Would You Shop on Netflix?

While "TV ads" might one day need a dedicated Wikipedia page for historical context, their current form still deeply influences people's lives.

Contrary to what you might think, this isn't about "live-stream shopping." This marketing strategy, based on social media logic, is fundamentally different from the advertising strategies developed during the television era. The key to live-stream shopping is attracting users to stay in the live room and convert to consumers. In contrast, TV ads aim to convert those who are already engaged.

This is a seemingly "slower" marketing channel in terms of pace, but one with great potential: interactive ads.

In the fiercely competitive streaming era, diversifying revenue streams may be the main battleground for streaming giants in the coming years. Leveraging algorithms, streaming giants, who can most accurately judge and predict viewer habits, have recognized the growth potential of "interactive ads" and started to tilt their business strategies in this direction.

So, the interesting question arises: this move will inevitably reshuffle current advertising methods, but where should we begin to understand it?

In the traditional sense, "interactive ads" were more about spreading information than converting sales. In the once capitalist-frenzied America, TV stations allowed merchants to include CTAs and voice prompts in ads, encouraging consumers to call the number on the screen to place orders. However, not only was this not very effective, but it also made the TV station unpopular among the public for a while.

But now, major streaming giants are not only embracing interactive ads but also hoping to provide a "seamless, integrated shopping experience," allowing viewers to easily click and complete purchases. These "shoppable ads" turn the streaming platform interface into a shopping cart, enabling viewers to directly purchase products they see on the screen. CPC (Cost Per Click) will undoubtedly become a key metric, establishing an intuitive cooperative model between streaming content and brand commercial needs.

In May of this year, Amazon announced upgrades to Prime Video's shoppable ad formats, including carousel ads and interactive ads that allow users to shop from a paused screen. Meanwhile, Warner Bros., Peacock, Disney+, and Roku (a streaming set-top box) are all making efforts to popularize "shoppable ads" on their dominant streaming interfaces.

Undeniably, streaming indeed occupies a significant part of people's lives. Statistics show that streaming occupies nearly 12 hours a week for Americans. Some analyses predict that by 2029, the number of subscribers to streaming platforms will approach 3 billion.

After some platforms started testing this ad format, others followed suit. Tech giants heard the call and joined in. Besides Amazon, with its own streaming service Prime Video, Google, Samsung, LG, and Meta are also trying to bring shoppable ad experiences to viewers through their own terminals, such as Google TV. Lisa Herdman, SVP at RPA, emphasized, "These tech giants not only have an audience size comparable to past TV audiences but also have multiple means to enhance product sales efficiency."

This move will be revolutionary for both electronic marketing and traditional offline marketing, creating an organically integrated way between "watching content" and "product advertising."

Imagine an already popular streaming show that naturally attracts viewers, and organically creating a "one-stop" shopping service within it. For instance, if you watch a morning food reality show or revisit the popular fashion drama "Emily in Paris" and like Emily's shoes, lipstick, or handbag, you could click on the screen to buy related or similar recommended products. This would be an unparalleled virtual shopping model combining experiential marketing and seamless shopping.

In today's leading content creation system, streaming giants and their backing investors, producers, broadcasters, and distribution industries, along with all their sub-industries, together form the world's largest "trend creators." Even trends on social media often have to give way to new Netflix dramas, Disney movies, reality shows, or Universal pop music.

When trend creators turn their attention back to themselves and explore more advertising revenue possibilities, it will change the advertising marketing ecosystem from within. Our current advertising channel market, dominated by tech companies (Google ads, social media ads), will face formidable competition. This could be good news for many brands. More advertising channels mean more choices, and the bidding price for single-channel ads will decrease accordingly.

At the same time, this move could change the content of future ads themselves. Deciding what kind of shows to place ads in, what kind of audience to face, and how to appear before them will involve considerations beyond just "eye-catching" elements, focusing more on the compatibility with the show itself and interaction with the audience. In other words, the content and form of ads may undergo significant changes.

Shoppable ads are still in their early stages. Herdman noted that shoppable ads work well for retailers, clothing brands, DTC products, and food delivery. However, the ideal programming/content for these ads remains unknown.

For instance, will people shop during dramatic moments in a show like "Game of Thrones"? They might, or they might not, but theoretically, both have the potential and allure to be worth testing. Conversely, reality TV shows and content, due to their lighter nature and different demographics, may seem more suitable for ad placement at first glance. Whether they will indeed perform as expected requires time to test.

Interactive streaming ads are blending entertainment and e-commerce innovatively. Major platforms now integrate shoppable ads, letting viewers purchase directly from their screens. Though still early, this trend promises to revolutionize ad interaction and online shopping. With ongoing refinements, the growth potential in the advertising industry is immense.

Naturality is passionate about elevating your ad strategy and boosting business development. Contact us today to learn more about effective digital advertising!