How VOD/OTT services personalization helps retain customers

The COVID-19 pandemic changed lots of things, including TV viewing preferences. According to 2021 findings of StreamTVInsider, while 71% of US households still had TV subscriptions, 54% of people aged 18-34 didn’t have it, and 41% of newly moved-in renters did not subscribe to any linear TV service. And the share of cable TV keeps on falling.

Why so? Because the customer experience offered by VOD (Video On Demand) and OTT (Over The Top) platforms like Netflix, Amazon Prime, and Hulu is infinitely better. Due to video personalization, customers can watch only the content they want, which results in much higher engagement. But that’s only the tip of the iceberg.

Content personalization for VOD/OTT services means that customers are both more willing to continue watching despite the omnipresent ad pauses — and might also interact with these ads and buy the goods/services offered should they be relevant. But how to ensure the ads are relevant, meaning the right ads are shown to the right audience at the right time?

This is where video personalization came to the rescue once again. As a result, CTV advertisers saw a 21% YoY increase in conversions in 2022, which is a huge growth — but not the limit by far.

In this article, Perfsol breaks down the reasons behind the growth of VOD/OTT services' popularity and explains how video personalization helps fuel the process and how to build a working personalization for VOD/OTT services. This 5-minute read will get you from the basics to working advice on improving conversions for a VOD/OTT platform.

What is video personalization for OTT services?

OTT video personalization uses the subscribers’ viewing data and analytics to customize the content they are offered. As a result, viewers get relevant recommendations and engage more. This is absolutely essential to growing a loyal audience, and according to Microsoft, positive customer experience is the key driver of brand loyalty for as many as 96% of customers.

These analytics take into account factors like:

• Type of content consumed
• Discovery journey that led to watching the particular content
• Device used
• History of viewing for all the devices in every profile and other details.

This information also includes more traditional data on customers’ location, language preferences, demographics, and more. This also helps customize the homepage content — from general content language to the offers in the hero slider. As a result, even people within the same geographical location but speaking different languages can have their homepages tuned to their personal preferences (and remember the selection across all the used devices). That’s a big differentiating factor for multicultural and multilingual countries.

This is solid ground for building and maintaining subscribers' loyalty, as they usually switch to another VOD/OTT provider in less than 90 seconds if they have trouble finding what they want to watch. But while subscriptions are the mainstay of the OTT services, both these and VOD platforms still rely on ad budgets for butter and caviar.

Video personalization benefits for advertisers

VOD and OTT platforms build in-depth customer profiles to enable personalization. These profiles are a treasure trove for advertisers, as they reveal exactly what the viewer is interested in and allow them to spend ad budgets showing relevant ads to appropriate audiences.

For example, when users select the content types they are most interested in, this profiling helps advertisers better understand viewers’ ad preferences. This, in turn, results in more interactions with the ads. An important caveat is that with customers freely shifting between a smartphone, tablet, laptop, or smart TV, the purchase journey can be quite long — but must remain consistent across devices and content mediums to be successful.

The key here is the clear communication from CTV advertisers and OTT/VOD platforms that opt-in will enhance customer experience. Viewers will have to watch ads no matter what — but opting in ensures they watch the ads they might actually be interested in, which is a win-win for all the parties involved. No wonder CTV ad spending grew by nearly 40% in 2022 and will continue to do so.

With personalization benefits so evident, the question is not whether to use them. The question is how to use it most efficiently to stand out from the crowd and build a loyal — and paying — audience.

Data sources for content personalization for VOD/OTT services

It is important to note that data points used in analytics are split between explicit and implicit. Explicit are details provided by informed consent through actions like:

• History of watched content
• Watched in full
• Liked & shared
• Commented on (positively)
• Recommended to friends
• Marked as “watch later” and so on.

These actions are the backbone of user engagement analytics, but they cannot account for all the decision patterns viewers might exhibit. The implicit actions are no less critical:

• Determining the time of day with peak viewership for all types of content
• Connection to ongoing local events (sports games, festivals, exhibitions, etc.)
• Combining post-opt-in data from first-party and third-party points
• Performing real-time analytics and tracking behavioral patterns

By combining explicit and implicit action analysis, OTT operators can accurately predict what content a specific viewer cohort would like to watch next and what ads should be displayed within it. But to achieve this result, you need to overcome several challenges — both technical and behavioral.

Challenges with video personalization implementation

Naturally, running comprehensive real-time analytics and providing relevant content to various viewer groups is complex. At the very least, it requires a properly configured recommendation engine based on a well-trained AI algorithm. Making it possible requires an astute tech background coupled with in-depth business analysis expertise — a combination not easy to come by.

Second, we mentioned informed consent for a good reason. GDPR legislation has long been affecting content consumers in the US, Canada, EU, and EMEA. Both content servers and consumers are used to requesting — and providing — permission to store and process user data.

The original intent of GDPR was to stop the wave of unsolicited ad spam. GDPR informs viewers that the data they provide will be used to ensure better content — and ad — personalization for them. Now, the content providers can use the right language to articulate the value exchange and are more at ease with letting the users decide.

In turn, the users are more aware that their consent exists across devices, mobile apps, and platforms and expect a consistent customer experience, which drives a better consumption rate. As a result, the opt-in rates have actually gone up in recent years. Naturally, the pandemic heavily influenced the subscription rates, but these subscriptions were not canceled when the COVID limitations were removed.

Also, Google deprecating third-party cookies in early 2024 means advertisers won’t be able to use this long-serving instrument to track customers’ activity across multiple platforms. This makes hyper-personalized recommendation engines all the more important, as both ad servers and OTT/VOD platforms will have to use the data available to them to the max.

So, what should an implementation journey look like in this context?

Steps of building personalization for VOD/OTT services

To personalize VOD/OTT services, you must cover the entire customer journey, addressing all the interaction points to ensure the viewers get continuously better personalization the longer they use the service.

Homepage recommendations

Users actually spend a lot of time on the homepage — deciding what to watch next, reading comments, browsing through New Shows and Upcoming Releases, etc. It is prudent to ensure the platform’s homepage has Recently watched, Watch later, and You might like sections. 80% of Netflix consumption is attributed to its personalization and recommendation features.

Genre-based recommendations

Some users just feel like watching a good action movie or a drama. Having a shuffle that brings up a list of films in the selected category is helpful, as it shows the content in random order, so a viewer doesn’t have to scroll through pages of already watched movies.

Pre-populated playlists

Combining genres from opt-in options with the user’s personal watch history enables VOD/OTT platforms to provide playlists of movies from different genres, which can increase Click Through Rates, or CTR, by up to 80%.

Thumbnail personalization

Many movies come with specific posters and thumbnails based on the viewer’s country. Netflix uses different thumbnails to promote the same content to different demographics globally, catering to its audience’s cultural and behavioral preferences.

Personalized recommendations

This is where the mix of all the above yields unique playlists centered on a particular user. This way, content consumption can grow up to 110% compared to offering an unstructured mix of videos.

Personalized ads

Finally, when viewers watch the content that suits their expectations, they will be more content (pun intended) with watching the ads in full. Especially if these ads are relevant to the user’s current life situation (remember the watch history, user demographics, and sports or cultural events we mentioned earlier?)

This approach will strengthen brand loyalty and advocacy and help acquire and retain paying customers more efficiently. Why do we say that?

Why work with Perfsol?

We have firsthand solid expertise in building VOD and OTT services for our customers or helping other developers empower their projects. For example, we helped Minick.de grow into one of the leading German content integration providers; participated in developing Allego — the world’s first content enablement platform; and helped develop Riverside.fm — an excellent content recording, curation, and management platform for all content types.

With 30+ TV software development experts on board, Perfsol is proud to be one of the Top Plus Upwork Developers, Top B2B Service Companies in Ukraine on Clutch, and Top Software Developers on Goodfirms.

We are ready to deliver the same value to your projects. Contact us to discuss how to implement video personalization and more efficient advertising for your new or existing VOD/OTT platform.