Why OTT Providers Should Give Data a Starring Role

To succeed in the long term, OTT providers need to acquire customers cost-effectively and maximize their monetization opportunities.

If you build it, they won't always come. With so many players entering the over-the-top (OTT) market, acquiring customers now takes more than great content. Often, it takes massive amounts of marketing dollars. But that’s not always the best business strategy. To succeed in the long term, OTT providers need to acquire customers cost-effectively and maximize their monetization opportunities.

This is where the creative use of data can help. Let’s take an OTT player like CBS All Access, which is currently using the premiere of the new show Star Trek: Discovery to drive signups. CBS knows that the audience for Discovery skews heavily male. So the marketing department is targeting U.S. males where they are—and this time of year that’s anywhere near an NFL game.

But many other marketers are also targeting males who watch football. It’s the place to be. The NFL is in full swing and the audience is fully engaged. As a result, third-party advertising platforms like Facebook and Google, among others, are currently charging more to companies that want to advertise to football fans. It’s a simple matter of supply and demand.

So OTT providers are stuck paying high rates to target the market they want, right? Not entirely. There are alternative audiences that a provider like CBS All Access can target—with less spend and greater success.

In the case of Star Trek: Discovery, CBS All Access can use third-party data (such as Ranker Insights data) to find other groups of potential fans and target them. For example, the data says that Star Trek enthusiasts also like the TV show The Man in the High Castle. They have an affinity for the director Mel Brooks and the singer Annie Lennox. Also they’re fans of anything to do with Frankenstein. So targeting these alternative audiences on, say, YouTube, can be much less expensive than simply going after NFL fans.

The same applies for HBO Go and its show Ballers. HBO could spend a lot of money by marketing to the broad NFL audience. Or it could target alternative audiences who aren’t already bombarded by ads—and who could be more receptive. Who are these alternative audiences? In the case of Ballers, Ranker Insight data tells us they’re people who like the actor Don Cheadle, the movie Inglorious Basterds and the video game Grand Theft Auto.

By using data to locate potential audience members outside of the obvious, OTT providers can better spend their marketing budgets and reach alternative viewers who are more likely to convert to customers at a lower acquisition cost.

But acquiring customers is only half the battle. Once they arrive, OTT platforms have to work hard to keep them. Again, data can help here.

Let’s look at Hulu, which recently attracted record sign-ups with its Emmy-award winning show The Handmaid’s Tale. Hulu’s average daily sign-ups have increased 98 % since the launch of the series, according to the Hollywood Reporter. The test for Hulu now is whether it can keep the momentum going.

Now that The Handmaid’s Tale has wrapped up its first season, will subscribers leave the service or will they continue and watch other shows on the platform? The answer depends on how well Hulu is able to leverage data to keep Handmaid viewers engaged. Once an OTT platform builds a customer base, it can keep them there by using metadata to surface other pieces of content that will interest the audience.

For instance, if a customer just watched a Will Farrell comedy, it makes obvious sense to recommend other content that features Farrell—or similar comedians. The goal for OTT providers should be to connect consumers to the programming and content that is most relevant to them at any given moment.

Sure, these kinds of recommendations seem obvious. But a lot of OTT providers are not using the data in their possession to surface relevant content. They may collect important metadata about viewing habits but they haven’t figured out how to activate it to make the full range of recommendations that can help them retain customers. They haven’t figured out that people who watch X on their platform also watch Y, but not Z.

In fact, some OTT platforms are still using expensive survey data to figure out who their audience is and what their preferences are. They’re actually mailing out surveys and asking their viewers to fill them out manually. This is crazy, especially when you consider that the data they need already resides on their platforms right under their nose.

Still, it’s not enough to know what viewers like. You also need to know why they like it. Take the HBO series Curb Your Enthusiasm. Not every fan of the show enjoys it for the same reason. Some like it because it’s a comedy. Others because they’ll watch just about anything on HBO. Yet others like it because it’s well-written. Or because it has A-list guest stars.

This is the holy grail: knowing why viewers like something is even more valuable than knowing what they like. Because once you know the reasons for their preference, you can precisely target those people with all sorts of other content that’s quite likely to appeal to them.

Here’s the point: by understanding different audience segments and their level of interest, marketers can spend less on those consumers who will see their content without prompting anyway, like hardcore fans of the Star Trek franchise, and more on alternative consumers who are persuadable.

In other words, once OTT providers truly understand their audiences, they can monetize them more effectively. This is a job that is increasingly important given the rise of programmatic advertising, which automates the decision-making process of media buying by targeting specific audiences and demographics. Programmatic ads are common in the digital realm but they are now expanding to TV advertising marketplaces, including OTT.

In essence, an OTT provider like CBS All Access can help a video game maker fine-tune its marketing efforts by targeting its latest game not just at 18-to-25-year-old men, but more specifically to men in that age category who also love Star Trek and Stephen King horror movies. OTT providers can generate higher revenues by helping the game maker identify this very specific audience and deliver ads only to people in that defined group.

In a highly competitive market, it’s the OTT providers that use data most effectively that will survive. They will gain increased revenue—and happier customers—by creating better entertainment experiences for their viewers and better monetization opportunities for their advertisers.