The future of advertising models on premium OTT platforms

In the present day, paid subscription means ad-free content for viewers on premium OTT platforms, but will this revenue model sustain the digital content ecosystem or advertising would be a part of the paywalled world of content? We find out the resolution to this concern with industry experts.

In a fireside chat with Chanpreet Arora, Business Head, VOOT (AVOD), Viacom18 Digital Ventures, and Karthik Shankar, Head Of Digital Trading, GroupM explore what the future model of advertising on premium OTT platforms would look like.

Chanpreet shares that the growth of premium platforms during the pandemic has been recorded at a 49% increase in time spent on OTT platforms. Indian mobile internet consumed 4.6 hours of video as a daily average in the last year, which is the highest consumption rate in the world. India also holds 29 Mn paying subscribers.

Here we explore how advertising can fund and grow the INR 291 Bn digital Indian industry, through advertising on premium platforms.

The Future Model

Karthik dials back to the lineage of advertising and mentions earlier when consumers would purchase newspapers, or today when they pay for cable service, they still see ads, and this model has not changed.

He believes that users will adopt the platforms producing quality content, and advertising will be a part of the paid ecosystem as well. It started with Sports as a subscription category and moved to News, OTT, Audio, Video, and Commerce. He doesn't see subscription existing as a pure-play.

Chanpreet shares that Voot took a leap of faith with the launch of Big Boss with advertising on the show's live stream. But she adds that they're remaining cautious, being more relevant, and clubbing AdTech.

She reckons that the ideal ecosystem behind a paywall is still being explored in the industry but better quality content and more contextual ads, can cover the cost of content production and scale-up OTT platforms.

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Chanpreet adds that currently at an industry level there are two layers of subscription - ad-free subscription at a higher price model and ad-supported subscription at a lower-priced model. She shares that majority of the online content consumers in India may go for an ad-supported lower price model.

She adds that Linear to VOD has experienced a big explosion, where 66% of the boom has happened, age-gated and personalized content has transformed the industry.

The Structure Of The Future Model

Karthik states that different brands have different appetites for risk and developing a risk assessment framework that lists down investments, and content a brand would like to be associated with, can help structure the future model of advertising to paid subscribers, and investments would be sensitized.

Chanpreet mentions that premium OTT platforms are fighting for their fair share of the audience's attention and it wouldn't be fair to compare a placement in a premium platform to a CPM auction.

She shares that advertising on premium OTT platforms is different from other digital platforms. Although pricing is going to be competent, as brands want ROI, but as an alternative structure, there is a better way to manage pricing and reach a viable value where none of the partners lose money.

The Metrics On The Future Model

Chanpreet adds that defining a new language of measurement is also important, but brands should not compare ads to content. "Shows from the Viacom18 slate have an average of 52% completion rate, with 80% completion rate being some of the highest, and instead of looking at it as a performance medium, brands should focus on intent creation," she adds.

She shares that advertising can grow through direct loyalty and investment of viewers, various models can cater to various concerns, such as a model focussing on a deeper relation with advertisers, another focussing on the advertiser and audience relationship.

Brand integration at the content level and inventory play can solve a problem for advertisers, and entertain the audience.

Chanpreet Arora, Business Head, VOOT (AVOD), Viacom18 Digital Ventures

Chanpreet Arora, Business Head, VOOT (AVOD), Viacom18 Digital Ventures, and Karthik Shankar, Head Of Digital Trading, GroupM shared their thoughts at the Voot Presents India's Best Marketers & Planners Summit.