VIDEO-ON-DEMAND. aamp. and the Consumer Advertising Experience. Summary Findings to Date of the Advanced Advertising Media Project
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1 VIDEO-ON-DEMAND and the Consumer Advertising Experience Summary Findings to Date of the Advanced Advertising Media Project aamp
2 aamp AAMP MISSION AND MEMBERS The Advanced Advertising Media Project (AAMP) is an industry-wide research initiative that brings together media industry stakeholders to test, measure and analyze the effectiveness of advertising within free video-on-demand () television programming. AAMP leverages the collective knowledge and expertise of agencies, advertisers, programmers and cable operators to shape dynamic advertising strategies and measurement that can help the industry to accelerate the monetization of content. 1
3 Findings Summary KEY FINDINGS is fundamentally a television experience, but with heightened attention and engagement compared to linear TV. Consumers accept advertising on. Today s consumers expect to see advertising on TV and related platforms, and its presence on is neither a surprise nor a barrier to enjoyment. Ad load on does not affect key measures, such as viewer enjoyment of the show, engagement with the advertising, brand recall, interest, and purchase intent. ads are equally effective and viewer engagement is equally strong across light, moderate and heavy (linear-style) ad loads. creates opportunities for different ad formats. offers a more engaging platform than linear TV. Consumers respond positively to longer-form, branded content (and potentially other ad formats) that recognize their heightened level of attention and engagement. 2
4 AAMP Initiative Summary MARKET TRENDS With time-shifted television viewing accelerating at an annual growth rate of 17.9 percent*, consumers are clearly expressing their viewing preferences. In parallel, this rate of change has prompted agencies, advertisers, programmers and cable providers to rethink historic advertising strategies and models. This continuing evolution of television viewing behavior was a driving factor behind the creation of the Advanced Advertising Media Project (AAMP) - an industry-wide research initiative to quantify the impact of advertising within on-demand television environments. AAMP harnesses the collective expertise of key advertising stakeholders to maintain the integrity of the consumer viewing experience and to accelerate the monetization of content. * Nielsen State of the Media TV report, March
5 AAMP Initiative Summary (cont.) Research Overview AAMP is a three-phased industry initiative designed to systematically test, reveal and apply the findings of each stage to inform the next, in order to create a progressive body of learning. THE THREE PHASES OF AAMP 1 Media Industry Insights qualitative analysis In-depth study establishing a baseline understanding of current industry perceptions of the challenges, opportunities and expectations for advertising on free (status: completed) 2 Consumer Video Lab quantitative analysis Laboratory consumer research to explore and measure viewers experiences when engaging with advertising in simulated and linear TV environments (status: completed) 3 Live Test market trial In-market test using insight and data gathered in the first two phases as a basis for a practical, live consumer trial of advertising (status: 2012) Summary Findings, In Context This AAMP report starts with a foundation of highlights from the Media Insights study, which set the stage for the Consumer Video Lab. The lab component, completed in September 2011, revealed new insight on consumers perceptions of advertising in television environments. These findings are being disclosed publicly for the first time as part of this report. 4
6 In Review: Top-line Findings from AAMP Phase I Media Insights: Key Themes Among Industry Stakeholders During the initial Media Insights survey phase, researchers conducted more than 20 in-depth interviews with senior media executives to gauge industry perceptions and opportunities related to dynamic advertising. The exhaustive survey covered such topics as the current perceptions of TV; the future of advanced TV; barriers to advertising adoption within ; and the prioritization of requirements of advertising. Key findings are summarized below; a more detailed version of the report can be downloaded from Findings 1 There remains a deeply held belief that major 2 affords an opportunity for advertisers to forge a growth for lies ahead. closer relationship with consumers in a highly engaging, focused viewing environment. It is way too hard [to sell and manage advertising]. But, we believe in it as a medium. offers the consumer the ability to It is funny, my team will moan and complain manipulate time, content and access, in ways I about it, but nobody wants to give it back to don t get to do in linear TV Now we are the television team, because we still believe it is talking about not CPM or impressions, but the future. going further into the relationship-building - ad sales executive, programmer process with the consumer. - senior marketing executive 3 Metrics that approach established measurement 4 tools already in use within the industry were identified as critical to helping advertisers understand the value of on-demand placements. If you can use existing metrics that everybody sort of accepts, but use them in a way that helps us understand and demonstrate what we want to show, I think you are better off. Any metric we have is always, in some way, a proxy for a real gain: Did we sell more Coca- Cola today? - research executive, programmer Full-scale research is required to gauge consumer awareness and usage of, as well as reactions to advertising in a context where little visibility exists today. I really want to understand how the consumer makes a distinction between linear TV, and their DVR. Is there any distinction? What is it that would give them that they are not getting now? - research director, TV network 5
7 AAMP Phase II Methodology AAMP Phase II: Study Design Phase II of AAMP represents one of the most comprehensive market research studies ever undertaken on. More than 1,000 consumers all likely targets for watched 30 minutes of television in a highly realistic context within sophisticated media labs in New York City and Los Angeles. A custom-built platform offered a choice of 19 television shows across the comedy, drama and reality genres from 11 networks. Aspects of the viewing experience were systematically varied across respondents, creating an experimental design that pinpointed the effects of: Platform (linear versus ) Fast-forward functionality (enabled versus disabled) Ad format (spots versus longer form, branded content) Ad load (light, moderate or heavy, defined as 3, 5.5 or 8* minutes of ads per 30 minutes of viewing time, respectively) Three main types of data were collected: Dial test data Collected second-by-second reactions using a custom-built dial application on a touchscreen phone given to each respondent, synched to a set-top box to log files for analysis Survey data Collected immediately after the respondent finished watching the show, with core metrics such as viewer enjoyment, ad recall, brand recall, purchase intent, and other measures of ad efficacy. In-depth interviews Conducted after the survey by experienced qualitative moderators with 30 respondents The design of the Phase II research is summarized on the following page. * Linear TV typically contains an eight-minute ad load per 30 minutes of programming. 6
8 AAMP Phase II Methodology Phase II Research Summary RECRUITMENT Screening Questions: Age, gender, ethnicity usage (all respondents used at least once a month) DVR usage Genres enjoyed Specific shows (from our list of 19) enjoyed LINEAR (CONTROL) F N = 200 N = 800 NON-DVR* DVR* FAST FWD DISABLED FAST FWD ENABLED N = 100 N = 100 N = 400 N = 400 LIGHT 1* LIGHT 2* LIGHT 1* LIGHT 2* MODERATE* HEAVY* MODERATE* HEAVY* N = 100/cell N = 100/cell 7
9 AAMP Phase II: Key Findings Acceptance of Advertising on One of the most fundamental questions in the industry has been: Will consumers accept advertising on the platform like they do on linear TV?. The AAMP Phase II research indicates the answer is a resounding yes. Dial test data shows that engagement on builds, even with the presence of advertising (Figure 1). On average, respondents watching with an ad load equivalent to that of linear TV were 11% more engaged with Segment 4 than they were with Segment 1 during a 30-minute TV show. Figure 1 Engagement SHOW SEGMENT 1 SHOW SEGMENT 2 SHOW SEGMENT 3 SHOW SEGMENT 4 (with Linear ad load) When asked unprompted, open-ended questions about their viewing experience in the post-viewing survey, most did not mention advertising as a factor that positively or negatively affected their lab TV experience. Only 18% of respondents commented on the ads in a negative way mainly because they didn t like the product, or the creative, or had seen a particular ad many times before. Only 6% expressed the unprompted opinion that there were too many ads. When specifically asked about the ads in, 9% said there were too many ads, while 10% commented that there were not too many ads. In general, positive comments about the advertising outweighed negative ones (Figure 2). Figure 2 w P OSITIVE 65% N EGATIVE 49% Good Ads, Funny, Interesting, Informative, Entertaining, Eye catching w Boring, Bad ads, Couldn t relate to them, Out of date, Don t like advertised products 8
10 AAMP Phase II: Key Findings Ad Load Does Not Impact Viewer Enjoyment As described above, engagement with programming averaged an 11% increase from Segment 1 to Segment 4. Importantly, this same increase exists for all three ad loads in, demonstrating that engagement is not affected by the size of the ad load (Figure 3). Figure 3 Engagement SHOW SEGMENT 1 SHOW SEGMENT 2 SHOW SEGMENT 3 SHOW SEGMENT 4 (Light ad load) (Moderate ad load) (Linear ad load) The survey data also shows that ad load does not affect viewer enjoyment, with consumers no more likely to say too many ads for an eight-minute linear ad load than for a three-minute light ad load (Figure 11% Figure 4 10% 12% 4). In addition, respondents in the heavier ad loads were no more likely to fast-forward through ads than those in the light ad load. (Light ad load) (Moderate ad load) (Linear ad load) While it is true that a very small minority of consumers rejects any amount of advertising, the vast majority has no issue with having an eight-minute linear ad load on. Ads are commonplace today, and their presence is neither a surprise nor an issue for consumers - provided ad loads do not exceed the perceived normal level of a standard linear-tv ad load. Everything has ads if there were 10 commercials in a break then it might make a difference. - male respondent 9
11 AAMP Phase II: Key Findings : TV, But Not as We Know It While is fundamentally a television experience, the act of selecting a show heightens viewers attention and engagement and creates a more personalized experience when compared to linear TV. For example, the dial testing data shows that for non-live programming, is consistently more engaging (Figure 5). Figure 5 Engagement SHOW SEGMENT 1 SHOW SEGMENT 2 SHOW SEGMENT 3 SHOW SEGMENT 4 (with Linear ad load) Linear TV Linear TV for this study was defined as 50% DVR and 50% live The qualitative, in-depth interviews reaffirmed the added feeling of control that provides viewers. Overall, offers viewers the choice they have come to expect from TV Everywhere type of video, coupled with the familiarity and comfort of the TV/living room environment.!0
12 AAMP Phase II: Key Findings Ad Load on Does Not Have an Impact on Ad Effectiveness Earlier data showed that viewer engagement with a TV show is not affected by ad load; similarly, ad load has no impact on the effectiveness of advertising. This is perhaps the most important finding from the AAMP Phase II study, and suggests an opportunity for utilizing full, linear-style inventories. Figure 6 Aided recall of any of the advertised brands 63% 58% 59% Not surprisingly, unaided ad recall is slightly higher for light ad loads. For aided recall, however, average scores for all ad loads are statistically the same, and consistent (Light ad load) (Moderate ad load) (Linear ad load) across all demographic sub-groups (Figure 6). Advertising in significantly and consistently increased purchase intent and interest in advertised brands, regardless of ad load, indicating no loss in ad efficacy at higher ad loads (Figure 7). Figure 7 Very interested in finding out more about advertised brand Would be first choice brand +3% POINTS +5% POINTS +5% POINTS +5% POINTS +4% POINTS +4% POINTS (Light ad load) (Moderate ad load) (Linear ad load) (Light ad load) (Moderate ad load) (Linear ad load) Charts show average uplift in % points for all advertised brands versus a control cell!1
13 AAMP Phase II: Key Findings Rewards Different Ad Formats Phase II of AAMP also explored different ad formats, revealing that 90-second spots can significantly increase interest in an advertised brand, relative to a comparable 30-second spot. Moreover, for, there is an interest premium reflecting heightened viewer engagement with the platform; a 90-second spot generates a 64% increase in the level of interest in the advertised brand, relative to linear TV (Figure 8). Figure 8 Percent of viewers very interested in finding out more about the advertised brand. Vs. :30 Spot on Vs. Linear TV 14% 28% 14% 23% :30 TV spot on :90 Branded Content on :90 Branded Content on Linear TV :90 Branded Content on On Light ad load (3 mins per 30) On Linear ad load (8 mins per 30) The in-depth interviews underscore how consumers increased engagement with makes them more attentive for advertisers bold enough to utilize nontraditional formats. Consumers believe advertisers should use this opportunity for innovation, to tell them something they didn t know or to reward their heightened level of attention. In short, the viewer sentiment is: You ve got me, now impress me. I expect to see different ads [on ] do something a little different as they know people don t want to watch (standard) ads. - female respondent!2
14 Closing Thoughts Conclusions As a result of the first two phases of AAMP, the media community is gaining greater clarity regarding the potential of advertising within programming. Based on the results of the Phase II media lab study, it is clear that the environment has a positive impact on the level of engagement and responsiveness of consumers across all ad loads, as well as their interest in new ad formats. The implications of these findings suggest that agencies, pay-tv operators and programming networks have an opportunity to leverage heavy, linear-tv ad loads in while advertisers may utilize new, longer-form creative approaches. AAMP will test these conclusions, and more, in a market trial in the first half of 2012.!3
15 Acknowledgements AAMP Research and Technology Partners Engagement Marketing Group AAMP Phase I Engagement Marketing Group (EMG) is an advisory firm of senior executives. Founded in 2006, EMG has expertise across consumer and market research, strategy development, database and cross platform measurement. Clients include leading companies in the digital services space, often in the early stages of development. About Ipsos OTX MediaCT AAMP Phase II Ipsos OTX MediaCT is the market research specialization within Ipsos, built to reach, engage and more effectively understand today s digitally driven consumer in the fast-moving media, content and technology space. Through custom and syndicated research, the company offers a complete view of today s evolving media and entertainment ecosystem, and the role played by new technology in driving change. About NDS AAMP technology partner NDS is a leading global provider of digital TV technology and advanced advertising solutions for the paytv industry with customers such as DIRECTV, Cox, Cablevision, Comcast and more than 70 other pay-tv companies worldwide. NDS has been a participant in AAMP from its inception. Leveraging its expertise in TV user experience and interface design, as well as STB software and applications, NDS provided the underlying media platform for the second phase of AAMP AAMP. All copyrights and logos are property of their respective owners. AAMPPII Published November 15, 2011!4
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