Streaming must innovate past the 30-second ad to help unlock its true potential

UK public broadcaster Channel 4 recently made a familiar vow: to become a digital-first media company by 2030.

Like many organizations, it spotted the generational shift happening as younger viewers migrate from traditional TV to streaming. But perhaps more rare, it isn’t just investing in a new website or developing snackable shows — it’s rethinking the advertising experience so that viewers (and advertisers) stay engaged.

In a recent trial with 15 brands testing new ad formats and placements, the broadcaster drove an 81% increase in brand recall when an ad appeared alone before a show and first in the middle of a program. Those experiments suggest small adjustments can bring big results, and there is room for growth in the quest to grab viewers’ attention.

Streaming has revolutionized how people watch, but many of the 15- and 30-second spots look just like the commercials that have dominated the TV landscape for decades. But innovative broadcasters, like Channel 4 and several in the U.S., are experimenting with more interactive and flexible ad formats that streaming allows. Not only is it driving better business results, but it has the potential to improve the ad experience for brands and consumers.

“Where I think we’re lacking and would like to see the biggest progress is being way more creative with the formats you’re able to do,” VML global CEO Jon Cook said on The Current Podcast. “There will be a streaming platform that will break that up and allow brands to tell stories in a unique way and create entertainment on their platforms that lives next to that, will be the platform that I will love. And that's what we're keeping our eye out for.”

To that end, Group M organized the “Ad Innovation Accelerator,” a working group composed of major players like Disney, NBCUniversal, Roku and YouTube, to crack the code on connected TV ad formats. The group will release its findings ahead of 2024 upfronts planning.

Advertisers across the industry are testing several ad formats beyond the standard 30 second spot – from shoppable TV and episode takeovers on Netflix and Max to gamification tactics like trivia.

When Walmart announced it would buy Vizio for $2.3 billion, the retail giant specifically highlighted the acquisition as a way to “connect with and serve its customers in new ways including innovative television” in the second sentence of its announcement.

And some brands pushing past the 30-second ad are having success. NBCUniversal’s senior vice president of commerce partnerships, advertising and partnerships, Evan Moore, recently told The Current that many advertisers using shoppable TV formats have seen 10-20% increases in on-site sales.

“More innovative solutions are going to yield better results for brands,” Scott Ensign, chief strategy officer at the independent agency Butler/Till tells The Current. “And I think once that happens, that will be the way that brands will migrate to one platform or another.”

Disney is one of those platforms exploring how improved ad formats can connect brands to their desired audiences. At CES, the media giant announced multiple innovations including a new tool that uses AI and machine learning to help brands tailor their ads to fit the mood of specific scenes in shows or movies on Disney+ and Hulu. This type of contextual advertising is another step towards personalizing messaging to the viewer.

“What that means is leaving broad demos behind and buying specific audiences,” Geoffrey Calabrese, Omnicom Media Group's chief investment officer told Reuters. “These magic words are literally going to be able to connect me to the emotions of the consumer, at an audience level. And for us, that's really a game changer.”

Disney is also launching its first shoppable ad format on Hulu (and soon Disney+). Its Gateway Shop will send users push notifications for items on their phones, with a focus on minimizing disruption to the viewing experience.

Getting more value out of ads

In short, industry leaders — from networks to agencies — are looking to simplify the experience for viewers and make it as easy as possible for them to engage with ads, and ultimately, make a purchase.

Viewers who grew up without ads on Netflix will likely have different expectations around their ad experience, which has implications for those rethinking ad formats and delivery. For instance, that could mean delivering fewer ads altogether that are of higher quality. Streaming has already standardized a huge shift in ad loads compared to traditional TV, with platforms offering 4-7 minutes of ads per hour, far less than 14-17 minutes on broadcast.

Using measurable data and more interactive ads can create a more actionable environment where these ads do more in less time, allowing platforms and advertisers to reap the returns they’re looking for. Integrating ads more as part of the experience rather than a break helps create a unified flow, Ensign believes. And from the viewer’s perspective, they can sit through fewer commercials that are not relevant to them so they can get back to their show.

“Hopefully in the next 2 [to] 5 years, our clients will buy fewer, more productive, more measurable ads,” Matt Sweeney, chief investment officer at GroupM U.S. said on a panel at CES. “That has to be where we’re going with this. We’re oversaturating the market with messages and so many of them are not helpful or not meaningful, not entertaining. They don’t get me closer to buying something.”

“The future is we're going to be paying higher CPMs because based on where everything is going with signal loss due to cookie deprecation, with privacy concerns, you are going to see fewer impression opportunities that have a higher value,” Ensign adds. “But in the future, brands will be happy to pay that. Agencies will be happy to pay that because it will be of a higher value.”

Super-charging brand awareness with performance

Performance has become a bigger key in the world of streaming, as it transitions more from a brand awareness play to something more measurable. Shoppable TV is possibly the most popular ad format that has risen over the last year, with Amazon, Roku and NBCUniversal as key players diving in. Whether products are bought through the remote on-screen or through a second screen, shoppable TV can work to let consumers cut through the noise so they can buy what they want right away.

“We're seeing a push towards lower funnel ad formats and people really starting to measure what's happening after the ad and not just awareness and brand awareness,” Jackie Paulino, chief product officer at Pixability, tells The Current. Pixability works with brands to optimize their CTV campaigns. “That's the direction I see 2024 going, is really incorporating more of those formats that can be easily measured and tracked. I think it will be a giant part of how we watch TV.”