How streaming impacts digital advertising and consumer entertainment

Streaming opens up new marketing avenues and revenue potential and is reshaping consumer entertainment in the process.

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As the number of cord cutters continues to grow, brands and advertisers are shifting their efforts to follow consumers to streaming platforms, reshaping digital advertising and consumer entertainment in the process.

With more than 200 such platforms in existence, advertisers have more options to run their messages than ever before. This potential ad revenue could determine who survives the streaming wars.

SEE: Quick glossary: Streaming video (Tech Pro Research)

Reshaping digital advertising

I spoke with Dr. Stefan Birrer, co-founder and CEO of real-time streaming solution Phenix about how streaming is impacting viewing media.

Scott Matteson: How is streaming reshaping digital advertising?

Stefan Birrer: As the number of cord cutters continues to grow, and subscription revenue starts to wane, brands and advertisers are shifting their efforts to follow consumers eyeballs to streaming platforms to grow their advertising revenue. The numbers prove that live-streaming remains on the up and up--for instance, more than 2.5 million people streamed Super Bowl LIII, up 31% from the previous year.

Brands and advertisers recognize streaming is only increasing, especially for big live events, so they're evolving their business models to meet new demands, mediums, and formats. As a result, digital advertising is expected to account for half of the total global ad spend by 2020.

Scott Matteson: Does streaming take advantage of any new technology?

Stefan Birrer: To yield the biggest return from streaming-based advertising, brands need to tap into the modern consumers' mindset and understand the types of ads streamers and cord-cutters want to engage with and see. People are certainly not willing to sit through five back-to-back, full-length commercials anymore. Today's streamers are interested in interactive content options such as having the choice of what ad to watch, interactive real-time stats or having a quiz to play with and a prize to win.

Companies like YouTube implement these tactics, allowing consumers to sign up for services directly or receive informational e-mails from brands they're interested in, depending on their location. This desire for engagement should be positive for brands because it provides them with a more direct line of communication to audiences and a glimpse into their preferences and behaviors so that they can continue targeting them appropriately and distinctly.

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Scott Matteson: What challenges remain for advertising on live-streams?

Stefan Birrer: The remaining challenges of advertising on live-streaming platforms boils down to the current back-end technology. Right now, the common perception is that 'live' streamed content is the same as 'real-time,' but that's not the case - most streams suffer from latency, lasting anywhere from 10 to 90 seconds.

Going back to this year's Super Bowl stream, the most watched event of the year in the US, Phenix had a tester on-site at the stadium and measured the lag behind the action on the field to cable, over the air broadcast and satellite to various streaming platforms such as, the CBS Sports app, the Yahoo Sports app, and Results showed delays ranging from 28 seconds to nearly 47 seconds behind real-time.

Further, when comparing lag time for different viewers watching on the same platform, it showed they're extremely out of sync, with delays ranging from 69 seconds to more than 100 seconds apart from each other. We need to optimize the back-end experience to ensure that live-streams can support both speed and scale, not one or the other.

Scott Matteson: What challenges has streaming surmounted?

Stefan Birrer: As a whole, we're seeing picture quality improve. Quality and scale are the first two pieces of the puzzle that are on the road to being solved.

Reshaping sports

Scott Matteson: How is streaming reshaping sports?

Stefan Birrer: Streaming is completely revolutionizing sports consumption, providing a plethora of a la carte variety and access to more games and leagues than ever before. Platforms as diverse as Hulu, fuboTV, and Facebook all offer live sports. We're seeing a fundamental shift occur from traditional sports broadcasts to one filled by new platforms, social media, and a mobile-first, multi-screen strategy.

However, nearly three-quarters of sports fans recognize that streaming sports is challenging and unpredictable. They know there's a chance they'll see a tweet or push notification about the winning touchdown before it happens on their screen. It all circles back to the necessity of a real-time experience, which will have a substantial bottom-line impact on subscriber dollars, ad dollars, and more.

SEE: 5G mobile networks: A cheat sheet (TechRepublic)

The 5G factor

Scott Matteson: How does 5G factor in here?

Stefan Birrer: With the introduction of 5G, the general consumer will become more familiar with faster internet speeds, and this shift will push organizations to provide content at a heightened standard. The more people with good connections, the better for streaming. In reality, 5G is probably one to three years away from mass adoption.

In countries like Japan, however, that could happen sooner as it's a mandate from the government to have 5G implemented by the Tokyo Winter Olympics in February 2020.

Scott Matteson: What's the next step after 5G?

Stefan Birrer: It will be several years before 5G reaches critical mass worldwide--4G is still way behind in many regions of the world--so although there is always something new to be thought of, we are years away from 6G, 7G or even 8G.

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Image: Tero Vesalainen, Getty Images/iStockphoto