connected TV

The Upfronts: Is the old ship slowly changing course?

October 9, 2020 13:54 Comments Off

Our US Business Director Victoria Potter explores how the Upfronts format might finally be changing – and why that’s good for advertisers.

How did the pandemic affect the Upfronts format?

A few months ago, I questioned in another of our ECI Thinks posts whether the pandemic would force through seismic changes in the Upfronts landscape. There has been a growing appetite for such changes in recent years, but it takes a lot to change the course of a huge, 60-year-old ship. Then the global coronavirus pandemic came along, and it seemed like the kind of storm that could expedite that change in direction: transforming consumers’ consumption priorities and their paths to purchase, and therefore affecting the media strategies of B2C brands.

But the change in direction didn’t happen as we anticipated. The Upfronts went ahead, and many advertisers bought their inventory. However, there are now indications emerging that some transformation is on the cards. Marketers are demanding changes to help them cope with the uncertain environment:

Increased flexibility: Advertisers feel more comfortable committing to longer-term deals if there is greater flexibility and more options available to them
More streaming: Many vendors managed to keep their revenue flat (rather than dropping) thanks to a shift in investment from linear to streaming. Streaming now accounts for one-third of ad dollars invested in TV.

Just a couple of weeks ago Marc Pritchard, Procter & Gamble’s Chief Brand Officer, declared that fundamental changes must happen, and must happen by next year. This is particularly important because P&G is such a key player in the Upfronts, and indeed has been a driver of the ‘FOMO’ (fear of missing out) that other advertisers experience, and which has been fundamental to the continued existence of the current format. Pritchard said the Upfronts are ‘inconvenient at best’ and that the system must change because ‘a level playing field means planning and negotiating when it fits the business – that’s calendar year for most.’

So, what exactly is behind the desire for change – and the apparently increased willingness of the Upfronts system to accommodate that change?

Timing

As Marc Pritchard observed, the Upfronts have long adhered to a schedule that suited the TV networks best, from October to September. Most advertisers work to a calendar-year agenda, so having to purchase TV inventory in a different schedule is disjointed. What’s more, the Upfronts format obliges advertisers to purchase inventory for almost a year away; as pandemic has laid bare, plans can change dramatically just a few months into the future. The old format was therefore driving inefficiency, with the purchase of too much inventory driving frequency and waste.

This year, however, was a buyers’ market, thanks to the deflation in media pricing (see our recent Inflation Report Update for more details) and a lack of content. Buyers could negotiate options that suited them more, forcing TV vendors to introduce more flexibility. Buyers were able to commit dollars by quarter, and to negotiate better conditions such as the ability to cancel a certain percentage in a larger window.

Traditionally, streaming and linear ads were sold in two separate packages, with the former offering more flexibility than the latter. However, vendors are increasingly selling the two as a combined package, again because of advertiser demand. This has resulted in less flexibility for streaming but more for linear – and that benefits most advertisers because the majority of investment is still in linear. It will be interesting to see if and how this changes in the coming years, as streaming becomes increasingly prominent.

Control

Linear TV used to be the foundation of any media plan for the larger advertisers, but TV budgets are now divided across a number of areas, including linear, streaming, programmatic and addressable. Committing spend so far in advance, as per the ‘old’ Upfronts format, limits the opportunity for advertisers and their agencies to adjust to the rapidly changing landscape and optimize their buys.

It’s no secret that the media landscape is fragmenting, and that the most effective ad campaigns are optimized across all channels. Buying advertising separately, at the Upfronts, NewFronts and the podcast upfronts means that optimization is more difficult to achieve. Merging them, as 39% of media buyers favor, would help them to better understand measurement and research across screens, which would intern improve performance. The IAB’s new CEO, David Cohen, pushed for this ‘coming together’ to happen over the summer.

Optimization and measurement are key factors in the combined linear and streaming packages that vendors are increasingly offering at the Upfronts. Viewership is changing dramatically, particularly this year as more and more consumers have subscribed to streaming platforms during lockdown, and this is leading to an increase in streaming dollars at the Upfronts. However, a recent Wall Street Journal article highlighted that measurement problems are holding back advertising in Connected TV. Keeping track of who is watching what, and where, as well as how many times they see the same ads, is becoming a source of frustration for advertisers seeking to move their dollars into the medium. Ad-supported streaming from the likes of Amazon.com and Roku is attracting more and more viewers, but a fragmented media-buying landscape can mean that viewers are hit repeatedly with the same ad. Ad inventory purchased from multiple sellers often shows up in the same ad break; the problem is exacerbated by the fact that there is a smaller pool of advertisers in streaming than in traditional TV. There is a lack of transparency on when and where ads run within streaming platforms and apps; while it is slowly improving, the situation is far from resolved and this is causing significant wastage for advertisers. We’ll be exploring this in more detail in an upcoming post on ECI Thinks.

So, what’s the bottom line?

Advertisers are demanding transparency and that their media buys work together to drive maximum efficiency and effectiveness. The old Upfronts format is without doubt in need of an update so that it aligns more closely with the current media landscape. Furthermore, the vendors have work to do to ensure that measurement is unified and keeps up with the pace of change. The times they are a-changin’, and the Upfronts need to change accordingly.

Image: Andrey_Popov / Shutterstock

Insights from day 2 of CES 2020

January 9, 2020 20:34 Comments Off

The momentum doesn’t slow for a second at CES! On day 2 in Las Vegas we were treated to a smorgasbord of innovation – some ready-to-go, some just conceptual, but almost all are exciting and will transform how we as consumers go about our everyday lives.

Hollywood meets Silicon Valley – but will it work?

We started the day by attending one of CES’ flagship corporate keynotes. This one was from Jeffrey Katzenberg, former Disney Chairman and founder of Dreamworks, and Meg Whitman, former President and CEO of eBay and Hewlett Packard. They were unveiling Quibi, their mobile entertainment platform which they have positioned as the sweetspot where Hollywood meets Silicon Valley; they underlined the collaborative aspect of the creative process, where content creators and engineers work hand-in-hand right from the start to drive innovation. Quibi offers viewers a ‘revolutionary’ video-streaming technology that delivers portrait and landscape video at the same time, and allows creators to take advantage of other mobile capabilities such as GPRS, time, camera and interactivity. All content is in ‘quick bites’ (hence ‘Quibi’) of 10 minutes or less – so that it can be consumed in those historically hard-to-reach moments on the go. This means super-short series episodes and splitting movies into ‘chapters’.

A lot of emphasis was placed on the opportunities that this platform represents for advertisers, especially the fact that it specifically targets the hard-to-reach millennial generation at a time when they are particularly hard to reach – on the go. Their low ad-load will also no doubt appeal to ad-weary generation Y. Quibi’s first-year advertising inventory, worth $150m, has sold out and they have many world-famous brands on their client roster, including AB InBev, Procter & Gamble, T-Mobile and PepsiCo; the latter was invited on stage to talk about the innovative, collaborative creative process and the brand-safe, brand appropriate environment.

Quibi is undoubtedly an innovative new streaming platform and the idea of creating short-form video content for the on-the-go generation is a good one, but some questions remain. In the age of the streaming wars, how will this young start-up fare against established competitors such as Disney, Netflix and Warner? And will viewers really want to keep flipping their phones while they are watching a show to get the full Quibi experience? Furthermore, with content costing on average $100,000 a minute to produce and with plans to deliver a huge amount of content, is the business model sustainable? Quibi launches in April – after that, time will tell.

A dose of futuristic technology

After Quibi’s talk we made our way up the Strip to the Las Vegas Convention Center, where the world’s leading future-facing brands showcase their innovations. The Center is mind-bogglingly huge with the footprint of many exhibitors’ ‘stalls’ matching that of a mansion. We made a beeline for Samsung’s space, eager to see for ourselves the products that they revealed in their keynote speech. There’s so much to say about Samsung’s contribution to CES that we will be posting a separate blog about it tomorrow, but suffice to say that their space was seriously futuristic and shakes up what the future of the home, the city and even of you (and me, and all of us) looks like.

It’s all about screens

Screens were a big area of innovation. Our eyes were drawn by LG’s undulating display of their OLED screens – and as we entered the LG space we were shown just how slender these screens are. There was also a roll down screen on display – similar to the roll-up screen showcased a few years ago and which is now available to buy. Meanwhile, Samsung displayed its enormous MicroLED screen called ‘The Wall’. MicroLED technology allows screens to be built at any size, and The Wall is truly huge, at 292 inches or 7.4m. Its sheer scale and extreme brightness and contrast meant that it was truly a sight to behold!

Flexible screens were another big talking point. Intel showcased its conceptual 17-inch foldable screen which works as a laptop or monitor, while Lenovo unveiled the ThinkPad X1 Fold. It seems inevitable that foldable screens will become far more commonplace over the next few years.

Tomorrow: Samsung deep dive

We’ll be posting a deeper dive into Samsung’s presence at CES tomorrow, including their keynote and seeing their innovations in action on the show floor. In the meantime, if you’d like to discuss anything at CES and how it affects marketers, please contact us on value@ecimm.com

Image: Alex Matthews

Insights from day 1 of CES 2020

01:33 Comments Off

Las Vegas, early January: it must be time for CES, time for 180,000 delegates to discover, quite literally, what the future holds. Alongside the famous show floor, where delegates can enjoy futuristic product demos from brands as diverse as Samsung, Nikon and Impossible Foods, there is a dazzling array of talks and discussions on a wide range of topics, from smart cities to health and fitness.

We spent our first day on the ‘Future of TV’ tract, a series of panel discussions and talks featuring brands, agencies and TV experts discussing what the future holds for TV, and what that means for advertisers.

A mantra for the new decade: progress before perfection

The day started with a session on ‘The New Frontier of Television’, with the Editor of Forbes’ CMO Network, Jenny Rooney, interviewing Deborah Wahl, Global CMO of General Motors, about what developments in TV mean for her brand. Deborah talked about how GM has reaped huge benefits from the rapidly changing TV landscape – their effectiveness has increased by 10% over just three month – and how they are embracing the change by getting their teams comfortable with learning and failing. She noted – as have many over the week – that failure is inevitable, but that’s ok. If everything you do is working all the time, then you’re not doing enough, because there’s so much out there to play with. Deborah’s mantra epitomises this mindset: progress before perfection.

Deborah also discussed how excited she is about the future of TV and how the huge amount of data available to advertisers now is helping creativity to become scientific. It’s delivering faster, better, more measurable results so that creative can be customised in almost real-time, creating content that is better for consumers – and therefore better for brands.

When CTV effectiveness is fully measurable and provable, ad dollars will shift quickly

Next up was a panel featuring Lynn Blashford of White Castle, Gustavo Alvarado of Activision and PepsiCo’s Kate Brady, facilitated by Innovid’s Stephanie Geno. The group discussed scaling success in connected TV (CTV), and started out by discussing what is holding brands back from CTV: it receives just 3% of media investment in the US, despite accounting for 30% of media consumption. The key reasons given were measurement, high CPMs, a lack of inventory and proven models from linear TV: investment in tradition TV has always led to an increase in sales, and it’s difficult to take money away from something that is proven to work. Brands are still looking for ways to illustrate success as clearly and quickly for digital devices and CTV so they can start shifting significant ad dollars to these platforms.

Kate Brady mentioned how her ultimate goal is to harness data from CTV to optimise activity on a weekly basis – and ideally even more frequently – ‘the more data we can have, and the better we can optimise, the more it will help us’. She emphasised the importance of using data to work out what resonates with one customer versus another, so that personalisation can drive brand love as well as ROI. Meanwhile, Gustavo Alvarado discussed how direct response hasn’t been a focus on how we buy TV, but the opportunity to ‘add to cart’ direct from a CTV ad would be a really exciting development for advertisers. However – he said that whatever the future holds, it must be measurable. Measurement is key.

What do the streaming wars mean for CMOs?

With the launch or imminent launch of streaming platforms from Disney, Apple, NBC and Warner, we were particularly excited about the next session, about what the streaming wars mean for CMOs. Innovid’s Tal Chalozin interviewed Rich Greenfield from LightShed Partners about how CMOs can best navigate this new landscape. Rich noted how numbers for live TV are down by double digit percentages, and even when we do watch live TV we are not as engaged as we used to be, particularly during ad breaks. That’s true even for live sport, the saving grace of linear TV. This is partly because the ad experience on traditional TV is not nearly as engaging for viewers as it is on, say, Instagram. TV advertising has not kept up with the internet and isn’t customisable or shareable. He went on to discuss how expensive channel bundles are and how they force consumers to pay for channels they are not interested in. This, combined with a frequently heavy ad load, sends consumers straight into the embrace of the streaming platforms which are cheaper, offer content that they actually want to watch, and allow them to watch it seamlessly across devices.

An interesting point that Rob raised was the fact that wealthier consumers are now effectively able to buy themselves out of advertising – so how do we reach them? The obvious answer is live sport, but there simply isn’t enough to satisfy the demand of the many brands for whom wealthier demographics are their target audience. It’s a question that has yet to be answered, but integration may be part of the solution.

Moving from creating ads to curating experiences

Next to take to the stage was the Chief Marketing and Communications Officer at Mastercard, Raja Rajamannar, in discussion with Innovid’s Beth-Ann Eason about Mastercard’s new approach to marketing. Raja started by emphasising that Mastercard now looks at consumers as people, for whom consumption is just a small part of their lives. What happens outside of that consumption – how they live their lives, their values, their passions – informs how and what they consume. People are bored of ads and care more about experiences than things, so Mastercard’s marketing strategy focuses on ‘nothing but curating experiences’, targeted in a highly effective way. Raja’s team divided people’s lives into 10 different passion points, such as music and food, and curated multi-sensory experiences at scale, with seamless and non-intrusive integration of the Mastercard brand. These experiences engage people completely and make them want to tell and spread the story of that experience – word of mouth for the 21^st century. This strategy and razor focus on experience has helped Mastercard to move from number 87 to number 12 in Kantar’s ranking of the top 100 most valuable brands, and to be named Interbrand’s fastest growing brand across all categories.

The future of linear TV in the US relies on NFL

Innovid’s ‘Future of TV’ tract was wrapped up by Luma’s inimitable Terry Kawaja, who took us on a rip-roaring ride through the stream wars and the future of TV. He pointed out that the streaming wars have created Nirvana for customers, who have more choice at less cost, and that the future for linear television in the US essentially rests in the hands of NFL. NFL contracts are up in the next few years, and the big tech companies such as Amazon are getting ready to swoop – Jeff Bezos himself has said that Amazon wants to use live sports to drive value for prime customers. The big problem for the linear TV companies? Those big tech companies have a lot more money, and global reach. In order to defend themselves, the broadcast networks are turning to scale consolidation, direct OTT distribution and CTV tech acquisition – but they need to do it quickly.

There are few losers in the future of TV

One of our favourite slides of the day was one that we shared on our LinkedIn page here. In it, Terry showed his audience the winners and losers of the streaming wars. For agencies, tech intermediaries, big tech, content creators and consumers the streaming wars are undoubtedly great news, while for media distributors it is less positive. Terry believed that for brands it could go either way, but in a subsequent panel discussion that he hosted with brand CMOs and TV experts, he revised his opinion and decreed that the age of streaming was in fact a great opportunity for brands!

An opportunity to bundle streaming service packages

Another key takeaway from Terry’s talk was his prediction that the myriad options available to consumers would in time open up an opportunity for an independent third party to re-aggregate the streaming platforms, bundling up their services in order to make them more manageable – and more affordable – for consumers. His prediction for who that third party could be? Apple – who could well want to position themselves at the top of the TV ‘waterfall’ in the same way that Amazon is for shopping and Google is for search.

More insights from #CES2020 tomorrow

Day one at CES was an incredible opportunity to hear from experts about their vision and predictions for the future of TV: if you would like to discuss anything you have read here in more depth with our experts then please get in touch. In tomorrow’s blog we’ll be covering the keynote from Jeffrey Katzenberg and Meg Whitman on their new mobile entertainment platform, Quibi, and bringing insights and innovation from the CES show floor.