Some of the biggest problems facing the D2C industry today include short-timer bingeing consumers, being found, and increasing sign-ups. Here’s how three industry insiders think about the problems.
At the Videoscape conference from Mediatel in London on October the 10th 2018, I had the privilege of moderating a panel entitled How Direct-to-Consumer Changes the Distribution Business. The panelists talked a lot about some of the direct-to-consumer (D2C) industry’s biggest challenges. Here are some of their thoughts on how to cope with the problems.
Keeping service brand front-and-center
For big-name D2C services like Netflix and Amazon, remaining visible to consumers is not a big problem. Most connected TV devices preload the apps and give them a prominent place in the user experience. For smaller providers, their brand could be their biggest asset, according to Arlen Marmel, General Manager of VRV, Ellation:
“I don’t see a lot of people wearing Netflix T-shirts. There are a lot of people wearing Crunchyroll t-shirts, there are a lot of people wearing Formula 1 t-shirts, and other brands they care about deeply. We have to cultivate that. In a pull world, we have to work as diligently as we can to make sure these brands are long-standing and front-and-center for the consumer.”
Video services that identify with a well-defined niche can tap into the passion of the group to help others find the service. Branded merchandise, events, and shareable content are a great way to let the group display their passion and reinforce the value of the service to others in the group.
Short-timer bingeing subscribers
One problem faced by D2C providers is customers that sign up for a free video service, watch all the episodes of a show of interest, and then quit without paying for more than a month or two of service. The behavior is becoming an increasing problem for D2C services. Alexander von Woikowsky, Managing Director of 7TV, a German joint venture between Discovery and Prosiebensat.1, says he leans on multiple business models to help solve the problem:
“With the combination of different business models that we have in our service, we may lose the customer as a subscriber, but our ambition must be to keep him in the universe of our service. We can still keep him in the free world. Then, when we hit the right content for him again, we can upsell him to another pay service.”
In other words, a customer is still a customer even if they aren’t currently paying for service.
Conversions and effective marketing
An effective marketing plan is essential to help people find a D2C service. However, marketing doesn’t end once a consumer signs up for a free trial. What if your conversion rate, the number of people that sign-up compared to the number of people that trial the service, is very low? When I asked Dan Fahy, Vice President of Commercial and Content Distribution, at Viacom what the biggest challenge for D2C services was, he went straight to free-trial conversions and his suggested solution:
“Conversion from trial to paying, which drives your subscriber acquisition costs, which goes to your marketing effectiveness. Marketing is a big chunk of your D2C business, and if that’s not effective, it’s a struggle.”
Getting someone to use their free subscription is the best way to get them to stick around and start paying. Marketing is not only a critical tool in helping someone find a service. It is also essential in getting them to use it too!
Why it matters
A service’s brand is critical in helping a service be found.
Service providers must keep in mind that the customer relationship doesn’t end when a consumer stops paying.
Marketing is an essential tool with existing subscribers as well to bring in new customers.