Tag Archive: streaming

  1. Advertising and media: key developments in 2021

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    2021 is finally here, its arrival gratefully welcomed by many across the world glad to turn their backs on a 2020 full of hardship and challenges.

    But we are still living with the coronavirus pandemic, and its impact has permanently transformed how brands and consumers interact. Stay-at-home orders for billions accelerated the digitization of our everyday lives, and brands have responded by ramping up the digital share of their marketing strategies.

    So, what developments will dominate in the year to come and what do they mean for advertisers?

    Point of sale will shift with consumption patterns

    2020 accelerated the digital revolution and forced brands to reconsider their priority advertising channels. Streaming and social advertising were obvious winners, while OOH and cinema have inevitably suffered because of their ‘out of home’ nature. But another less obvious victim is point of sale (POS). POS has always been an important channel for brands, convincing consumers as it does to make an impulse purchase or to make a last-minute decision in favour of one brand over another. The move online means that the power of this valuable opportunity to reach consumers at a critical time in the purchasing funnel has been diminished, and this is likely to have exacerbated the impact that the pandemic has had on sales. Many brands will be looking to shift their POS investment into alternative channels – and vendors such as Amazon will benefit, with their ability to reach consumers while they are in the ‘buying mood’, echoing the power of POS. In fact, all retailers with strong online sales capabilities will benefit, as retail – and therefore POS – increasingly moves online.

    Big Tech will face its big reckoning

    With so many people forced to stay at home, the services offered by the tech titans dominated another year: keeping in touch with Facebook, shopping with Amazon, collaborating with colleagues using Microsoft’s tools, and seeking entertainment via YouTube and streaming services. This inevitably sent their revenues soaring, with the big four each posting remarkable results whilst other companies floundered in the midst of a global recession. This dichotomy did not go unnoticed: it did nothing to quell suspicions that Big Tech is too powerful and that its monopoly on the marketplace is too large. They stand accused by lawmakers across the world that they have engaged in anti-competitive behaviour, using their power and scale to choke the ability of their smaller rivals to compete with them.

    2021 could be the year that Big Tech finally feels the ramifications of these accusations; regulatory authorities in the US, the EU, India and the UK are all clamping down on Big Tech in different ways. The EU has revealed the drafts of two digital services laws that would create a powerful apparatus to temper the power of Silicon Valley, complete with threats to break up companies that repeatedly engage in anti-competitive behaviour. Meanwhile, the federal government in the US has launched antitrust cases against Google and Facebook, accusing them of pursuing strategies to throttle competition.

    But it might not be these regulatory moves that pose the greatest threat to Big Tech. It could actually be its employees. The current employees of the Big Tech firms are becoming increasingly comfortable with expressing their concerns about their employers: in an internal poll, only 51% of Facebook employees said they believed the social network was having a positive impact on the world. The ‘badge post’ – a traditional farewell note for any departing Facebook employee – has been weaponised against the social network on a number of occasions in recent months, with one data scientist saying it was ‘embarrassing to work here’ thanks to the amount of hate speech on the platform. Meanwhile, more than 200 US Google employees have formed a union, the first group at a big tech company to do so as the industry faces a ‘reckoning over years of unchecked power’, and Google employees also recently protested over the departure of ethics researcher Timnit Gebru.

    For advertisers, this reckoning will likely lead to a wider dispersing of their digital ad dollars. Many are already asking their agencies to pull investment out of Facebook and direct it to other platforms such as TikTok, Snapchat and Pinterest, or even ad-supported streaming platforms, because they no longer trust Facebook enough to place 100% of their investment there. There is also a risk that consumers will react negatively to brands associating themselves too closely with the big tech companies – as we saw during the Facebook boycott in the summer of 2020. With trust in all the tech giants dissipating, it seems inevitable that this diversification trend will affect them as well – and that will be a good thing for the industry.

    TV will tip from linear to streaming

    Services such as Netflix, Amazon Prime and their newer competitors like Disney+ and Peacock have attracted new viewers in their millions in the past year – and ad dollars are following those eyeballs.

    At the US Upfronts, advertisers were increasingly demanding more streaming options as part of the packages they were purchasing, and vendors were obliging in an effort to offset losses incurred by the lack of live sport and investment from sectors hit hardest by the pandemic. Combined linear and streaming packages were common, and this focus on streaming by both vendors and buyers will likely tip the balance in streaming’s favour this year, particularly as restrictions seem set to be with us for the foreseeable future.

    US marketing executives say CTV already represents 18% of their advertising spend, with almost 39% of sports viewers watching live sports content through their CTV devices. This is significant because, up until recently, one of the key reasons to not cut the cord was due to live sports. As advertisers are increasingly including CTV into their mix, and cord-cutting is increasing, the need for measurement is amplified.

    Most people have probably heard about, or experienced, being inundated with the same ad over and over while watching a show on CTV. Not only is this frustrating, but it can also have the opposite to the desired effect: overserving ads can turn a potential customer off buying a product.

    For linear TV, it has been standard practice to measure certain quality KPIs to determine advertising effectiveness. We can tell where and when an ad runs – measuring the efficiency of daypart mix, competitive separation, double-spotting, to name a few – to ensure that the quality of the buy is delivering to set communication goals. Even with these measures in place, we too often see inefficient impression delivery, leaving valuable reach untapped.

    Within the CTV world, issues of measurement, management, and transparency are working to catch up. Even with frequency capping in place, it can be hard to implement, so a lot of waste is created. Some also speculate that, as usage of streaming increases, frequency will lessen due to more advertisers being present on the platform. While this may occur, it will still be important to have a bearing on where and when your ads run, and that frequency is being managed.

    With CTV’s share of media plans set to grow at an exponential rate in the coming years, more focus must be on measurement and reporting, to ensure that impressions are effectively building towards communication goals.

    Flexibility will be key

    2020 has shown that even the best-laid plans are not infallible. Which airline marketer, for example, put provisions in place for a pandemic that essentially shut down the travel industry?

    One of the many consequences was that the favoured model of large, long-term advertising commitments took a fatal blow, with a multitude of advertisers worst hit by the pandemic desperately trying to disentangle themselves from their advertising commitments. At the TV Upfronts in the US, flexibility was every advertiser’s number one priority, with cancellation options non-negotiable; as TV networks were desperate to bolster their bottom lines, buyers could negotiate options that suited them more, such as committing dollars by quarter, and the ability to cancel a certain percentage in a longer time frame. These must-haves are likely to remain in 2021 and beyond.

    The drive for flexibility to be able to better weather storms is likely to manifest in a gravitation towards media placements at the lower end of the sales funnel. These channels offer the flexibility to halt spending quickly, so advertisers are likely to choose programmatic spend rather than committing a fixed amount to a publisher, or social media channels as opposed to large, inflexible TV investments.

    Successful advertisers will be prepared, but agile

    The pandemic has accelerated change across the world, at a societal, economic and individual level, and we will be feeling its ramifications for many years to come. The most successful advertisers will be those who are prepared, but also agile: able to bend, rather than snap, in the face of inevitable change. In order to be prepared and flexible, a deep understanding of your media activity and how it can be optimized is essential.

    If you would like to discuss how to optimize your media performance in 2021 and beyond, please feel free to contact us:

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  2. The Upfronts: Is the old ship slowly changing course?

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    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 directiontransforming 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, 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

  3. AT&T’s digital advertising ambitions

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    Rumors have been swirling in recent weeks about AT&T’s plans to sell off parts of its business, and even whether it will pull out of its media play altogether. In recent years, it has purchased a number of companies – including, most famously, Time Warner – in order to become a major player in the digital advertising sphere. Pursuing a line of business outside its traditional telco remit has become increasingly important in order to ‘keep up’ with key competitors Verizon and Comcast, who have both expanded their offerings: Verizon invested in a fiber-optic network for high-speed internet, while Comcast has focused on bundling content, mobile, internet, cable and landline. AT&T’s proposition, on the other hand, was seen by many as somewhat antiquated; this could only be remedied by upping its technological capabilities through investment or acquisition. AT&T chose the acquisition of companies that would make it a major player in digital advertising. This, said new CEO John Stankey, would allow it to ‘compete with companies that are incredibly strong and capable, like the Googles, Amazons and Apples of the world – and so we’re playing big’.

    Rumors that DirecTV will be sold off

    AT&T started its journey into advertising with the acquisition of DirecTV for $49 billion in 2015; however, it made the purchase just as the TV market started to change dramatically and irrevocably. It was a time when the likes of Netflix and Amazon Prime started to make cord-cutting a viable option, and new live TV players like Hulu Live and YouTube TV have since made inroads into the appointment viewing arena. Subscription numbers have been falling, so it is perhaps unsurprising that AT&T is under pressure from shareholders to offload the unit, even though it is now reportedly worth less than half what AT&T paid for it.

    Digital advertising moves

    Having acquired a source of inventory for its digital advertising capabilities, AT&T then purchased AppNexus to serve as the foundation of Xandr, its programmatic marketplace for targeted TV and digital video advertising. To complete its digital advertising triumvirate, the telco giant famously acquired media titan Time Warner in 2018, giving it access to assets such as HBO, the newly launched streaming platform HBO Max, Warner Bros and CNN.

    Expanding digital capabilities

    So have these big purchases, which have left AT&T in a large amount of debt, paid off? AT&T’s rumored sale of DirecTV led to speculation that it was also seeking to offload Xandr (this was later dismissed by CFO John Stephens) and that led some to wonder if Warner Media (as Time Warner was rebranded) was also for the chop. As far as we know, AT&T is not entertaining these ideas at all; WarnerMedia is an important revenue-driver for the telco giant, and Xandr has recently partnered with the Dentsu Aegis Network (DAN) in Asia to create Dentsu Curate, which leverages Xandr’s tech platform to create a new programmatic supply solution. Xandr was struggling to make its product offering appealing as it was unable to pull together inventory from enough platforms to make it interesting to advertisers; the Dentsu move could help address this issue and increase Xandr’s reach. It will also be enhanced by the launch of HBO Max’s advertising-supported tier in 2021.

    Could bundling streaming services be part of AT&T’s future?

    With the uptick in the streaming wars at the start of this year, many consumers are likely wondering whether they want to pay for several subscriptions at once – the cost could start to look like the high cable costs that led to so many cutting the cord. AT&T’s ownership of WarnerMedia, particularly HBO Max, could make it a viable option to start ‘bundling’ streaming services. These streaming bundles could be used to incentivize consumers to stick with AT&T’s telco services and will, of course, create an even richer inventory list for Xandr – a win-win situation for AT&T.

     

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  4. The streaming wars part two: Pandemic

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    Until late 2019, Netflix was the undisputed king of the streaming sector. It had competitors, notably Amazon Prime, but its subscriber base, content catalog and accessibility were almost unrivalled. 2020 heralded the much-anticipated ‘streaming wars’, with many media companies such as Disney, NBCUniversal, ViacomCBS and AT&T releasing their own streaming services. The competition was always going to be fierce, and then coronavirus came along. The global pandemic forced billions of people indoors for weeks and months, and many turned to the streaming services – old and new – for entertainment. A lack of live sport also drove many fans into the arms of the streaming services.

    Strong Q2 performances

    The streaming platforms’ second-quarter results reflected the millions of new subscriptions, with particularly remarkable performances from Netflix and newcomer Disney+. For the big media companies, streaming performance was a bright spot in balance sheets dominated by bad news in the form of closed movie theaters, canceled sporting events and major advertisers slashing their TV budgets. But as the world slowly transitions into a post-pandemic landscape, can the streaming services maintain their success?

    Let’s start with a round-up of the major players’ performances over the last two quarters.

    Netflix

    Netflix had an incredible Q2, adding 10 million subscribers to end the first half of the year, to a total of 193 million subscribers across the world. That was on top of an unprecedented addition of 15.7 million subscribers in the first quarter of the year. However, Reed Hastings, Netflix’s co-CEO, warned that this kind of growth couldn’t last, suggesting that the pandemic had pulled subscriber growth into the first half of the year. He predicted that the platform would attract just 2.5 million new subscribers in the third quarter, a prediction which caused Netflix’s share price to plummet.

    Disney+

    Many argue that Disney+, The Walt Disney Company’s much-publicized on-demand streaming service, is the big success story of the pandemic. It is the biggest streaming launch on record, with a huge 10 million subscribers in the 24 hours following its launch, and more than 60 million subscribers by early August – four years ahead of their target of 60-90 million subscribers by 2024. This is particularly impressive given that they have yet to complete their global roll-out. Including Hulu and ESPN+, both of which it also owns, The Walt Disney Company’s streaming subscriptions now top 100 million.

    Peacock and HBO Max

    It is still early days for NBCUniversal’s Peacock, which is ad-supported, and AT&T’s HBO Max, which is the premium version of cable channel HBO. Peacock launched in the US in mid-July, and at the time of writing has attracted 10 million subscriptions – a third of its 2024 target. Meanwhile, HBO Max launched in late May and has grown the pool of HBO and HBO Max customers by 1.7 million in the first half of this year, to a total of 36.3 million subscribers. It is helping AT&T to mitigate the effects of cord-cutting, although there are signs that HBO subscribers don’t yet fully grasp what the new service offers, or how and why they should get it.

    Is brand-supported streaming the future?

    It is indubitable that the coronavirus pandemic has created extremely favourable market conditions for the streaming platforms, both new and established. But, as Reed Hastings said, it’s possible that it has simply pulled 2020’s – and possibly 2021’s – entire pool of new subscriptions into the first half of 2020. To date, the streaming companies have focused on the production of high-quality content to lure new subscriptions and maintain revenue. But content by itself isn’t enough – Quibi’s unsuccessful launch is testament to that – and, what’s more, supply far outstrips demand: consumers in the US subscribe to an average of three SVOD services. The streamers will need to find new ways to deliver increasing value to shareholders.

    There has been some concern amongst advertisers about the growth of ad-free streaming, but many industry players now agree that brand support seems almost inevitable. With ad dollars always wanting to follow eyeballs, there are potentially billions of ad dollars up for grabs. What’s more, the consumer data that the streamers own will be of huge value to advertisers, allowing the likes of Netflix and Disney+ to compete with that infamous tech duopoly, Facebook and Google. Horizon Media CEO Bill Koenigsberg told AdAge earlier this year, ‘if they [the streaming companies] go that way, if they will be able to allow us to unveil the walled gardens and provide data back, then that’s an enormous competitor to the Facebooks and Googles of the world in terms of the audiences these platforms are going to attract and our ability to engage with them’.

    The big streaming platforms have huge tech capabilities which will allow them to create new ad models, formats and partnerships to drive revenue. However, they will need to prioritise consumer experience – part of the appeal of the streaming platforms is the low ad load, or total lack thereof, particularly for US viewers who often sit through more than 15 minutes of ads per hour on primetime TV. Brand partnerships will need to enhance rather than disrupt the consumer’s experience.

    A key moment in streaming

    While the streaming sector has been one of the few winners of 2020, it is far from certain that this success will continue. As the world continues to emerge from lockdown, the economic ramifications of the pandemic are becoming clear. Many countries, including the US, are in recession and unemployment is rising dramatically. Consumers will be looking for ways to make savings and non-essentials such as streaming subscriptions may well be among the first thing to go, particularly as restrictions on other parts of life ease. Netflix, Disney+ and their competitors will need to work hard to retain consumers and maintain their profit.

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  5. TV in the time of coronavirus

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    Around a third of the world’s population has had their freedom of movement limited to a lesser or greater extent – these restrictions include recommended or mandatory social distancing, school closures and orders to work from home if at all possible. For the billions of people now spending the vast majority of their time at home, TV has become the primary source of entertainment and connection with the outside world. It is a trusted source of information and distraction, and even acts a social glue: it’s one of few things that we still have in common that isn’t the battle against the covid-19.

    TV is an industry that has seen huge change over the last few years: the pandemic will accelerate that change and, in some cases, even reshape it.

    People are watching more TV than ever

    It’s no surprise that TV viewing figures across the world have increased dramatically over the last few months. In the two-week period to March 29th, overall usage of TV among viewers aged 18-49 in the US increased by 25% year on year, compared to the same period in 2019. Streaming video on demand (SVOD) services have enjoyed similar gains: Netflix subscriptions are reportedly up 27%, Hulu’s are up 16% and Amazon’s 21% (according to NBC). In the UK, TV viewing grew by 17% year on year in the week commencing March 16th – and that was a week before lockdown restrictions were implemented. Meanwhile, Statista found that 43% of US adults are now more likely to watch movies from a streaming service, while 40% of adults are more likely to watch TV online.

    Primetime has shifted earlier as viewers turn to TV to alleviate boredom throughout the day. According to Conviva, daytime viewing jumped by nearly 40% in the week of 17th-23rd March, versus the week of 3rd to 9th March.

    A profound effect on advertisers

    Of course, the impact of coronavirus on brands has been profound: many are seeing decreased sales with customers unable to leave the house, and with financial concerns of their own affecting purchasing decisions. With decreased revenue, many advertisers have pulled back some of their advertising spend – American travel advertisers, for example, cut their spend by 50% in the first two weeks of March: that cut is likely to have increased significantly as more travel restrictions have been implemented in late March and in April.

    Advertisers are redirecting linear TV spend

    Sport is an incredibly important advertising opportunity for many brands, reaching as it does many hard-to-reach consumers, including young men. The fact that pretty much all live sports events have been cancelled or postponed for the next few months has left gaping holes in media plans and TV network revenues and has made premium audiences harder to reach. Advertisers are redirecting linear investment, particularly investment which had been targeted at sort, to other inventory controlled by the TV networks including digital inventory, as the latter attempt to make up for lost reach and hang on to ad revenue. However, brands are also increasingly redirecting linear TV spend to the streaming platforms, accelerating a trend that was already worrying the linear TV networks. It’s interesting to note that the streaming networks are unlikely to enjoy the same level of spend by advertiser as the linear TV networks do: ads on streaming platforms can be targeted to specific audience segments, allowing the advertisers to spend less money.

    With increased pressure on their bottom lines, particularly in light of an imminent recession, some brands may be tempted to remove their spend from TV and streaming altogether in favour of Google or Amazon, which are more likely to lead directly to product sales.

    Coronavirus will impact on all players in the TV industry

    The entire TV and streaming industry will be affected, but it’s likely that TV networks will suffer more than the streaming platforms, thanks in part to their reliance on live sport. Although TV viewing figures are up dramatically, this increased supply is being met with lower demand from advertisers, which is causing prices to decrease. Interestingly, when US network NBCUniversal announced that its viewing figures had increased sharply, it also shared that it would be cutting back on some of its advertising inventory in order to improve viewer experience. This is a laudable effort to stop prices plummeting, and is a trend we expect to see across the TV industry as a whole over the next months and years.

    A triple whammy of factors leading to a loss in ad revenue

    The loss of ad revenue will be a key implication of the coronavirus pandemic for the TV industry. The triple whammy of advertisers looking to make savings in their marketing budgets, a lack of live sports and the pause in production of new content leading to holes in programming, the outlook is fairly bleak, particularly for the traditional TV networks. The streaming services may fare better at least in the short term as advertisers shift their budgets to them from the traditional networks, but they will be equally affected by a lack of content down the line.

    The surge in subscriptions may be temporary

    While it seems so far that the lockdown has led to a surge in subscriptions, particularly for the streaming networks as mentioned above, the upward trend isn’t reliable. The coronavirus pandemic has caused huge increases in unemployment across the world: twinned with worries about a global recession, consumers may well be looking for ways to tighten their belts, and they might be willing to forego their streaming subscriptions, particularly when the lockdown is over and financial concerns kick in.

    Sports fans will resubscribe – but to which service?

    Whether or not they are concerned about money, sports fans in the US may also consider cancelling their pay-TV subscriptions while there is no live sport. They are likely to re-subscribe when sport returns, but could be tempted by the flexibility and lower prices of services such as YouTube and Hulu: this will be a true test of the theory that it is live sport that keeps people tethered to traditional TV.

    A lasting impact on traditional TV and the streaming platforms

    The coronavirus pandemic has accelerated and reshaped a transformation that was already happening to the TV and streaming industries. Some of the effects of the virus will undoubtedly be temporary – sport will return and advertisers will pay to reach the people that watch them – other effects, such as the shift towards the streaming platforms, will be more permanent.

    Image: Monkey Business Images/Shutterstock

  6. The streaming revolution: should marketers be worried about ad-free streaming?

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    The New York Times recently observed that Hollywood experiences a seismic shift every three decades or so. In the 1920s it was the shift from silent films to ones with sound, while in the 1950s it was the rise of broadcast television and the 1980s saw the cable boom.

    As we draw to the end of the 2010s, a new seismic shift is rapidly increasing its pace. The streaming revolution is upon us, and the big three of the entertainment industry – Disney, Warner Media and NBC Universal – have either recently launched their streaming services, or will do soon. On the whole this is great news for consumers, particularly wealthier ones, who have a huge amount of high-quality content and their fingertips, although it comes at a cost, of course. It is, however, less welcome for the traditional broadcasters and cable channels, who are seeing their viewer numbers decrease at an alarming rate. In the US there was a 5.4% decrease in cable subscribers in Q2 of this year.

    TV has for at least 70 years been at the heart of the advertising strategies of advertisers big and small around the world: where does this latest shift leave them? And should they be worried?

    Better content, more choice, no ads

    The modern consumer has more choice and control than at any other time in history, and they are more connected than ever: 50% of the US and UK populations have a connected TV, and that figure is expected to continue growing. These consumers are increasingly choosing to consume video content from the new streaming services over the more traditional broadcast channels. Why? There are two key reasons: the quality of the content available, and the fact that the majority of them are ad-free, so they can watch their favourite shows without interruption. A huge 60% of adults in the US were subscribed to a streaming service in 2019, while in 2018 Netflix use alone surpassed cable and satellite TV for the first time. With the glut of new streaming services – mostly ad-free – launching at the end of this year and the beginning of next, those figures will only increase.

    If it affects consumers, it affects advertisers

    As consumers leave traditional TV in their droves, advertisers are having to work out rapidly what it all means for them. Of course, if consumers are flocking to ad-free services, that makes reaching them much more difficult. This is particularly the case for wealthier consumers – a key target audience thanks to their buying power – who are more able to pay to rid their viewing experience of ads. The high-quality ad spots that do continue to reach large numbers of consumers – think live sport and of-the-moment experiences such as the Oscars – will increase in cost dramatically. Indeed, many TV media owners will be rethinking their inventory strategy and may well have fewer, higher impact ad spots for which advertisers pay a premium. This is also more likely to be acceptable for viewers as it will likely mean shorter ad spots with higher quality advertising.

    Advertisers must to an extent accept some of the responsibility for the migration to the ad-free services. Consumers are fleeing ads because they are all too often repetitive, irrelevant and uninteresting. If advertisers can transform their strategies and the quality of their advertising and targeting, consumers will be far more forgiving of an interruption of the programme they are watching.

    Technology will help: many traditional TV broadcasters are embracing technology in order to allow them to shift to programmatic, highly targeted buying, for example Sky’s AdSmart addressable offering which has rolled out across multiple markets over recent months. This will help increase relevance but, as we explore in this article, it’s not necessarily the answer for brands seeking mass reach – TV’s traditional USP.

    It all comes down to targeting

    Amid all the talk about the streaming revolution, there are many saying that it’s not over for TV. There are undoubtedly still many people watching scheduled TV; particularly for non-US audiences, local broadcasters have expertise in creating culturally and contextually relevant content that the mainly American streaming services aren’t yet doing. There is also the paradox of choice – with endless options available to them on the streaming services, there is evidence that many feel overwhelmed and gravitate back to traditional TV when they don’t know what to watch. And of course live events such as sporting fixtures will always attract viewers – although whether they remain on traditional broadcast TV remains to be seen.

    However, whether people are still watching scheduled TV or not misses the point. Effective advertising is all about targeting, and if a large proportion of your target audience is absent from a channel, targeting becomes far more complex. All Scat Porn Videos – Download Exclusive Scat Videos. Scat Blog WATCH ONLINE scat porn. The extremal collection of most rare scat videos on scatnude.com This is especially true as the future of the cookie looks increasingly uncertain: indeed, Google may follow the lead of other browsers and further restrict the use of third-party cookies on Chrome.

    The answer for marketers is, of course, to rethink, to innovate. Where do the new opportunities lie? Are there other channels and strategies that will deliver on your objectives, or will you need to increase your TV budget to secure those high-impact, high-quality spots? Creating, implementing and learning from a great media strategy will become ever more crucial as marketers strive to understand what works, and why.

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  7. What does TV fragmentation mean for US marketers?

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    ECI Media Management’s US Business Director, Victoria Potter, looks at the changing TV landscape and explores the ramifications.

    This week, eMarketer released an article stating that this year, there will be about a 3% decline in TV ad spend from 2018, and that trend shows no signs of slowing. By 2022, eMarketer is predicting that TV ad spend will drop below 25% of total us ad spending. Of particular interest is that, the typical “political year” bump that has been prevalent in previous years will not be as great in 2020, only accounting for about a 1% increase, followed by steady 1% decreases in the following years. Contributing to this decline is steady growth in cord cutters and ratings decline.

    Nielsen is showing steadily declining ratings over the past few years. In the desirable Prime daypart, C3 ratings have seen a 33% decrease from 2016 to present.  While ratings are declining, networks continue to show increases in pricing – with Nielsen reporting a 7% increase in spend during the same period. And, coming out of the latest Upfront, networks were seeing low-double digit increases, despite lower audiences.

    What does this mean for marketers? Linear TV still provides efficient reach build. However, the days of one-size-fits-all tentpole events are over, and not coming back. It is important to adjust the media mix to account for audience erosion and fragmentation.

    Connected TV increases

    Meanwhile, as we see Linear TV spend decreasing, another eMarketer report out this week predicts Connected TV spend will reach around $7 billion, a 38% increase vs. 2018, and projected spend of over $14 billion by 2023. Connected TV is defined as TVs, smart TVs and TVs hooked up to the internet via a set top box, game console or similar device.

    A reminder: the day is still 24 hours long

    The amount of new content available is staggering: Hollywood Reporter stated in June that 2019 was on track to top the 2018 year-long high of 495 scripted series. To add to the proliferation of streaming services already available (Netflix, Amazon, Hulu), this month sees the launch of Amazon TV Plus and Disney+, the latest, but not last, entries into the streaming world, with PeacockTV (Comcast/NBCU), and WarnerMedia (HBOMax) to follow next year. However, the day is still only 24 hours long, meaning that all the new content is vying for the same attention, creating more fragmentation. It leaves many asking – what will the new TV ecosystem look like? Subscription services are currently ad-free, but there’s a big question on how much of an appetite consumers have to create their own “bundles” with so many standalone options. While cord-cutting was once thought of as a money saver, it is now a trade-off between the channels in the cable bundle vs. a personally curated streaming bundle.

    How do we measure it all?

    With the myriad options available to advertisers and consumers alike, the question becomes – how do I evaluate my reach across platforms? Many companies are proposing their solutions, most recently Roku and Innovid, which launched a combined solution currently being tested by several Innovid and Roku clients.

    It can be difficult to navigate the changing video landscape – to determine the right balance between scale and targetability. Here is some advice from ECI Media Management’s experts:

    • Establish clear Reach and Frequency goals, and put in place a standard for measurement
    • Be clear about target(s) and ensure your agency is prioritizing goals when putting together plans; keep fragmentation in mind and make sure your media mix is broad enough to adequately reach the audience, building reach and not just frequency.
    • Ensure you account for transparency within your agency agreement, as more media dollars are allocated to principal agreements.
      • Most of these principal-based buying situations are done as a service to clients, offering flexibility. However, a lack of transparency requires a great deal of trust, as clients do not fully know where, or even when, their ads are running.

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  8. Is Netflix ready for the launch of rival platforms?

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    Make or break for Netflix

    A couple of weeks ago, Bank of America Merrill Lynch told clients that Netflix’s Q3 figures, out later today, would be ‘make or break’ for the streaming platform, and would indicate whether it would be able to effectively compete with new rival platforms from the likes of Disney and Apple. It’s been a difficult few months for Netflix – its share value has plummeted by nearly 30% in the last three months, and subscriber levels fell short of the company’s own guidance in Q2. Whether those subscriber levels have recovered will be of particular interest in the Q3 results – and investors will be looking for signals that they can retain that recovery as competitors launch their streaming platforms.

    Who are the competition?

    So what does the competition look like for Netflix? Apple and Disney are launching their streaming services next month: Apple TV+ on 1st November, and Disney Plus on 12th November in the US, Canada and the Netherlands, with other markets in the months afterwards. This makes strategic sense, particularly for Disney, as it can piggyback on the marketing for its big-budget holiday-season films, and Netflix has shown over the last few years that it gets its biggest viewership in the last couple of months of the year. WarnerMedia’s HBO Max and NBCUniversal’s streaming service will be launching in early 2020. So Netflix’s battle to keep its subscribers loyal – and grow its customer base – starts now. Convergence Research Group, which tracks the streaming industry, predicts that its 47% share of the streaming market in 2018 will decrease to 34% by 2022, as reported in an LA Times article.

    Original content will be increasingly important

    This decrease will in part be down to the fact that Netflix will be losing some of its most watched shows to its competitors: ‘Friends’, for example, will go to WarnerMedia’s streaming service in early 2020, while ‘The Office’ will be shown by NBCUniversal from January 2021. With adults spending only around 30% of the time they spend with Netflix watching Netflix Original content, it looks like this could have an effect on Netflix’s subscriber numbers.

    However, Bank of America Merrill Lynch told investors that he believes Netflix will have time to ramp up production of original content while its rivals work on building their subscriber bases. This will means that Netflix will need to continue its huge investment into original content – this year it is estimated to have spent around $16 billion dollars, and Pivotal Research Group estimates that this will have climbed to a giant $35 billion by 2025. This needs to be funded from somewhere and Netflix’s capacity to raise subscription fees – its fallback option to date – will be stymied by increased competition. Netflix could also consider increasing its debt, introducing ads, investing in innovation (such as the ‘Bandersnatch’ episode of ‘Black Mirror’, where viewers could choose what the main character did next), or harnessing the vast wealth of data they have on what people like to watch, and where.

    A core part of the streaming bundle?

    Netflix’s choppy year has made investors a little nervous, which is why so much rests on the figures that it is releasing today. But many think that things will be ok. Mark Mahaney, lead internet analyst at RBC Capital Markets, for example, told CNBC that most people will want to use more than one streaming service, and it’s likely that that will mean Netflix plus another – Netflix will be a core part of the bundle. He believes that Netflix has the scale advantage and better brand name, content, global distribution and partnerships than its competitors, which bodes well for the future. Time will tell!

    What does this mean for advertisers?

    TV is still a crucial medium for advertisers, but with viewers having more and more ad-free options from the new streaming platforms, it will become increasingly difficult to reach their hearts and minds. What’s more, they are likely to be less forgiving of higher ad loads on the ad-funded free-to-view channels. This means that the most effective media channels will likely become more expensive, and the wise ones may well have fewer, higher impact ad spots for which advertisers will pay a premium. Furthermore, the growth of addressable TV will allow for more targeted and therefore more engaging ads, and lower levels of rejection by the consumer.

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  9. How can vehicles like YouTube be made safe?

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    YouTube is embroiled in yet another brand safety scandal

    YouTube was recently beleaguered by yet another scandal involving brand safety. A Wired investigation revealed that many major advertisers, including Alfa Romeo, Grammerly and L’Oreal were featuring alongside videos that had widespread activity by paedophiles in the comments section. In response, brands such as AT&T, Disney, Nestle and Epic Games pulled their YouTube spend. This isn’t the first time that they’ve had to do this following a brand safety scandal: in early 2017, UK newspaper the Times revealed that brands were unwittingly funding terrorism by appearing next to extremist videos. Indeed, AT&T had only recently resumed its spend before pulling it again after this latest issue.

    It appears that media vendors continue to sell very poor-quality content, and buyers continue to purchase it – will anything change? How?

    Why is this happening?

    With their ads appearing alongside some of the most unsavoury content imaginable, you’d be forgiven for assuming that brands would turn their backs on YouTube permanently, or at least until they could be assured that it wouldn’t happen again. You could also be forgiven for thinking that tackling this matter would be top of vendors’ list of priorities, given that their business model is so dependent on advertising. So what’s going on?

    It’s all about the money

    The answer is, as it so often is, money. For vendors, the temptation to sell huge bundles of automated or semi-automated impressions can be too strong to pass up, while the sheer reach of those impressions is hard for advertisers to resist. The issue here is a lack of motivation on both sides to police content: brands could be doing more to monitor their campaigns, while vendors certainly have work to do around the content that appears on their platforms, and what advertising appears next to that content. The algorithm always goes where eyeballs go, which can lead to errors: for example, children’s videos often have high viewing figures, and children don’t tend to skip ads. The algorithm thinks this is fertile ground for an advertiser and promptly serves… an alcohol ad. This is especially likely if the child is looking at mum’s iPad and the brand is using demographic targeting. To be fair, Google has gone to significant effort to build tech that can track consumers across all devices, but that hasn’t stopped its targeting capabilities falling short, as the example above illustrates.

    In short, these scandals are happening because of an industry that continues to reward quantity rather than quality.

    So what can be done to improve brand safety?

    This is a difficult battle but it’s certainly one worth fighting as digital advertising becomes ever more prevalent and important. Responsibility lies with the platforms, of course – they must try much harder to make their content safer (not just for advertisers), and to prevent ads being served alongside potentially damaging content. But brands have work to do as well.

    Advertisers must be more careful about where their ads are being served, and what bundles they buy. There will always be a conflict between reach and relevance: while vendors and tech firms sell a dream of the automated purchasing of millions of hyper relevant, this is completely unrealistic, particularly in the short and medium terms.

    Using premium marketplaces

    One avenue that some savvy brands are pursuing in order to mitigate the risk of ads being served alongside ‘unsafe’ content is premium marketplaces, such as Google’s Preferred programme, private marketplaces and programmatic direct deals. These platforms give brands access to – at a premium price – inventory that is higher quality, brand safe and more relevant, in theory at least. However, these platforms are becoming increasingly crowded by concerned advertisers, and the packages often leave out high quality content. Alarmingly, there have even been instances where the packages have included content that has caused the brand safety scandals that brands are desperately seeking to avoid.

    Other formats are an option

    Of course, there are other options to the ‘traditional’ video ad: native advertising is not only safer, but also easier to target at the right audiences, so you get relevance and reach.

    Vendors must act too

    Of course, it goes without saying that the platforms themselves must really focus on weeding out inappropriate content, and on being stricter about which content can be monetised through ads. This might be controversial amongst content producers who rely on ad dollars for their income, but it will be critical to the success of the video platforms and avoidance of the scandals that have beset them in recent years.

    There’s no easy answer

    This is a complex issue which will take a lot of work from both brands and vendors to overcome; there’s no silver bullet. Google’s EMEA president even admitted that the tech giant may well never be able to guarantee 100% safety for brands. Advertisers will need to accept that they can’t have both huge reach and hyper relevance: greater relevance will come at a cost through programmes such as Google Preferred or private programmatic exchanges. Meanwhile, vendors must of course invest in tools and technology to make their content safe – for advertisers and viewers.

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  10. The reincarnation of audio

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    The last decade has seen a huge focus on digital and visual innovation in the advertising industry; but marketers and practitioners have always known the value of non-intrusive, highly accessible and limit-free advertising, which is why we are seeing a recent re-incarnation of audio for this generation.

    Divergence and evolution

    The audio marketplace has seen a divergence and then evolution from the standard radio format towards the podcast and music platforms, although radio still remains crucial. The beauty of these mediums for the advertiser is the ad: no blocking and no ‘peak-time’ engagement driving up prices.

    Demand for on-demand audio driven by commutes and smart speakers

    On-demand audio streams surpassed 400bn in 2017, compared to 252bn in 2016. Commuting times are rising as people seek more peaceful lives outside of cities, and rail commutes are on average 2 hours and 11 minutes: it’s no wonder that the demand for podcasts and other on-demand audio has risen so dramatically. Furthermore, smart speaker streaming helped to drive an 8% increase in the number of hours spent listening to digital broadcasts in 2018 versus 2017. The resurgence of audio should not go unnoticed.

    Is the marketplace ready for digital audio?

    Whilst the marketplace re-aligns with its audio roots, it is inevitable that there will be challenges for media planners, advertisers and auditors alike. The proliferation of streaming, smart devices and wifi has given consumers greater autonomy over their time and their method of consumption. Whilst this provides excellent opportunities for reach and brand awareness for advertisers, it begs the question: does the marketplace have the tools and devices ready to provide accountable and accurate tracking and analytics? Until these tools are standardised and harnessed across the market, it is likely the adoption of digital audio into media planning will remain consistent, but slow. Investment into this medium will be a lower priority until it can be demonstrated that digital audio outputs add strong, measurable value.

    Alongside this tracking and analytics issue, the industry will need to work out how to harness the increased quantity of data in order to drive further engagement with consumers. While digital audio attracts investment with an environment that is free of ad-blocking, it does create a transparency issue for the consumer-agency-platform owner relationship.

    An exciting future for audio

    The future of digital audio is an exciting one. The integration of programmatic audio is set to   propel audio back onto the main stage of advertising channels. Programmatic advances will increase campaign ROI, augment automation and decrease audio costs. The combination of these factors, alongside the accessibility and increase in the number of platforms will see marketers, advertisers and auditors being forced to become more innovative and dynamic in a format once seen to be traditional and static.

    All hail the return of audio: finally, our eyes will be given a rest from mobile screens!

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