Data: The beginning of a beautiful friendship

Data: The beginning of a beautiful friendship
Neal Romanek
August 24th 2016 at 2:22PM : By Neal Romanek

For Solomon Israel, VP of business development for TV & Media at Ericsson, says data doesn’t just boost relationships with consumers - the data is the relationship

One of the TV industry's biggest challenges today is finding new ways to present content to the consumer. The age of internet TV is a time where immersive, personalised and interactive video services are all pervasive and available through unprecedented connectivity.

Although we have the requisite analytical data to ascertain the depth of the consumer’s content library in a particular space, it is fundamentally important that service providers deliver highly targeted recommendations and services. It is a critical element in the overall user experience. Yet the greatest challenge is ensuring the data is both actionable and meaningful.

The needs of the consumer

Netflix is an interesting discussion point and I sometimes refer to them as the “tallest Pygmy in the room” as they are doing the best job based on the data that is available today. The service is proving popular because the consumer feels they are part of an audience of one, rather than one person in an audience of many. Netflix’s usage statistics demonstrate continued and increasing usage by individual subscribers attesting the value of what they do.

Nevertheless, if you peel the layers of the onion further back, what you realise is that consumers are ultimately dissatisfied. The 2015 Ericsson ConsumerLab TV and Media research found that consumers are still not surprised or delighted by the types of recommendations they receive. Looking more broadly at the industry, 50 percent of consumers cannot find anything to watch on linear TV at least once every day. That’s a startling statistic, particularly when you consider that many consumers can have access to up to 600 channels at any one time. But if the consumer does not know a particular piece of content is available to them, in their eyes it simply does not exist.

Advertisers will need to…deliver thousands of niche commercials, in order to make the most of the audience data available

Getting personalised

This offers a huge opportunity for service providers, particularly when you consider that they have a distinct competitive advantage over their OTT counterparts by being able to draw upon far deeper content catalogs and longer-held subscription bases. Ericsson ConsumerLab data shows that one in two consumers trust their current TV service provider to handle their personal data securely and responsibly. Furthermore, one in four TV/video consumers said they were open to providing personal data to get more accurate recommendations. However, this implicit agreement to divulge information around viewing habits is reliant upon receiving a tangible benefit, including cost efficiency and hyper-smart services that respond to moods and needs.

We are also seeing personalisation extended to the world of advertising and the overall monetisation of content. The value of content itself has changed. The consumer is only interested in content that is valuable and relevant to them, regardless of whether it has been endorsed by a broadcaster, network or a brand.

This is opening up an entirely different avenue for content providers to participate in the content creation process, with shorter production timeframes, and less investment required up front.

During INTX 2016 earlier this year, it was interesting to listen to Mark Greatrex, executive VP, Cox Communications, describe how his company has been working to a process where the content is personalised to develop a deeper bond with the consumer. The process starts over a 3-4 month period, and based upon their experience, the content is later customised further, based on feedback. This has ensured lower churn, higher customer satisfaction, greater numbers upgrading their service and a better overall user experience.

The Netflix approach

Ericsson ConsumerLab research highlights that 40 percent of consumers said the greatest influence in deciding what to watch on their broadcast TV service was the way in which they browsed through the titles in the TV guide within the service.

The key to success lies in using data to drive the organisation. For instance, in an interview with Gizmodo, Nick Nelson, Global Manager of Creative Services at Netflix, said: “Imagine having to tell your friend about the last movie you watched through a single drawing on the back of a playing card. If you had to encapsulate the entire movie into a few inches to convince your friend they’d love the movie, what would it look like?”

The company’s internal research found that if they were unable to capture a member’s attention within 90 seconds, they would mostly likely lose interest and move on to another activity. In fact, the human brain is reported to process images in as little as 13 milliseconds.

It’s through this process that having selected an initial dozen or so images associated with the content, Netflix can measure what viewers are watching, the click through rate and how specific imagery works across different screens or platform.

By accurately gauging viewer response in relation to its artwork, Netflix has been able to increase the number of hours its subscribers view content, as well as overall engagement. While they remain the tallest pygmy in the room, Netflix is succeeding by responding to consumer’s feedback in real time. They are offering a blueprint for the industry; concentrating on agility and leveraging analytics to understand how to present content to an array of devices, specific locations and most importantly, to the individuals watching their content.

(Netflix’s) internal research found that if they were unable to capture a member’s attention within 90 seconds, they would mostly likely lose interest and move on to another activity

Data in advertising content

AT INTX 2016, Neil Katz, VP and editor-in-chief, The Weather Channel, argued the advertising industry isn’t ready for additional data, as TV producers only make a limited number of commercials for a mass audience, despite knowing that there are thousands of different audience slices within that overall grouping.

In order to compete, advertisers will need to adopt similar techniques to content publishers by delivering thousands of niche commercials, in order to make the most of the audience data available. This requires a paradigm shift for an industry that is built around brands and agents. We need to design a mechanism that is steered away from purely the mass market and the number of eyeballs that watches something in prime time. If we can correlate advertising alongside the purchasing trends, the value of the advertising goes up dramatically, even if it is only resonating with a certain number of people. Distributors now have far more data than they realise. One example I often refer to is a personal experience that I had with Amazon Prime while renting a movie with my children. The movie stuttered throughout and proved to be a bad experience. Nevertheless, I then received an email proactively to acknowledge my bad experience and suddenly, they became my advocate having provided a refund and an apology.

Data first, strategy second

In short, our industry needs to focus on becoming data driven before devising specific strategies around it. The influx of data can then be used to validate these strategies and then be adapted, course corrected or refined further as required. That, of course, will require a fundamental change in the way advertising is measured and paid for. While consumers do not want service providers to over-intrude, highly personalized, relevant advertising is seen as a positive overall. It is absolutely critical to ensure there is associated value, having pinpointed the way each individual consumer is searching, interacting and purchasing video services. Ultimately, it comes down to responding to the disruption that is happening in the industry and that comes with a deep focus on the consumer.

That comes through analytics and the raw numbers that we see today but it also comes from the deep in-depth interviews that we can perform with individuals.

For instance, there has been a lot of discussion in the last few years about the cord-cutting trend, with many claiming it’s a cost-cutting exercise. During the compilation of Ericsson’s 2015 ConsumerLab TV and Media research, one of the individuals interviewed (who we dubbed ‘John the Cord Cutter’) said he was prepared to spend as much or perhaps even a little more than he did before – as long as he had a say on the bundle or selection of content that he was being provided.

For me, that says everything about the importance of control and empowerment. While the importance of cost is still a hugely important fact, it really does come down to listening and engaging with consumers in a far deeper and meaningful way.