The survival strategy of branded content in the over-the-top (OTT) environment: Eye-tracking and Q-methodology approach in digital product placement

Highlights

• How branded content may be adopted to succeed with the over-the-top market using digital product placement.

• A multiple research methodology comprising eye-tracking analysis and Q-methodology.

• The physically optimized places that would attract users’ visual attention.

• User centric perspective on branded content.

Abstract

The goal of this paper is to discuss how branded content may be adopted to succeed with the over-the-top (OTT) market using digital product placement (PPL). Analyzing the eye movements of 34 subjects with manipulated experimental materials we also examined their fundamental attitudes toward branded content using digital PPL in the OTT environment. In the first part of the experiment, eye-movements and fixation durations on our nine equally divided areas of interest (AOIs) were analyzed. In the second part, we used the Q-method to classify users’ underlying factors for the digital PPL into three types, namely pragmatism, conservatism, and rationalism. Despite intensive differences, there are some common attitudes among these three types with respect to regulations. Based on three research questions, our results recommend that both practitioners and researchers should identify the physically optimized places that would attract users’ visual attention based on their brand characteristics. At the same time, they should formulate psychological strategies whereby users are unable to recognize the intentional exposure of a particular brand or the brand becomes integral to the plot.

Introduction

With the advent of the cord-cutting over-the-top (OTT) services, many users have changed their consumption patterns of video content from television (TV) to mobile and tablet PCs. OTT refer to online streaming services that deliver video clips of various forms over the open, universal Internet through existing set-top boxes. In this environment, the traditional TV providers who had hitherto, enjoyed advertising revenues simply by owning broadcast channels, are placed on the crossroads of survival. In other words, the wall between mobile and TV is disappearing in the environment called the all-IP era. In fact, US subscribers of Netflix registered at 43,180 million people in the third quarter of 2015 (Zara, 2015). This number grew to 3340 million subscribers in the fourth quarter and recorded sales of approximately $ 4.9 billion. Netflix surpassed the number of subscribers and revenues of Home Box Office Inc. (HBO) in the same period (Jin, 2016).

Recently, the Netflix Chief Executive Officer (CEO), Reed Hastings, announced at the US Consumer Electronics Show (CES) 2016 that Netflix has significantly expanded their online streaming services from the existing 60 countries to more than 130 countries. In addition, Netflix has succeeded as the service that recommends the most appropriate content to subscribers based on cloud and big data. The current OTT services have high potential to develop with the convergence of different media and sophisticated big data technologies. The OTT has the potential to grow gradually into the favored service among ultra-high definition (UHD) broadcasting systems. It is generally agreed that the OTT would be the catalyst to change the paradigm of the future media industry to an environment in which consumers may watch desired content over the internet with different devices regardless of place or time. This is in line with the claim that the OTT services represent users’ ongoing shift in video content consumption pattern from the TV to mobile and Internet.

Based on this trend, Cheil Worldwide, the largest advertising agency in Korea, formed a partnership in 2015 with Mirriad, Britain’s digital advertising firm, to secure new product placement technologies, specifically digital PPL, that insert elements of product placement in pre-made videos using computer graphic technology. After advertisers select their preferred video and determine the exposure type, hours, and advertising size, the concerned products and brands are inserted into the video using computer graphic technology (Lim, 2015). This partnership between the two companies illustrates the importance of branded content in OTT services. Branded content is described as the fusion of advertising and entertainment into a marketing communications product that is integrated with the organization’s overall brand strategy and intended to be distributed as entertainment content of a highly branded quality (Horrigan, 2009).

The OTT is experiencing significant growth but its business models and interdisciplinary aspects are not well known. The intent of this paper is to discuss how branded content may be adopted to succeed with the OTT market using the digital PPL technology which allows brands to be digitally integrated into TV shows and music videos in the form of products, signage, videos and other branded assets. Specifically, this study employed a multiple research methodology comprising eye-tracking analysis and Q-method to investigate the effects of branded content in the OTT service. Through an empirical approach, this research explores the potential of branded content as a new revenue model of the OTT environment.