dive video

OMD Copyright 2015

Welcome to Dive Video, the third and final installment of the OMD Dive Series Trilogy. We started the DIVE Series in 2014, to investigate and demystify the biggest challenges facing the China marketers. In that spirit, we chose Social, Mobile and now Video.

China’s digital video market has evolved swiftly. CNNIC report for 2014 pegs digital video viewers at 461 million and is expected to cross 500 million this year. This has been complemented by sky rocketing ad spend on digital video—eMarketer forecasts it ill hit RMB 25 billion in 2015. The exponential growth of both users and ad spending have brought new challenges to all of us.

We found that current studies mainly focused at the superficial level on digital video: ad spend and time spent. However, as video becomes the main diet of entertainment across demographics, it was important to understand not only the consumers’ motivations and attitudes, but also how effective it is a medium.

We started this project last year hoping to unravel and interpret those mysteries. Our objective was to uncover the answers for all stakeholders—Advertisers, Video sites as well as Agencies. For this we used a two pronged research approach that leveraged proven and tested research methodologies with latest technology based (cookie and SDK) methods.

For the 1st phase we partnered with Admaster using tags for our client’s campaigns. This enabled us to map device, location as well as frequency of exposure. This is the first cross device study in China that measures

advertising effectiveness with real campaigns. It has given us and our clients real data to plan & optimize video campaigns across devices as well as guidance for online video sites on how to monetize their inventory.

For the second phase, our objective was to understand the consumer journey towards watching a video. What are the motivations, what are the barriers and more importantly what can an advertiser or video owner can do to influence it? Dive Video will also tell you consumers’ preference towards content, why shows become big and how niche video sites have an edge.

We are very grateful to our sponsors—Sohu, PPTV, Youku, Tudou and LeTV for their support for this initiative. We also owe our gratitude to our media partners who provided us with inventory for the research. Most importantly, our thanks go to our clients across OMG whose campaigns were part of this path breaking research. Lastly, I would commend our research partners: Mintel & Admaster for being part of Dive Video.

Dive Video will unravel all of the mysteries in the industry, clarifying the best way to use video for advertisers, video sites and agencies. It provides the roadmap for both those who are producing and promoting content as well as those advertising across different devices.

We are now proud to present our research: Dive Video. I hope you find Dive Video inspiring and useful in the next phase of improvement of Video marketing and advertising.

BHASKER JAISWALManaging Partner—Business Intelligence, OMD CHINAF

OREW

ORD

Thank you to our participating brands, sponsors and contributors.

SPONSORS CONTRIBUTORSBRANDS

5

Netizens spend 80 minutes a day watching online video67% of all internet users watch online video

Source: iMediaMatrix, CNNIC

6

The average number of online videos we watcha week13

Source: iResearch 2015

Digital adspend is shifting to video

38.6% 36.8%

25.2% 25.7%

20.0% 24.8%

0.9%0.8%

15.3% 11.9%

Q4 2012 Q4 20147

PAIDSEARCH

BANNERS

VIDEO

EMAIL

OTHERS

Source: Analysys International Enfodesk, “2015 China Digital Advertising Marketing Report” March 3 2015 via eMarketer

0

2,000

4,000

6,000

8,000

10,000

12,000

2007 2008 2009 2010 2011 2012 2013 2014

AD

SP

END

CN

Y M

illio

ns

Video Ad Spend

Adspend growth has exceeded expectations

8

We talk about online video a lot

9

But maybe we’re not asking the right questions

There are many challengesto doing online video “right”

10

CONTENT ADVERTISING

No tracking of competitors and limited postbuys

Data is not robust or does not exist

Vendors struggle to price online video inventory across devices

Limited understandingof differentiation of OTV channels

Little understanding of OTV consumer journey

No clear trendson what drives OTV viewership

2 prong approach

11

Using AdMaster’s tracking tags and SDK codes we tracked 17,500 consumers and measured their exposure to our ads, mapping them to device, location and OS. We then surveyed them to measure consumer response to advertising.

1ADVERTISINGTracking and Survey 2

CONTENTQualitative and Quantitative Study

Working with Mintel we conducted qualitative and quantitative research across Tiers 1-4, querying 2,300 consumers on their OTV watching habits

12

Online video is our

leisure activity of choice

Leisure time is equally spent offline and online, with lower tiers spending more time online

ONLINE

49%OFFLINE

51%

13

46%54% 52%48%

TIER 1 TIER 2

51%49%

TIER 3 & 4

Boredom is the great OTV trigger

14

34%

19%

7% 6% 5% 5% 5% 4% 4% 3%

REASONS FOR WATCHING OTV

15

When I’m free, I usually watch OTV to kill time, so I won’t be so bored.(Female/22/Shanghai)

BOREDOM

It’s impossible to have no work pressure. When my boss curses during a meeting, or when I'm not meeting business targets,I feel pressured and will watch OTV to relax.(Male/44/Shanghai)

PRESSURE

Watching OTV can broaden my world view, for example, I can see the overseas scenery I’ve never seen before.(Male/20/Zhongshan)

INFORMATION

The majority of our leisure timeis spent on OTV

16

17

Online video watching

is habitual

Most of us already know what we want to watch before we start

18

KNOW 69%

DON’T KNOW 31%

Our habits vary by device

19

KNOW

DON’TKNOW

71%

29%

64%

36%

53%

47%

74%

26%

We basically use the same device everywhere but home

But we still watch OTV most at home

21

We have our favourite apps

22

22%22%

15%8%7%

6%

Dominant players have the trifecta of loyalty, time spent and videos watched

23

PhoenixSina

Ku6

LeTV TudouSohu

PPTV

Tencent

iQiyi

Youku

-50

0

50

100

150

200

250

300

350

400

0% 10% 20% 30% 40% 50% 60%

WEE

KLY

TIM

E SP

ENT

LOYALTY

BUBBLE SIZE=VIDEOS WATCHED A WEEK

Habit and user experiencedrive our platform choice

24

41%consistently choose their favourite video platform above others because they “just got used to it”

6%

7%

9%

12%

13%

15%

15%

17%

17%

24%

32%

41%

Ability to upload my own clips

Clear interface and layout

Has exclusive rights for an OTV show

Easy to navigate

Has all kinds of programs

Has many of my favourite programs

Ability to download programs for later

Has much less ads

Regular updates for shows

High definition picture

Smooth playing

Just used to it

USER EXPERIENCECONTENT

Different sites attract audience for different reasons

25

Just get used to it

Smooth playing

High definition picture

Regular and timely updates for its programs

Much less ads

Tier 1 have far more sophisticated needsthan the lower tiers

26

TIER 1 TIER 2 TIER 3 & 4

Just get used to it

Smooth playing

High definition picture

Regular and timely update for its programs

Much less ads

Can download the program for later watch

It contains many my favourite OTV programs

Have all kinds of OTV programs

Easy to navigate

Have exclusivity right for OTV program

Clear interface and layout

Can upload my own video clips to the APP

Can make my own comments while watching OTV

Screen lock

27

Content

differentiatesniche players

People actually want a few key things from the online video content

35%33%

29%

26%

19%18%

16% 16% 16% 15%

12% 12%11%

7% 7%

28

Content people want isrelatively the same everywhere

29

Shows that pique our interest have a few core elements

30

Funny

A good story

New ThemeClose to real life

Celebrities

RunningMan

I'm a Singer

Happy Camp

Where are you goingDaddy?

Hua Qian Gu

But content isn’t a great differentiator

31

Niche players need to rely more on self produced content

32

YoukuiQiyi

TencentTudou

Baidu

Sohu

LeTV360 Video

PPTV

Sina Video

Bilibili

Ku6China Internet TV

Phoenix

Popcorn

60

80

100

120

140

160

180

200

220

240

0% 5% 10% 15% 20% 25%

IND

EX S

ELF

PR

OD

UC

ED C

ON

TEN

T A

S A

P

LATF

OR

M C

HO

ICE

DR

IVER

SITE WATCHED MOST OFTEN

33

Winning an audience for content

requires an offline-online approach

Offline and online play an important part in how we discover shows

34

41%37%

32% 32%

24%

16%

10%7% 6% 5% 5%

SOURCES YOU LEARN ABOUT OTV PROGRAMS

Different devices have different push media

35

Search

Friends

OOH ads

Friends

TV AdsTV Entertainment

Programs

Search

OTV Platform

Social media

Search

Social media

OTV Platform

However, positioning on an OTV platform is key when users don’t know what to watch

36

HOW DO YOU FIND OTV TITLES IF YOU DON’T KNOW WHAT TO WATCH?

Tier 1 non-deciders use morediverse ways to find content

37

38

Video ads

are effectivebut only in certain forms

OTV ads are preferred over a multitude of formats

39

MOST ATTRACTIVE AD FORMAT

24%23%

21%19%

18%

15%14%

13% 13%12%

11% 11%

7%6%

OTV ads also perform better than TV in many factors

40

RELEVANCE

TRUSTWORTHINESS

55% 45%

46% 54%

VARIETY 63% 37%

INTRUSIVENESS 60% 40%

VS.

TVOTV

But OTV ads are the number 1 cause of dissatisfaction for OTV platforms

41

0%

10%

20%

30%

40%

50%

60%

70%

80%

Fees Content UserExperience

Ads

Fees Content User Experience Ads

Too Many Ads52%Ads run for

too long24%

Too much repetition

24%

NEUTRALJust wait until its over

Mute the speakersRest my eyes

Watch the ad absentmindedly

Click on ad if it features interesting products

POSITIVE

Go to the bathroomDo something else

Just walk awayGrab some snacksMake a cup of tea

Have a quick smokeSwitch platforms

Open another websiteStart another OTV program

Play with mobile phone

NEGATIVE

Reactions to OTV ads are overwhelmingly negative

42

87%6%

7%

We distract ourselvesduring adbreaks

43

10%

13%

11%

Product Recall

58%

47% 47%

Ad Recall

The time we spend watchingmobile ads is the most effective

8%

13%13%

Purchase Intent

44

22%

26%29%

Brand Recall

PC Smartphone Tablet

CONSUMER RESPONSE TO ADVERTISING BY DEVICE

15s video ads outperform 30s adsacross all brand metrics

63%

25%

14%9%

48%

18%

5% 6%

Ad Recall Brand Recall Product Recall Purchase Intention

15s 30s

45

This is even more pronouncedon mobile devices

46

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

PC Smartphone Tablet

PURCHASE INTENT

15s 30s

0%

2%

4%

6%

8%

10%

12%

14%

16%

PC Smartphone Tablet

PRODUCT RECALL

15s 30s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1 2 3 to 5 6 to 10 11 to 15

AD RECALL

Increased frequency does notalways lead to uplift in recall

47

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1 2 3 to 5 6 to 10 11 to 15

BRAND RECALL

PC Smartphone Tablet

Nor does it drive increasein product recognition

48

0%

5%

10%

15%

20%

25%

1 2 3 to 5 6 to 10 11 to 15

PRODUCT RECALL

0%

5%

10%

15%

20%

25%

1 2 3-5 6-10 11-15

PURCHASE INTENT

PC Smartphone Tablet

49

Online video is our leisure activityof choice1Online video watching is habitual2Content differentiates niche players3Winning an audience for contentrequires an offline-online approach4Video ads are effective, but only in certain forms5

50

Implications for advertisersFrequency cappingis necessary for efficient campaigns1

Shorter ads have better ad, brand and product recall. Maximize OTV efficiency by utilizing 15 second ads

2 3Mobile (tablet and smartphone) is a key device for advertisers; promotional campaigns need heavy mobile support

4OTV ads still perform better than almost all other media. All digital campaigns should have a video element

Branded content needs support from outside theOTV ecosystem to ensure viewership; use search and social to bolster views

5

51

Implications for OTV platformsDevelop flexible monetization and pricing models for mobile ads to reflect consumer response to different devices, frequencies and length

1Promote OTV content off platforms, and ensure shows you want promoted have homepage visibility

2 3Niche players need to focus on delivering exclusive content and advertising it to break habitual viewing habits

4Improve user experience. It can still differentiate channels, especially amongst competitors within the same space

Ensure OTV-made content hitat least 3 of consumer content needs5

Much more

CONSUMER DEVICE

PREFERENCE DEEP DIVE

CONSUMER CONTENT

PREFERENCE BY DEVICE

CONTENT DISCOVERY BY TIER AND

DEVICE

ONLINE VIDEO AD RESPONSE

BY CATEGORY

ONLINE VIDEO AD RESPONSE

BY AUDIENCE

FULL USER

JOURNEY

Much more

CONTACT US

Jeanette Phang

Jeanette.Phang@omd.comDIRECTOR- BUSINESS INTELLIGENCE

Bhasker Jaiswal

Bhasker.Jaiswal@omd.comMANAGING PARTNER - BUSINESS

INTELLIGENCE

Alessandro Pang

Alessandro.Pang@omd.comDIRECTOR- BUSINESS INTELLIGENCE