What makes over-the-top (OTT) streaming services so appealing in 2021 is not just the 3-5 million viewers it amassed over the lockdown but also the variety of regional content available on its platforms, which thereby guaranteed a diverse target group (including Tier-2 and Tier-3 cities).
For DTC brands, the interest in OTT deepens further.
But is this marriage one without its fair share of challenges?
Why are DTC brands moving to OTT?
DTC brands had hopped on the ‘social’ trend by setting up their digital presence last year. But social media is a tougher nut to crack when it comes to brand visibility. The competition has grown by virtue of the fact that digital platforms are the birthplace of so many up-and-coming brands. And with Facebook and Instagram changing up its algorithms unannounced, DTC brands have faced the brunt of it with diminishing sales figures.
Additionally, the theme of the era is: to go further than sales. All brands strive to build brand equity. Brand building exercises like digital strategies are seen as a feature to lower customer acquisition costs (CAC) by the virtue of building brand reliance (without the third-party, digital ads).
But socials have become an unfavourable space for brands to work on these relationships. They have got to branch out. They have to consider other alternatives of distribution channels (like Modern Fertility and Lola tying up with Walmart) and advertising opportunities (like the state-of-the-art OTT advertising).
Not only is OTT cheaper (compared to digital platforms), it also provides a wider target audience for DTC brands (which ideally implies greater conversion rates) and more performance metrics.
With great profit opportunities, comes great challenges
There is a drastic distinction between the nature of advertising done on digital platforms and the ones on OTT platforms. While the former offers brands flexibility to personalize advertising, the latter’s time constraints compel the brands to cut to the chase. An additional cherry on the top of the time constraint is the fact that not all streaming platforms allow brands to put out video advertisements. For example, Netflix is an ad-free platform.
Brands can only advertise to the 182 million-worldwide-subscriber base via product placements.
But some brands ace their strategies through these limitations.
Exhibit A: Subway.
When Netflix released an animated series titled, “Green Eggs and Ham”, Subway jumped on the bandwagon and added a fresh item on their menu: Green Eggs and Ham Sub (spinach-dyed eggs, sliced ham, guacamole, cheese). Instead of sticking to the generic trope where main-character-casually-takes-a-bite-from-a-strategically-positioned-sub-and-pretentiously-talks-about-the-dish-for-minutes, Subway takes it a notch further. It is a win-all situation because Netflix gets brand visibility, Subway gets new customers (probably from the fandom).
Let’s look at another giant in the OTT streaming industry: Amazon. Amazon offers OTT advertising across a number of platforms: Fire TV, IMDb, IMDb TV and other publishers.
All except its premium streaming service, Amazon Prime. But let’s talk about the limited advertising opportunities it does offer first.
Not only does it allow brands to use these OTT platforms to advertise, it also delivers performance metrics using both first-party and third-party measurement tools (including metrics like brand reach, brand lift, offline sales lift, and new-to-brand).
Which is just crazy. The impact for DTC brands by advertising on the select platforms available will be unparalleled. More importantly, if your DTC brand is not on a third-party retail website like Amazon, that’s not going to prevent you from advertising on their OTT platforms.
However, when it comes to sliding in a 30-second ad in the middle of an intense Jack Ryan episode, Amazon pulls back. Just like its competitor, Amazon Prime sticks to product placements.
Other OTT streaming platforms (like Hulu, Disney+, Hotstar, ZEE5) operate on a freemium model so premium (paid) users don’t get access to video advertisements.
These platforms have commercial spots available in their product and therefore, generate massive ad revenues. For Hulu, it made almost 2698.3 million dollars in just video advertising revenue in 2021. ZEE5, the second-biggest OTT platform in India, reported Rs. 902.8 crore in advertising revenue.
But like I have mentioned before, time constraint is a bridge brands have to learn to cross creatively. Barely 15-30 seconds are available for advertising on these streaming platforms so brands have to stand out from the noise of content. OTT is not linear and therefore the one-size-fits-all approach won’t work on OTT streaming platforms. DTC brands have to mimic the conversational approach they used on digital platforms and make the advertisements relevant and actionable.
Yes, it is difficult to include a CTA that propels your viewers to actually move forward with purchase decisions when you are interrupting a viewer’s experience.
But here’s the catch.
Users have multiple devices within their reach when they are watching something on OTT platforms and this is exactly what DTC brands need to capitalize on. Google is one touch away and the ad should compel the user to act on these instincts.
Theory is difficult to understand so here’s a 30-second ad by Modern Fertility (a company I am not obsessed with, I swear) that checks all the boxes of a relevant, actionable and conversational ad.
Is Netflix’s marketing formula a sure fit for DTC brands?
The reason DTC brands have emigrated from digital platforms to others is limited opportunities to stand out, to be visible, to remain remembered.
Sure, other streaming platforms let you play out 30-second ads to a selective segment of their audience but here’s why I think Netflix’s method ensures longevity.
I know, product placements are drab and instead of blending in with the content, almost stands as a road-block. When a viewer comes across a product placement scene, all that’s going through their brain is:
“Can I please get back to my show?”
To state the obvious, the brand is not even remotely what the viewer is thinking about.
But newer, more subtle and creative ways to land brand collaborations is what drives sales and is the stepping stone in building brand equity. DTC brands can clutch to OTT advertising and this will ideally generate far more revenue and subsequently, help greatly in customer retention.
Here, your potential user gets to actually try out the product, form a habit and as a plus-one, a relationship with your brand instead of just passively watching their favourite character consume it.
Netflix doesn’t trade in money; it trades in relationships. It approaches brands whose audience will love the content their audience loves and doesn’t price the brands it amasses.
And this is a deal DTC brands can definitely benefit immensely from.