Tag Archive: TV

1. Is this the end of the entertainment mergers?

   May 27, 2021 16:54 Comments Off on Is this the end of the entertainment mergers?

   Last week, AT&T announced a $43 billion deal to combine its content unit, WarnerMedia, with factual TV network Discovery. The telecommunications giant will unwind its acquisition of Time Warner, which it renamed WarnerMedia, to create with Discovery a new media company that could be worth as much as $150 billion. The move is a sign that the huge conglomerates which resulted from a flurry of mergers just a few years ago are no longer big enough to contend with the major streaming giants Netflix and Disney. 

   What’s the context behind the deal?

   The much-discussed streaming wars are currently being won, by a large margin, by Netflix and Disney who both enjoyed significant growth during the pandemic. But even Disney is struggling to keep up with Netflix. Netflix has a huge 206 million subscribers and is still growing, albeit more slowly than Disney, which had 106.6 million subscribers as of early April. Netflix had a significant head start over the other streamers, and has a huge international footprint – crucial for continued sustainable growth in this competitive landscape. What’s more, Netflix is finally able to sustain itself financially, and no longer has to borrow money to fund its programming.  

   The American media conglomerates anticipated this situation, leading to a raft of mergers and acquisitions in recent years, such as Disney’s acquisition of Twenty-First Century Fox and AT&T’s purchases of DirecTV and, of course, Time Warner. These deals created huge entertainment companies, but the WarnerMedia/Discovery news suggests that even they are not big enough.  

   But the new company created by WarnerMedia and Discovery just might be. 

   Teaming up to win the streaming wars

   The Economist neatly summarised the four key things that a streaming service needs to compete successfully in the streaming wars: scale in the domestic market, high-quality content, a flexible balance sheet and the ability to expand globally. WarnerMedia’s HBO Max meets the first two criteria, but falls down on the third and fourth. Parent company AT&T’s financial woes made it difficult to keep up with Netflix in terms of programming spend, while the decision to licence content to foreign companies, such as Sky in the UK, means that its international footprint is very poor. The merger with Discovery will help WarnerMedia to address both of those problems: it will no longer be held back by AT&T’s revenue sheet, and Discovery+ already has a significant presence in Europe and India.  

   The resulting company will present a significant headache for the current winners Netflix, Disney and Amazon. WarnerMedia and Discovery’s combined content library will be huge and diverse: it will include HBO’s critically acclaimed dramas, Warner Bros’ blockbuster films, Discovery’s unscripted shows and a variety of sport and live news services. It will be very interesting to watch how the company unfolds. Will they merge their streaming services, creating a ‘one-stop shop’ that would compare favourably to Netflix but would undoubtedly have a high price point (HBO Max currently charges $15 a month, significantly more than competitors)? Or will they ‘bundle’ existing services and new ones for a discounted subscription price? 

   An admission of failure by AT&T

   The merger between WarnerMedia and Discovery is a de facto admission by AT&T that its foray into entertainment has failed. When it acquired Time Warner, which it renamed WarnerMedia, just a year after its purchase of satellite service provider DirecTV, the plan was to vertically integrate the businesses of content creation and content distribution – but that plan has been shelved. AT&T’s CEO John Stankey said that the telco giant lacked the global reach necessary to build a successful streaming business that could match the likes of Netflix and Disney. DirecTV will be sold to TPG. 

   What does this mean for advertisers?

   The question on every advertiser’s lips is ‘how many unique individuals can I reach through as few companies as possible?’. By merging, WarnerMedia and Discovery may provide the most convincing answer yet to this question. They will aggregate more inventory than the separate companies already do, and will provide advertisers with a huge, diverse audience. This will put them in a very strong position, particularly as Netflix does not currently host any advertising on its platform. 

   Interestingly, however, WarnerMedia’s ad tech arm, Xandr, is not part of the merger, and will remain under AT&T’s ownership. This is likely because it would take a lot of time, effort and money to disentangle Xandr from AT&T’s customer data, but given the importance of targeting and measurement in TV and streaming, and of mining media companies’ first-party data, it is would certainly be an advantage for WarnerMedia/Discovery to have its own tech stack. 

   A scramble to create more mergers

   With the streaming landscape now dominated by three giants – Netflix, Disney and now the company formed by WarnerMedia and Discovery – the rest of the industry is now scrambling to form mergers of their own. One of the most significant is Amazon’s purchase of Hollywood studio MGM, confirmed this week for a price of $8.45 billion. The deal will bolster Amazon’s TV and film library for its Prime Video service, and the jewel in MGM’s crown, the James Bond franchise, will help Amazon to compete in the streaming wars, even though it will only own 50% of 007. 

   AppleTV+ is yet to take off, despite giving away a huge number of free subscriptions – more than 60% of its 40 million users are thought to be on a free trial. However, it does of course have plenty of money to spend on acquiring another media company if it chooses to do so.  

   The other giants of American entertainment, NBCUniversal and ViacomCBS, themselves the products of huge mergers a few years ago, have found themselves in a difficult position. The very fact that WarnerMedia and Discovery have decided to merge is a sign that even NBCUniversal and ViacomCBS aren’t big enough to compete with Disney and Netflix. The problem? There isn’t really anyone left for them to merge with. They have too much competing content to merge with each other and anyway, the Federal Communications Commission prohibits such a move. That is unlikely to change given the current White House’s stance on antitrust. They could purchase smaller media companies, but this wouldn’t give them the global scale they need. 

   The race to grow and consolidate audiences continues

   As the world opens up again after the pandemic, people will be spending less time in front of their televisions. Many may decide to unsubscribe from some of their streaming services as TV no longer plays quite such a central role in their entertainment schedules. The race to grow and consolidate audiences – and therefore advertising dollars – continues, and the company resulting from the WarnerMedia/Discovery merger will be well-positioned to catch up with the current leaders. 

   Header image: atk work / Shutterstock

2. Will the coronavirus pandemic drive seismic changes to the Upfront market?

   June 18, 2020 18:31 Comments Off on Will the coronavirus pandemic drive seismic changes to the Upfront market?

   Coronavirus is a catalyst for changes that have been years in the making. Nowhere is that truer than the advertising industry, which has seen the adoption of new habits which might previously have taken years happen in a matter of weeks.  

   When and how will the Upfronts occur this year?

   One key area of change for the US market is the TV Upfront ecosystem. With production grinding to a halt and much of the country still in lockdown when Upfronts were meant to kick off, the question is, when and how will the Upfronts occur this year? Many key industry players have long pushed for the Upfronts to switch to a calendar year model, rather than the broadcast year of October to September. At the end of May, the ANA Media Advisory Board recommended a sweeping transformation of the system, causing a huge shake up in the media world. But how will it all pan out? 

   TV has transformed dramatically

   Few would argue that TV’s October–to–September timeframe is outdated. It harks back to a time when TV was mainly appointment viewing, with a set year-round schedule of shows having first runs from October to May, with reruns over the summer. This in turn is rooted in historic business movements: car companies used to unveil new vehicle models in the fall, so TV launched its new season to tie in with that. But the TV sector has transformed dramatically in recent years: the proliferation of channels and programming means new content is available throughout the year. What’s more, appointment viewing has dissolved with the growth of time-shifted viewing, on-demand, OTT and CTV platforms; Nielsen found that the streaming share of TV is now at 23%, up from 14% compared to the same period a year before, and is expected to continue its growth trajectory. 

   Allowing for a better understanding of budgets
   

   The suggested shift to a calendar-year model would allow advertisers until Q4 to get a good understanding of their budgets for the following year – especially important this year when all industries have experienced so much disruption. However, many of the large, traditional advertisers are set on signing upfront deals under the traditional broadcast-year model; even if the networks do choose to shift to the calendar year model, it would be easy to put aside the inventory that the big players normally go for, leaving newer advertisers with the ‘leftovers’ in the calendar-year marketplace or the more expensive scatter market. 

   The absence of live sports

   Another compelling reason to push back the Upfronts is the current absence of live sports, and how the ‘withdrawal’ that many viewers and advertisers have felt will affect viewership when they are finally allowed to play again. The fact that games will be played ‘behind closed doors’ means that TV audiences are likely to be through the roof; it will be very difficult to estimate prices for ad spots until networks have a better idea of what those audiences will look like. In that light, shifting the Upfronts to Q4 seems like the right thing to do.  

   A chance to align the Upfronts and Newfronts

   Shifting the Upfronts would present an opportunity to align them with the increasingly important Newfronts – a desirable outcome for both advertisers and media buyers. 72% of media buyers say that Newfronts are more important than ever, and nearly half want the Newfront presentations to merge with the Upfronts. A key factor in this is that 39% favor merging the two to help buyers better understand measurement and research across screens – which could in turn improve performance. There is a finite amount of reach available through linear TV and, in order to expand coverage or just reach the same number of consumers as before, advertisers need to diversify their media mix. 50% of marketers will increase their spend in CTV, OTT and Digital Video, while linear TV is likely to see a decrease. Advertisers will be looking to buy audiences agnostically across a network’s linear and digital assets: a compelling argument for merged Upfronts and Newfronts. 

   The time is now

   All in all, it seems that transforming the Upfronts timeframe to a calendar model makes a lot of sense. It will be uncomfortable for a while, but doing it in a year when the status quo has been disrupted so fundamentally and the landscape has transformed so dramatically anyway seems a good time to do it. Time will inevitably tell. 

   Advertisers should re-evaluate their media mix and KPIs

   Regardless of whether the Upfronts shift to a calendar-year format, or whether they merge with the Newfronts, this is a good time for advertisers to re-evaluate their media mix and KPIs, and to negotiate better deals with vendors.  

   • Buy flexibility: Flexibility has been an increasing priority for advertisers over the last few years, and the fact that so much new programming has been shelved as production is halted means that flexibility is more important than ever. Cognizant of the marketplace, vendors are likely to be more willing to provide more flexibility.  
   • Consider scatter opportunities: Marketplace uncertainty means that Upfront commitments are expected to be much lower than in previous years. This means that there will be more high-quality inventory left over for the scatter market – particularly as there is likely to be more certainty around programming and production as time progresses. 
   • Review your TV/digital mix: With 59% of media buyers expecting to increase their CTV/OTT budgets in the second half of 2020 compared to 2019, wise advertisers will consider where their audiences are, and the best touchpoints. 

   2020 has doubtless been a year of disruption and sleepless nights for advertisers and buyers in the US and worldwide, but with strategic thinking and agility, the transformation to the media landscape can be turned into an opportunity for the savvy advertiser. If you would like to discuss with one of our experts how you can identify and exploit the opportunities, please feel free to contact us on value@ecimm.com  

   Image: Vasyl Shulga / Shutterstock

3. TV in the time of coronavirus

   April 15, 2020 13:09 Comments Off on TV in the time of coronavirus

   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 29^th, 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 16^th – 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 17^th-23^rd March, versus the week of 3^rd to 9^th 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

4. The future is here: Samsung at CES 2020

   January 13, 2020 19:41 Comments Off on The future is here: Samsung at CES 2020

   It’s called the Consumer Electronics Show, but really, CES is a showcase of the future. Over three days across Las Vegas, attendees are shown how tech will create a strange, beautiful new world. Each year there is normally one brand that garners a lot of attention for its innovation and vision: this year it was Samsung, that most future-facing of organisations.

   Samsung launches #TheAgeofExperience

   So what better way to kick of this year’s show than with a keynote from the Korean tech giant? The President and CEO of the Korean tech giant’s consumer electronics division, Hyun-Suk Kim, took to the stage in front of an audience of thousands of delegates on Monday evening to explain Samsung’s vision for the future. That vision has the consumer very firmly at its heart, and ushers in ‘the age of experience’. In a world where 74% of us value experiences over products, Samsung has set out to provide consumers with meaningful experiences and memorable moments through the seamless use of innovative, unobtrusive technology.

   Help in the home

   H.S. Kim and some of his colleagues took delegates on a journey to show them how Samsung innovation will create these meaningful experiences for ourselves, in the home and in cities. We were introduced to Ballie, a small, spherical robot that understands you, supports you and reacts to your needs so that it can help you around the home. It can follow you around the home (without getting in the way) and can even help you look after your pets and instruct robot vacuum cleaners to clean dirty floors!

   A personal fitness assistant for all

   Another way in which Samsung has harnessed AI to support personal care is its fitness assistant, which pairs the existing GEMS outfit with other devices such as AI glasses and a smart watch to help users meet their health and fitness goals. GEMS and AI glasses can also be used to help people with disabilities to move and see, reinforcing Samsung’s promise to enhance people’s lives.

   The home as a living organism

   The GEMS demo showcased how the blurring of the physical and online worlds is allowing homes to act as other spaces too, including fitness studios, art studios and entertainment spaces. The home is becoming a living organism, an intelligent and deeply personal space that tailors experiences to our individual needs. Smart kitchens will be nutritionists, chefs and shopping assistants, giving meal recommendations based on your workout and what is in your fridge, putting missing items on a shopping list and even recommending wine pairings. Another exciting innovation revealed was the cooking assistant ‘Chef Bot’, a large pair of arms suspended over the kitchen worktop which can help you to whip up a meal.

   Building the smart cities of the future

   Samsung’s innovations demonstrate how the internet of things is expanding to make our lives easier in a personalised, non-intrusive way. But it is also growing its reach beyond the home and into the cities that so many of us inhabit. A key challenge facing us in the future is the rise of megacities (cities of more than 10 million people): it is predicted that by 2050, 70% of the global population will live in cities, with 42 megacities. This poses questions around how housing provision and transport will cope: and this is another area in which Samsung is finding smart ways to converge technology, building the cities of the future. Building structures will sense when there is a fault and send an alert before it becomes a problem, while residents will be able to manage deliveries, energy and other services with a simple voice command. Meanwhile, 5G vehicles such as the Digital Cockpit will communicate with one another and the passengers’ personal infrastructure for seamless, safe and clean transportation.

   Prioritising data privacy and security

   Of course, smart technology which so fundamentally affects and enhances our lives will require a huge amount of data, which Samsung will need to harness in order to ensure that its products deliver on their promises. H.S. Kim underlined the company’s commitment to data security and personal privacy, emphasising that they will be a top priority as technology advances and that customers will always have control over their information.

   Experiencing the future

   After Samsung’s keynote many in the audience were eager to visit Samsung’s space on the show floor and it didn’t disappoint. In their huge space we were treated to futuristic demos from the Chef Bot, Ballie and Bot Air, which cleans the air in your home, and witnessed a simulated demo of Digital Cockpit, which uses 5G to link features both inside and outside the vehicle, and provide connected experiences for driver and passengers. Dominating one end of the Samsung space was The Wall, a modular ‘as-big-as-you-want’ MicroLED screen – the iteration they had on display was a huge 7.4m (292 inches), and the colour, contrast and quality are mind-blowing.

   The GEMS exo-skeleton was also on display, as were a huge array of connected living devices and of course the high-quality laptops, tablets, smartphones and TVs that Samsung is so well known for.

   A bold vision for the future

   Samsung clearly feels huge responsibility: to provide meaningful experiences and memorable moments for consumers, to protect their data whilst making their lives better, to ensure that tech is a force for good, and to educate the next generation of innovators. It’s a big task but they are well positioned to deliver on it all, and more. The future is a strange place: Samsung’s innovations make it even stranger but also reassuring: technology will ensure that our lives run more smoothly and more healthily so that we can focus on what’s important. As H.S. Kim said in his concluding words, Samsung will dream big and defy barriers with people at the centre, for a better today and tomorrow. What could be more exciting than that?

   Image: Alex Matthews

5. Insights from day 2 of CES 2020

   January 9, 2020 20:34 Comments Off on Insights from day 2 of CES 2020

   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

6. Insights from day 1 of CES 2020

   01:33 Comments Off on Insights from day 1 of CES 2020

   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.

   Image: Alex Matthews

7. What does TV fragmentation mean for US marketers?

   November 15, 2019 14:23 Comments Off on What does TV fragmentation mean for US marketers?

   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.

   Image: Shutterstock

8. In the news this week: Comcast wins Sky bid, and Instagram founders resign

   September 28, 2018 13:07 Comments Off on In the news this week: Comcast wins Sky bid, and Instagram founders resign

   There’s never a quiet moment in the media industry, and this week was no exception, with two major pieces of news that could have major ramifications for advertisers, albeit in very different ways.

   Comcast gains full control of Sky

   On 22^ndSeptember, it was announced that Comcast, the American telecommunications giant that offers digital cable TV, internet and telephony services, had won the bidding for Sky, at a cost of $38.8 billion, beating 21^stCentury Fox. Four days later it emerged that Fox would also be ceding its pre-existing 39% ownership to Comcast for $15 billion, giving full control of Sky to Comcast.

   A year of mega-deals

   This is the latest in a series of ‘mega deals’ over the last 12 months, where content distributors and creators are merging in an attempt to confront the existential threat posed by the rapidly growing streaming companies such as Netflix, and the tech giants who are ‘scope creeping’ into TV; in June, AT&T acquired Time Warner for $85 billion, and the following month Disney beat Comcast to buy 21^stCentury Fox for $71 billion. In an industry quirk, it was then Comcast who effectively beat Disney, as 21^stCentury Fox’s new owners, to the purchase of Sky; Sky was originally going to be part of the deal that sold 21^stCentury Fox to Disney.

   A global footprint and more original content for Comcast

   Comcast’s purchase of Sky will be a major boost to their global footprint: Sky has 23 million subscribers in the UK, Ireland, Germany, Austria and Italy, and has launched an over-the-top service in Spain and Switzerland, meaning Comcast will be better equipped to fend off the likes of Netflix and other tech giants. The acquisition also bolsters Comcast’s original content capabilities: Ovum’s chief entertainment analyst, Ed Barton, said ‘they could look at licensing content on a combined basis, which would lower the cost on a per-subscriber basis, if you have something you can show to a European and US audience.’ This merging of content would also mean a larger library to leverage as they roll out into other markets globally.

   Combining technical know-how

   The cultural affinity between Sky and Comcast could also be important for advertisers; it is likely, even inevitable, that they will combine their technical and data assets to forge ahead with an addressable advertising offering which will make TV as targeted as online.

   Instagram founders announce their resignation

   The other big news for the media and tech industries this week was the departure of Instagram’s co-founders from the company, which they announced on Tuesday and which sent Facebook’s share price tumbling. Kevin Systrom and Mike Krieger founded Instagram in 2010, before selling it two years later to Facebook for $1 billion – an almost unprecedented amount for a two-year-old start-up. It has since become the jewel in Facebook’s crown and its fastest growing revenue generator.

   A snub to Zuckerberg?

   Sysrom and Krieger said that they were leaving the company to explore their ‘curiosity and creativity again’.  That is being seen by many as a veiled snub to Facebook and its founder Mark Zuckerberg, who have made a raft of unpopular changes to Instagram, in many cases in an attempt to boost traffic to the core Facebook platform. Sysrom and Krieger wouldn’t be the only ones to leave following differences with the Facebook CEO – last year, WhatsApp founder Jan Joum quit over privacy disagreements with his bosses, who were keen to monetise the service.

   Monetising the jewel in Facebook’s crown

   As discussed at length in the press and in previous ECI Thinks posts, Facebook has in recent years been battered by criticism of its approach to data privacy, fake news allegations and for allowing foreign interference into national election campaigns – and its user base is showing signs of disengagement as a result. Instagram has largely escaped these problems: it has more than a billion active monthly users and successful updates such as its stories feature, messaging and IGTV have seen off competitors from the likes of Snapchat. In this context, it’s unsurprising that Zuckerberg and his team are so keen to squeeze as many ad dollars as possible out of Instagram; Lynette Luna, a principal analyst at GlobalData, said “Facebook’s strategy has been to allow companies it has purchased to operate independently to garner growth, and then monetise. When they start monetising that’s when there’s a little conflict with the founders.” Systrom and Krieger may well have wanted to retain the independence to run Instagram as they wanted.

   It is not yet known who will replace Systrom and Krieger, but it will be interesting to see if changes to Instagram, particularly to its revenue model and integration with Facebook, accelerate in the wake of their departure

   Thumbnail image: Shutterstock

9. Does mobile pose a threat to TV?

   August 7, 2018 14:21 Comments Off on Does mobile pose a threat to TV?

   Audiences appear to be increasingly consuming video on their mobile devices. What does that mean for TV?

   A few weeks ago, we posted a blog asking if video streaming spelled the end of the TV industry as we know it. We concluded that TV would survive – even thrive – as long as it adapts and innovates. But the medium is not just fighting a battle on one front: mobile is another contender for the throne.

   The mobile decade

   Arguably, nothing has changed the face of media consumption – and therefore advertising – over the last decade as much as mobile. The statistics are familiar: in many developed countries, smartphone penetration is at around 70%, and mobile connection statistics tell a similar story: in 2008, there were 4.02 billion mobile connections globally, while in 2018 this had more than doubled to 8.53 billion – and in 2020 the figure is projected to be 9.02 billion. Human beings are duly becoming more reliant on their phones: in the UK for example, people spend around 24 hours a week on them, on average, and check them every 12 minutes, and this trend is reflected around the world. The mobile phone has replaced the television as the media device that we most miss; in 2007, 52% most missed the TV, while 13% missed their phone the most. 11 years later, the figures were 28% and 46% respectively.

   A bleak future for TV?

   Indeed, you could be forgiven for believing that the growth of mobile means a bleak future for linear TV. The young, mobile generation are increasingly tending to stream video content instead of watching traditional linear TV, and often do so on a mobile device. Many tech companies have noted this and are acting upon it: in June, CBS announced that it will be streaming NFL games on mobile devices from this autumn, while, shortly after closing their acquisition of Time Warner, AT&T announced the launch of their new mobile streaming service, Watch TV. These services will no doubt be popular, thanks in part to the smaller ad load for content streamed on a mobile.

   TV is still the most popular medium for video consumption

   However, Nielsen data released this week suggests that mobile is not denting TV’s success as much as it seems. Of 5.57 hours a day that US adults spent watching video in quarter one of this year, 4.46 of those were on live or time-shifted TV, while only 15 minutes were on a smartphone or tablet. Young people aged 18-34 were the only demographic who spent longer on a tablet or smartphone consuming general content (not just video) than on a TV. What’s more, even those households that don’t have a traditional TV don’t rely on their mobile devices to watch TV programming: 27% use a computer and 30% go elsewhere (to a friend’s or public place), compared to 16% using a mobile device.

   TV versus mobile in the future

   Will this change as the young, mobile generation grow older and take their mobile habits with them, replacing the more stagnant habits of older people? Or will they change their habits as they age to reflect those of their parents? Will increasing concern around mobile addiction and interest in digital detoxes encourage people to put their phones down and switch their attention to television? Time will answer all these questions, but we believe that TV is here to stay. One commentator said that ‘mobile is a wart on the ass of TV’: while we think that mobile is more significant in the video space than that, we can’t imagine that consumers will transform viewing habits so much that they will choose en masse to watch long-form content on a mobile over their television. TV is safe for now but, as always, needs to innovate and adapt to stay ahead of the game.

   Thumbnail image: Lolostock/Shutterstock.com

10. Media audits: the big four or specialists?

    July 11, 2018 13:03 Comments Off on Media audits: the big four or specialists?

    In an increasingly complex media landscape, media audits are becoming ever more important; should advertisers choose one of the ‘big four’ firms or a smaller media specialist to carry out their audits?

    The media audit – understanding efficiency and transparency in media activity

    In an increasingly digital and competitive world, where brands are concerned about transparency and about the effectiveness of every single dollar invested in advertising, the media audit is a very important tool in the CMO’s toolbox. Not only does it help advertisers to ensure that their agency partner(s) are delivering on their marketing and business objectives in the most efficient and transparent way possible, but it also enables them to identify errors and troubleshoot effectively: particularly crucial in an age of automated buying.

    Choosing a media auditor

    Once an advertiser has decided that they are going to carry out a media audit with their media agency partner or partners and established the KPIs of the audit, the next step is to select the auditor themselves. The options here are not myriad – this is not a huge industry – but they can be more or less divided into two camps – big generalists, or smaller specialists. The former, comprising the ‘big four’ audit firms – KPMG, EY, PwC and Deloitte – carry out audits across many industries for blue chip clients across the world, and are often chosen by clients for their undoubted auditing and accountancy experience, or because they have successfully audited another part of the company. The other camp comprises the smaller specialists, among whom we at ECI count ourselves. While these specialists do not boast the vast scale of the Big Four, there is huge value in having media specialists audit media activity.

    The big four versus the specialists

    In 2016, Sir Martin Sorrell urged advertisers to choose one of the Big Four to carry out their media audit, largely because they are chartered accountancy firms and are therefore subject to regulation. Sorrell said that he was concerned about giving specialist media auditors access to his group’s privileged information, given that they ‘lack professional rules and regulations’. This is a view

    commonly held by media agencies, an unkind interpretation of which is that they are nervous of having their activity audited by media specialists – some of whom may have even worked agency-side and know which stones to turn. In any case, we are convinced that, in an industry renowned for complexity that increases by the day, it can only be to an advertiser’s advantage to have experienced media practitioners examining and analysing agency practices – because they do indeed know what they are looking for.

    Impartiality issues

    In the wider business world, the big four are having to answer big questions about their work, having been involved in the auditing of failing or failed businesses such as Carillion in the UK, which went into liquidation earlier this year. Their impartiality has also on many occasions been called into question; PwC and Deloitte’s creative offerings (PwC Digital Services and Deloitte Digital respectively) are among the largest creative agencies in the world, putting them directly into competition with the holding companies that own the very agencies they are being hired to audit. Meanwhile, Accenture – not one of the Big Four but similar in offering and scale – has recently launched its programmatic offering, negating, in our view, impartiality for its audit function: this is indicative of a wider industry trend.

    In the end, the choice is of course up to the advertiser themselves, who should make their decision based on their specific needs and preferences. The key is to ensure you study the media agency contract carefully and agree on the scope of the audit with both the agency and the chosen auditor. Ultimately, it is about ensuring that every media dollar is used as effectively and efficiently as possible in order to drive higher media value.

    Thumbnail image: chase4concept/Shutterstock.com