Television buying dynamics, which were already starting to shift more rapidly, have been thoroughly disrupted by the economic impacts of the coronavirus pandemic.
“So much of the TV business is dependent on the upfront and live sports. And because of the uncertainty, much less money will be committed upfront in the 2020 cycle,” Dave Morgan, CEO of Simulmedia, noted in an interview this week with Advanced TV Insider.
In fact, based on input from clients, agencies and analysts, Morgan estimates that true upfront commitments will shrink by half this year, and that an extra $10 billion will move into the scatter market in the second half of 2020 and first half of 2021.
Much of that will flood into advanced television, with all segments of that industry chasing those dollars. “Prepare for a scrum,” he declares.
CTV will be one major beneficiary. “This will be a big moment for CTV — there’s no doubt that CTV spending will rise significantly,” says Morgan.
That jibes with new projections for the broader OTT video market from Digital TV Research, which estimates that, thanks to the pandemic’s effects, global ad-supported video-on-demand will hit $53.5 billion by 2025 — up 120% from 2019’s $24.3 billion.
But the fattened scatter market will also benefit data-driven national linear TV — Simulmedia’s bailiwick — says Morgan (who reports that the company is already seeing triple-digit growth year-to-date, despite the pandemic).
Morgan obviously has major skin in the game, with a dozen years in the audience-driven linear business. But his take is that demand for CTV will at some point exceed inventory supply.
While consumers’ streaming consumption has soared, the most-watched services are still ad-free, and only about 3% to 5% of advertising viewed on TV screens is via streaming, he points out.
Based on eMarketer data from earlier this year (pre-pandemic), “we projected that there would be 625 billion CTV ad impressions in the U.S. in 2020 — which is a lot of impressions, in the digital realm,” he adds. “But our estimate for national linear TV was 13 trillion impressions.”
Still, he’s quick to say that no one knows exactly how all of this will play out in the months ahead.
“What we do know, in addition to money being withheld from the upfront and pumping up the scatter market, is that agencies are expert at traditional TV buying, but not so much at advanced TV buying,” he says. “There are a limited number of people who have operational experience in both linear and ATV.”
In addition, given the economic pressures now in play, clients, who are already doing more of their own buying, will want to maximize their spending flexibility.
“So you’re going to have a lot of people — without a lot of experience, and maybe without a roadmap — making a lot of decisions about moving budget money, within much shorter windows than usual,” Morgan sums up.
“As a result, I’m afraid that the next five quarters may be a bit of a mess.”
What's your take on the ATV outlook in the year ahead? What about addressable? Look forward to your feedback...