The future of connected TV in Asia

In Asia Pacific, TV and movie revenues from OTT are expected to reach $48 billion by 2024, up from $21 billion recorded in 2018. According to reports, a $5 billion increase is expected in 2019 alone.

Due to the high internet bandwidth available, the majority of TV content in Asia is delivered OTT, with a number of large OTT players investing in the region. This includes the launch of HBO Go Asia and HOOQ, a streaming solution backed by Singtel.

Subscription video on demand (SVOD), where consumers have access to as much content as they want for a flat rate - such as Netflix -and transactional video on demand (TVOD), where consumers purchase content on a pay per view basis, is making way for ad-based video on demand (AVOD), which is growing in popularity in Asia, and will account for 52% of OTT revenue by 2024.

To ensure that AVOD continues to grow in Asia, brands need to take on a ‘less is more’ approach, to ensure that the advertising they are delivering drives engagement and keeps the consumer coming back for more. Smart advertisers will build AVOD plans into their overall media plans, ensure frequency capping of ads on AVOD, limit the number of ads during the ad break, and ensure that the better targeting promised by connected TV is delivered.

The right environment

The popularity of ad-funded video in Asia, where consumers remain happy to watch advertising in exchange for free content, is very different from the US and Europe, where we are starting to see an increase in the number of consumers willing to pay for an ad-free environment. With this in mind, ensuring that the creative is appropriate for the format is vital to the success of an advertising campaign.

Just because consumers are happy to watch advertising in exchange for content does not mean that they don't expect it to be relevant. It’s on the brand to ensure that they are optimizing ads based on the medium and audience. From there, they should be continuously measuring the effectiveness of their advertising, and make modifications where necessary. Identity resolution can help brands understand consumers’ preferences, so they are developing personalized ads that resonate with CTV viewers.

Avoiding repetition

This is one of the main flaws of the current model. Consumers are likely to see the same ad over and over again while streaming content, which can be extremely frustrating and ultimately runs the risk of disengaging the user. It’s also a waste of budget for the advertiser, and will negatively impact the ROI of ad spend. This can, of course, all be avoided by investing in an identity resolution solution for CTV devices which can limit the number of ads shown and provide better ad targeting.

Somewhat counterintuitively the benefit for marketers would likely increase if their ads were shown less. As AVOD take-up increases in Asia, marketers should take this opportunity to rethink how they are approaching VOD, and consider the best way of reaching their audience with the best return on investment. This may involve adjusting KPIs so the focus is not purely on the number of impressions earned, but instead focus on targeting and engagement.

A mobile first approach

By 2025, mobile penetration in Asia will reach 73%, with China expected to reach 89% smartphone adoption. Mobile is a hugely important device for consumers in the region and is one of the main ways that users will engage with video content. Netflix recently launched a mobile-only subscription tier in Malaysia, as it looks to tap into this important market.

With this in mind, businesses need to consider some of the challenges with streaming on a mobile device, including the variation in signal strength. As a result, many now offer the opportunity to temporarily download and store content so that it can be watched on the go. Despite the overall impressive internet coverage in the region, it’s important to offer this service so that consumers can access content on the go.

Asia offers slightly different opportunities for VOD businesses than other regions, driven by the difference in consumer behaviour. With consumers expecting to see advertising in exchange for video content, it’s important for brands to leverage this responsibly, and avoid bombarding consumers with repetitive messaging which could ultimately create negative brand sentiment... Instead, marketers should focus on creating an engaging environment, minimising the number of ads that are being served and instead focussing on quality targeting to reap the rewards of CTV advertising.

Abhay Doshi is SVP and head of APAC at Tapad.

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