Freddie Godfrey, founder of Origin Media, in talking to The Wall Street Journal, said the obvious: “There is no publisher on planet Earth who has 100% fill all of [its advertising] time, so they are always trying to add a new demand partner.”
Amazon is looking to take on sales efforts outside the walled garden of its digital TV network bundle -- Amazon Fire TV. Reports suggest the ecommerce platform is promising a $40 cost-per-thousand-viewer (CPM) deal for publishers that commit.
But what publishers are we talking about? NBC, ViacomCBS, Disney, Discovery, CNN? Think much smaller. And perhaps think about publishers without real premium video inventory.
Traditionally, in the TV world, the value of selling and controlling your own inventory is perhaps legacy TV companies most valued asset. There can be a big upside -- a fluid market price where a seller can adjust pricing on the fly.
Giving away top TV inventory to other sellers has never been a thing for traditional TV companies -- save for small- to mid-size TV stations groups that employ third-party sales rep companies.
This comes as media industry analysts say there is a continued scarcity of advertising inventory on premium OTT/connected TV platforms. (Does that sound familiar?)
Last week, NBCUniversal announced its new Peacock, mostly free-ad supported streaming services -- which leans into this a bit.
Linda Yaccarino, chairman, advertising sales/client partnerships of NBCUniversal, touted the new service would have perhaps the lightest ad load of any premium streaming service -- just five minutes an hour or less.
All this raises scarcity issues traditional TV network advertising executives know well. For decades, scarcity of prime TV inventory has controlled regular price increases during TV’s big $20 billion upfront advertising market.
Will all modern premium video streaming businesses go the same route?
The good news, for consumers, is that five minutes an hour of advertising time versus traditional linear TV -- where viewers might see 14 minutes to 17 minutes of advertising/promotional non-program time a hour -- sounds like a deal.
Making advertising scarce and potentially more valuable at the same time, as well as not tiring out TV consumers with advertising messaging? What's not to like! That is, unless, pricing and ad loads begin to rise after a modest start.
As I keep pointing out, the "scarcity" of linear TV ad inventory---aka commercial GRPs---is a function of gradual but progressive reductions in total viewing time --"premium" and "non-premium"--- and the fact that you can't keep increasing commercial clutter much beyond the current level of about 25% of content. As a result, the networks and cable folks, as they move into SVOD with ad-supported platforms are hoping to start by luring subs with the promise of fewer ads---that, plus their content, are the hooks----but pay for this by charging advertisers huge CPM premiums over "linear TV" buys based on the general attractiveness of the AVOD viewers as well as the likely higher impact of the AVOD commercials. Later, once the AVOD platforms are established, commercial clutter will surely increase but you can bet that the CPMs will not go down. Result: more ad revenue for the networks and cable programmers. It''s a smart plan.
Good news to me!