AWE18: So long, annoying ad formats?
The rise of ad-free video services might have re-tuned the brains of an entire generation to be less receptive to advertising in and around content. That was one of the views at Advertising Week Europe, in a session that examined the commercial and branding opportunities for streaming services.
"No-one wants to watch advertising," said Simon Valcarcel, head of creative and media at O2.
"The conditioning to not wanting to watch pre-roll and look at banners is already there, and so the challenge is to create content that people do want to watch and do want to engage with.
"But when the creative is good it doesn’t matter what platform or format it’s in, people will remember it."
Although the panel agreed that ad-free streaming platforms such as Netflix will eventually introduce advertising business models, Michael Thomas, sales director at video gaming platform Twitch, believes that introducing ads to a previously ad-free platform creates an "unpleasant user experience" and could potentially create a dip in revenues.
Meanwhile, Eric Boyd, director of product at JW Player, suggests that to some extent, Netflix already uses ads in an untraditional way.
"I think we’re seeing advertising a little bit with Netflix now," said Boyd. "When you open up a show, the video starts playing automatically so you enter into that stream and it engages you to watch.
"When the show ends they’re recommending you more of their own content, so keeping you engaged in their platform. It’s not really advertising, it’s advertising their own promoted brand content."
Netflix's subscriber growth has more than doubled over the past couple of years, from 57.4m at the beginning of 2015, to 117.5m by the end of 2017.
However, Netflix's business model is the only one among its competitors to generate revenue purely from streaming, which is another reason why it seems unlikely that the platform will use traditional advertising as a method to boost profits.
"If you talk about any of Netflix's competitors, whether it’s Amazon or Now TV, those businesses make a lot of their revenue from outside of the streaming environment," said Thomas.
"As a result, streaming is a good extension of their platform because it brings people into their ecosystem.
"Netflix does not have that, so it has two ways to make revenue, one is to continue to acquire subscribers, and two is to generate revenue by increasing the amount they pay."
Also discussed on the panel was the gradual disappearance and unpopularity of autoplay, as premium ad placement and videos are going to be where viewers want to engage in content.
"There’s no intent to watch anything that’s auto-started, it’s not a valuable place to place an ad," said Boyd. "Autoplay is going away."
On this topic, Jennie Dean, digital transformation director at Zenith, emphasised the "importance of non-disruptive content", referring to an unpleasant experience she had with Facebook’s new mid-roll ads.
"We’ve done a couple of tests at Zenith, and for some clients it’s worked, some clients it’s not worked, but for me personally, it’s just really annoying."