Amazon will destroy traditional media unless it nails addressable TV, warns Starcom
Amazon’s subscription content service, Amazon Prime Video, will be in 30% of Australian homes within two years, and there’s not much time for legacy media and brands to get ready, Starcom has warned at its 2018 Media Futures launch.
The report said the media battleground of the future will be personal television, with Starcom national strategy director Graeme Wood noting: “If we don’t as an industry create an ad-funded addressable platform to compete, we’re going to lose all of that potential to deliver the power of TV, with the personal relevance of digital for good.”
Starcom’s Media Futures warns of the looming Amazon threat
There isn’t much time left to solve the problem, Wood warned.
“If you think that the impact of Netflix was disruptive, just wait ‘til Amazon Prime gets here. We think that Prime, the loyalty program, is going to be in 30% of households in under two years, which means Prime the video platform is going to be far, far higher-scale, higher-impact than it is at the moment,” he said.
Television may have the upper hand in creating emotions compared to other forms of advertising, he said, but it comes at a cost.
“The power of TV to create the emotions clearly remains undiminished,” he said.
“However, mass emotional power comes at a price of personal relevance.”
The only alternative is for TV to create an ad-funded addressable model to compete, he said.
“Now data-rich, personalised Netflix and Amazon certainly are – ad-funded, they are not.”
Amazon and Netflix may have data, but they aren’t ad-funded: Starcom
Starcom also flagged the ongoing issues with online advertising including its inability to elicit emotion and how late it appears in the customer buying journey.
“Three quarters of all online experiences in the [Starcom Media Futures] study were all on an active research or shopper mission. And of the ones to end in a purchase, nearly three quarters of them ended up buying the brand that was originally planned to buy,” Wood said at the 2018 Starcom Media Futures launch.
“So when addressable data is applied in online advertising, it’s acting mostly as navigation. And while removing friction, simplifying the journey, are positive, they’re really just meeting expectations, rather than creating very positive opportunities to leverage excitement, connection to others and discovering.”
Online advertising needs to learn from its offline counterparts in order to become more effective, he said.
“So we need to stop thinking in terms of channel, and apply far better full-funnel analysis to individual customer journeys in order to really scale the learnings of ROE [return on experience]. Whether that is creating more shopping-catalogue-like excitement in news feed ads, or more personally relevant opportunities in discover through email, in order to maximise our returns.”
See above comment in website space. Yeah I know
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Same old research, grounded in zero data.
NetFlix, Prime and many other non-ad funded streaming services have been in other developed markets for years. TV ad spend has not exactly fallen off a cliff in those markets.
Why does Starcom think Australia will be any different?
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Cliff? No, but fair to say an relative decline in TV spend in those markets over time? Digital (for the first time) beat TV ad spend in the US in 2017. Doubtful there’s near future where time spent on netflix/prime decreases versus traditional, non-addressable, ad funded TV. Seems perfectly fair to plan for ways to reach these viewers spending increasingly more of their TV viewing time on non-ad funded TV?
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Yes, completely agree with your point. Streaming TV services will have a profound impact on TV consumption patterns and ad revenues overtime.
My problem is with the assertion in this report that Prime will be the death of TV. There is zero evidence to back it up. Not even any anecdotal evidence.
Asking the simple question of what local content does Prime have (answer not a lot) would tell the dimmest strategist that Prime is unlikely to be killing TV anytime soon.
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oh, yeah – definitely agree. “Destroy” in the headline is a bit of an overstatement
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