The CMO's Guide to Over-the-Top TV

It's no longer a question of whether TV networks will be available on an à la carte basis through streaming-video services, but how powerful those services will get. Everyone from satellite companies to tech players to TV networks are devising ways to make TV programming more attractive to younger viewers who aren't seduced by traditional cable bundles with bloated offerings and bills to match. The result is a sudden flurry of products -- including Sling TV, HBO Now and CBS All Access -- that threaten to undermine the traditional TV model. While it's still early going, the new services are already requiring marketers to reexamine how they advertise on TV. Here's what CMOs need to know to prepare for advertising in an "over-the-top" world. The term refers to delivering content over the internet instead of through cable pipes or satellite signals. OTT offerings include direct-to-consumer services from individual networks like HBO (HBO Now) and CBS (CBS All Access) that don't require a pay-TV package, as well as slimmed-down multichannel TV services from the likes of Dish Network (Sling TV) and Sony (PlayStation Vue). While most providers are keeping mum on just how many people have signed on to these services, Sling TV reportedly has about 100,000 subscribers, while CBS CEO Les Moonves says All Access boasts even more than that. The goal of OTT is to reach the approximately 10 million broadband subscribers who do not also have pay-TV packages. These viewers tend to be younger consumers who advertisers may currently struggle to reach on TV. The age of the audience for CBS All Access, for example, is in the high 30s to early 40s, according to Marc DeBevoise, exec VP-general manager, entertainment, sports and news, CBS Interactive. That's younger than the traditional broadcast-TV audience. Providers are also balancing the innate risk that these services will encourage pay-TV subscribers to cut the cord. To combat this, there may be a limit to just how many people can sign up for some platforms. Dish's agreements with content owners limit Sling TV to 2 million subscribers, Discovery Communications CEO David Zaslav said at a media conference last month. The services that include advertising are for the most part simply airing the same commercial load and national spots that appear in the linear TV feed. Some, like Dish Network's Sling TV, are experimenting with dynamic ad insertion, which allows ads to be swapped out. Moving forward, however, the web-based model presents new opportunities for advertisers who have been limited by linear TV, like shorter commercials and interactive ads. CBS All Access reduced its ad load by 25% for on-demand viewing of episodes of current series. Mr. DeBevoise said the network felt comfortable with the lighter load because the platform provides access to more detailed viewing data, allowing CBS to better deliver on advertisers' targets. Ultimately, the hope is these services will give marketers a much clearer picture on who is watching and what they are watching, allowing them to more efficiently reach their desired audiences and tailor messages to individual viewers. All this means marketers need to start better understanding their core audiences and get their data in order right now. While viewers will likely become even more fragmented in the new video ecosystem, a deep knowledge of consumer targets should help marketers better reach the consumers who are actually inclined to purchase their product. Marketers can also start adopting a native advertising mindset. Since it's not clear exactly what the ad models will be in an OTT world, with some services excluding ads, Cynthia Machata, managing director-digital strategy, Initiative, said advertisers need to find ways to get their messaging embedded in the content.

The CMO's Guide to Over-the-Top TV

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