean Galligan.

The number of OTT services has been growing for months — services like AT&T’s DirecTV Now, Sling TV and Sony’s Play- Station Vue are sitting alongside narrower offerings such as HBO Now, Showtime Anytime and direct-to-consumer offerings. Galligan said the time is ripe for a targeted digital message to grow their base.

But most OTT subscribers don’t respond particularly well to traditional advertising sources.

“OTT consumers are very open, they positively respond to advertising digitally as opposed to a TV ad for an OTT service,” Galligan said, adding that in Yahoo’s own studies, respondents were seven times more likely to sign up for an OTT service as a result of an online ad as opposed to a traditional TV ad.

OTT consumers are more swayed by advertising that focuses more on content than on the services, he said. Younger consumers are more concerned with what they’re watching than what they’re watching it on.

“The quality of an OTT provider’s content is really key in trying to hook or get that consumer to respond to advertising or marketing for that service,” Galligan said. “It’s a great environment for people to build a great consumer mandate for their service or shows, but it’s going to take a thoughtful marketing strategy and commitment.”

But even that message has to be honed for today’s OTT consumer.

Galligan said that as recently as 18 months or two years ago, OTT services based their advertising message on the amount of programming they had to cater to binge-watchers. Today, it’s all about the brand.

“It’s less about, ‘You get all this content for $X.99 a month,’ and more about, ‘Don’t miss out on this brand of a show, everybody’s watching it, it’s got all kinds of buzz,’ ” Galligan said. “It’s more driven by the brand of the content or the show. That will continue to evolve.”

Pivotal Research Group senior analyst Brian Wieser wasn’t completely convinced that digital ads would replace traditional TV advertising, especially regarding brand impact. For instance, DirecTV’s Rob Lowe ad campaign, helped burn the satellite-TV provider’s brand into the minds of audiences young and old, he noted.

“It’s true that television generally is consumed less by younger audiences,” Wieser said. “It’s true that typical networks have smaller reach than they do for older audiences. I don’t know on what basis it’s true to say that advertising is less effective for them for a given exposure for a given product. That you want to push back on.”

Wieser didn’t want to disparage the effectiveness of digital ads, which he said can be very effective in certain instances.

“It’s easier to carpet bomb, even target carpet bomb, a consumer and have some notion of truth of downloads, far more easily than you can connect the exposure to conventional TV ads, let alone billboards and print and arguably, the product itself.”

But making generalities about digital ads being more effective overall is dangerous, he said.

“There is a separate matter to say, ‘Here’s what works and here’s what we’re doing,’ ” Wieser said. “What works may not be the same as what they’re doing.”

At DirecTV Now, AT&T Entertainment Group senior vice president of strategy and business development Tony Goncalves said its marketing will almost exclusively be online and digital, because of the audience the service is targeting — younger consumers who don’t watch a lot of TV.

“I think you can expect a rather targeted means of marketing,” Goncalves said after the DirecTV Now launch on Nov. 28. “This is intended to be a price-conscious consumer that buys digitally, acts digitally, and so you shouldn’t expect big TV commercials. But you should expect very targeted marketing.”

Goncalves added that AT&T also expects to use its 5,000 AT&T Wireless stores to market and sell all of its video products, including its satellite DirecTV service, DirecTV Now and its millennial-targeted app Fullscreen.

“Every customer that comes through an AT&T sales channel should walk out with video, period,” Goncalves said. “On a needs basis we will assess what to sell them. A big family with a large home that needs an in-home DVR and the quality of service of satellite, we will sell them the premium service. Someone a little younger, in a multi-dwelling unit, we’ll encourage them to take the seven-day free trial of DirecTV Now. Someone a little younger, or a mom and dad who have a young millennial at home, will get promoted the Fullscreen app.”