Commentary
Video Ad World Will Change More In Next 6 Months Than In Past 6 Years
- by Dave Morgan , Featured Contributor, July 16, 2020
All of America has changed video viewing behaviors over the past few months. More people are watching more TV. More people are watching more streaming services. More people are watching different programming than they watched last year. With all these new consumer behaviors, the TV ad industry has never been as fixated on upcoming summer and fall seasons as it is right now.
Will sports reopen? And if not, does that mean that even more U.S. viewers will cancel their cable and satellite bundles?
Will TV productions reopen enough to build out full, fall prime-time schedules? And if not, will this drive even more Americans to transfer their entertainment show loyalties to binge-watching on streaming services?
If TV loses its tentpoles of sports and prime time, what will its advertisers do? Will they trade context for audience-based buys on TV? Will they scour the emerging connected TV (CTV) world in search of linear-like reach?
The video ad world will change more over these next six months than it has over the past six years. Here are some of the reasons why:
advertisement
advertisement
Incumbent TV companies hard-pressed to respond to new viewer demands. TV viewers now want to watch what they want, when they want, with a great user experience and few or no ads. Ninety-five percent of what TV companies deliver today is not that.
Advertisers now want the best of both worlds: linear TV’s massive reach, impact and fast-cuming of audiences, with digital’s automation, flexibility, targeting precision and real-time measurement. And they want to do it closer in time to campaigns’ airing, not a year in advance.
TV companies today can offer some of that in bundles or packaging, but not at scale as an ongoing, platform-delivered service like digital, and certainly not just-in-time.
Most advertisers haven’t developed robust Plan Bs. Many large brand advertisers don’t know what they will do if there are no sports on TV this year. Their businesses have been so dependent on sports for media outputs, brand integrations and experiential promotions that it hasn't been feasible for them to build out true back-up plans, particularly when the pandemic has massively limited their own operational capacities. So these companies are buying TV sports deals upfront, with no options to move their money to other media channels or companies if sports don’t happen.
More brands shifting marketing to consumer-first. The pandemic has been a massive accelerant for D2C businesses like ecommerce, delivery, gaming, personal financial services, communication services, and at-home learning. Not every brand can function this way, but every brand now needs to market like this.
That doesn’t mean the end of mass media like TV, but it does mean TV media will need to be increasingly delivered, measured and optimized for its direct consumer impact and return on investment -- not just to tick the GRP box as required by big-box sales channel deals and getting smiles around the boardroom when the super-expensive ads are previewed.
Big tech (and Google) is coming (again). For the past 20 years, TV companies have heard the footsteps of big tech advancing toward ownership of the living room and its central fixture, the television. For years, TV companies (and TV CEOs) had hoped that big-tech companies like Microsoft, Google, Facebook, Apple and Amazon would buy them out at big premiums, but to no avail.
As LightShed Partners' Rich Greenfield, one of the smartest Wall Street analysts in this space, wrote earlier this week, the “War for Your Living Room” is now entering its decisive phase, and Google is the new player to watch.
How TV companies, marketers and agencies navigate these next six months will be fundamental to their long-term futures. The changes and disruptions will come fast, decisions will need to be made even faster, and actions will need to be executed perfectly. These six months will define the future of TV (and the control of your living room).
What do you think?
Dave, Nielsen is reporting that "linear TV" viewing is now returning to normal levels---or close to it---as we are venturing away from home---to work, mostly---- much more than during the early lockdown days. The latest numbers seem to indicate that this will also happen to streaming in the sense that its peak usage levels will not be maintained for the same reason. So it may be premature to assume that America's TV program preferences have altered permanently because of the March-June lockdowns.
As regards prime time, the primetime shows aired by the broadcast TV networks attract about 10-13% of all viewing---so in terms of time spent---they are not such a big deal. I don't see much of a change in the availability of such "premium" content next year---once a reliable Covid-19 vaccine is developed. Yes, share of audience will continue to decline, but these shows will still command the big bucks. As for sports, advertisers whose near term sponsorships are cancelled due to the players not performing during the pandemic can easily garner the lost GRPs at half the cost---or less---via all sorts of available content. I assume that this is exactly what will happen as each league shuts down.Any "Plan B" will simply be of the stopgap variety---though one might hope that some care is used ---targeting-wise---- in replacing the lost GRPs.
Finally, on the issue of new ways to buy TV time, better targeting, attempts to cap frequency, etc. I'm all for these when they are able to do what they promise. But don't expect a major shift of ad dollars in these directions until advertisers abandon---or modify---their corporate buying regimens and give their brands a measure of freedom to buy what they---the brands need.
Dave- Again you throw open the door to a topic that needs fixing. This all remindes me of the first time the CEO of the largest mobile network asked me, " Why do we lose so many customers each month?" At the time attrition was between 6 to 8%. I said, "the holds in your minnow bucket are larger then the minnows you are pouring into your bucket." The relationship lasted twelve years, and the result of executing hundreds of tactics to close the holes, attrition is down to <2%. and the Marketing program paid for itself a 100 time over. In broadcast today the holes are much larger then viewers behaviors. Most obvious reasons, fragmention, lack of relevancy (in programing and crearive), overloading of commercial units in an avg. hour, time on smart phones, smart speakers, lack of addressablity, and the list goes on and on. If your readers haven't heard, we live in a digital real-time world where the consumer is in control "king". She simply doesn't see the stuff we push at her. That may be a bit of a stretch, but you get my point. Join the conversation.
Ed, very good points. Yes. Viewing is returning to normal+ total vlume levels, but it is certainly distributed differntly. And yes, primetime (and sports) don't represent the largest amount of time in that viewing, but they so dominate the spend that if they're not there, t will really impact the networks in asymmetrical ways. GRP replacement strategies may not work well, because the audience compositions of those networks' other shows are not likely to be the same. Our data shows that sports fans stay on TV for the same amount of time that they would without sports, but they are almost always watching different networks.
Net. Net. You are totally right. The corporate buying regimens have to change for things to get to the right place.
EDITED: Dave- Again you throw open the door to a topic that needs fixing. This all reminds me of the first time the CEO of the largest mobile network asked me, " Why do we lose so many customers each month?" At the time attrition was between 6 to 8%. I said, "the holes in your minnow bucket are larger than the minnows you are pouring into your bucket." The relationship lasted twelve years, and the result of executing hundreds of tactics to close the holes, attrition is down to <2%. and the Marketing program paid for itself a 100 time over. In broadcast today the holes are much larger than viewers behaviors. Most obvious reasons, fragmentation, lack of relevancy (in programing and creative), overloading of commercial units in an avg. hour, time on smart phones, smart speakers, lack of addressability, and the list goes on and on. If your readers have not heard, we live in a digital real-time world where the consumer is in control "king". She simply does not see the stuff we push at her. That may be a bit of a stretch, but you get my point. Join the conversation.
Excellent points Larry. The world of TV has gone from Content is King and Distribution is King Kong, to Consumers Control King Kong like one of their video games!
Larry, you are right about many of the negative trends that are developing in TV---increased ad clutter, lack of imagination and creativity in content development, etc. However it's a mistake to assume that everyone sees things that way. There are a lot of folks out there who are perfectly satisfied with what TV is feeding them.---even the commercials. Indeed, over the years TV---"linear TV"---- has become increasingly dependent on roughly 40% of the population---mostly old folks, but also including a surprising number of younger and middle aged adults with poor educations---who now account for something like 75% of the total viewing tonnage. Such heavy viewers have always consumed a disproportionate share of viewing, however, not nearly so much as now. What's more, over time TV's addicts become acclimated to bad things like more and more reruns, more commercials, etc. We just did a report for our Media Dynamics Inc subscribers which noted that even though the number of ad messages has risen almost six-fold since 1960, 40% of program viewers still look at the screen while an average ad runs for at least two seconds and many of these people watch the entire commercial.
What does normal TV viewing mean? Netflix in 6 years has gone from a 5billion cap to a $200 billion cap. Along with rise that comes a tonne of TV viewing time by users that isnt on normal networks at prior levels AND their share price keeps rising indicating more success.
In addition to that you have Amazon and Hulu that have grown significantly with all the new entrants (HBO/CBS/ Peacock/ Apple). So for any stability to exisit in linear the overall video consumption would have to risie signifivantly, or as more likely more consumption by a smaller audience. Hence ridiculous ad frequencies. I wonder how many CMO still do not look at ad frequencies by audience, based on the consultancy projects i have been on, i suspect it is too many.
Gary, no matter what Netflix's stock is worth, that, in and of itself, does not mean that Netflix dominates TV viewing. Best estimate is that, Netflix accounts for 5-6% of all viewing time---which is bigger than any individual broadcast TV network, but way below what "linear TV" gets collectively ( 75-80% ). The latter will, no doubt, decline as more and more SVOD/AVOD offerings come to the marketplace, many of them bringing "linear TV" fare plus ads to the streaming venue. So the future, to the extent that any of us can predict it, will probably see an increase in streaming's current 20% share of viewing but at the price of streaming content looking more and more like "linear TV's" content.
Gary, good points. I agree with Ed that we are likely to see streaming packages look more like linear packages, but there is no question that TV companies are going to have to work much harder on the viewer ad expeirence and the roverloadking of frequency that so many top advertisers get. It can aboslutely be avoided if better yield management and frequency controls were put into place. Unfortunately, I don't think that the buy side is ready to pay more to get a better delivery.