It’s Time To Diversify Your D2C Monetization Strategy

For much of the media industry’s history, monetization techniques have been somewhat binary, with pay TV providers funding themselves through linear advertising and monthly subscription fees. This model remains popular today within pay TV and, to some extent, has been replicated within over-the-top (OTT) streaming services. The technology powering these monetization tactics has certainly come a long way in recent years. Ads are more relevant, and subscriptions are more flexible.

However, the rapid development of streaming technology has simultaneously brought a whole new mindset to how media companies monetize their content, particularly amid the wholesale shift towards direct-to-consumer (D2C) services. As a result, new hybrid business models are quickly emerging, which involve monetization through subscription, transaction, fan engagement and advertising.

Decision-Making In The World Of TV Advertising

Advertising-based streaming platforms currently dominate the market, with the four leading advertising video on demand (AVOD) platforms (Hulu, Peacock, Paramount+ and Tubi) drawing in $3.5 billion in advertising revenue in 2021, according to Kantar. Yet the TV advertising industry remains in a state of flux as broadcasters and operators weigh the most effective ad insertion models for both linear and non-linear viewing experiences.

A continuing conversation is the debate around the benefits and drawbacks of server-side ad insertion (SSAI) and client-side ad insertion (CSAI). Both options offer benefits and drawbacks depending on how the content is delivered and to which platform.

SSAI, for example, is an ideal candidate for scaling content to many users, yet it may present challenges with delivering highly targeted, low-latency live streaming. A great opportunity in CSAI lies in its ability to enable interactive content such as gaming and fantasy league services, multiple camera angles and live statistics, features with big advantages in the sports world.

The easy answer is to adopt both SSAI and CSAI since each model addresses a different challenge and delivers unique solutions. However, budget restrictions may prohibit the launch of SSAI and CSAI in tandem, calling for prioritization of which model to solve which use case.

The Streaming Opportunity

The use of data-driven analytics is propelling significant innovation in this space, enabling advertisers to have a greater understanding of who their audience is, their viewing history and habits and which ads they best respond to. This means advertisers can target specific messages or switch between multiple ad placements where relevant to the timing of the game.

Traditional linear advertising doesn’t afford this level of flexibility and personalization, instead focusing on push mechanisms that publicize content to as broad an audience as possible. But this is no longer a sustainable method for generating regular sales — advertisers simply cannot afford to cross their fingers and hope the message reaches the right audience.

A New Approach To Monetization

A new approach to next-generation advertising can also be seen in companion content that aids gamification. Major streaming services are experimenting heavily in the realms of interactive content and investing large amounts into gaming divisions to bolster their existing propositions. By including more gaming and interactive opportunities within streaming services, content owners can gain considerably more insights into their audience and can provide far more active and engaging experiences.

Incorporating Commerce

D2C services have soared in popularity and are established as a new means for consuming and distributing all types of media. However, these offerings could offer even more economic clout. A financially sustainable distribution and monetization strategy cannot be based on one approach alone. By diversifying a monetization strategy to include a whole breadth of approaches and features, broadcasters, content owners and service providers can create compelling, engaging, and economically viable services that exceed the expectations of their audiences.

Bob Waln is product manager, monetization at MediaKind.