Commentary
Nielsen's Streaming Percentage -- 26% -- Surprises Many
- by Dave Morgan , Featured Contributor, June 24, 2021
Nielsen revealed that broadcast and cable still account for 64% of total TV viewing, with streaming only representing 26% of viewing -- and Netflix, the dominant streamer, only at 6%.
Many “media folks” were surprised by those numbers.
No one described the disconnect between perception and reality better than CNN’s Brian Stelter, who said: “Streaming might take up three fourths of the media world's attention, but right now it's only one fourth of viewership time. Streaming might eventually cannibalize everything, but that day is a long way away.”
Even Netflix founder and CEO Reed Hastings expressed surprise, but also acknowledged the accuracy of the measurement. He tweeted, “Wild that most TV time in USA is still legacy linear. Stream team needs to up its game.”
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There is a lesson here for folks in the advertising business. We need to be careful not to conflate what media folks talk about with what Americans actually do.
The U.S. is a vast, diverse nation. Most media folks live on the coasts, with the heaviest concentrations in New York City and LA. As someone from a small coal town in western Pennsylvania, I can certainly attest that the TV habits of folks I grew up with are nothing like those of my current neighbors on Manhattan’s Upper West Side.
Don’t get me wrong. I am a huge believer in streaming and have been for a long time. But I’m also a pragmatist who lives in the TV and streaming ad market and sees the actual viewing data from tens of millions of Americans televisions and set-top boxes on a daily basis. I can confirm that Nielsen got it right with The Gauge. As Jack Welch famously preached, “See reality as it is, not as you would like it to be.”
Incredibly, one of the stats in Nielsen’s report hasn't gotten much attention, but everyone in the ad business hopefully caught it. A big chunk of the streaming viewing was on services with no or few ads: Netflix, Prime Video, Disney+ and Hulu. So, for all of those marketers out there telling their media teams to shift 30% of their TV budgets to streaming video, you’re likely to be disappointed.
The ad inventory just doesn’t exist. Unless, of course, you can convince Netflix to take your ads. But on that topic, Reed Hastings has been pretty clear. He has no intention to go there.
Were you surprised by Nielsen’s streaming measurement numbers?
I wasn't surprised, Dave. We at Media Dynamics Inc. have been making similar estimates for our subscribers for some time and I am pleased that Nielsen has merely confirmed them---including that 6% share of all viewing for Netflix. Hopefully we can now plot trends as they develop thanks to timely monitoring by Nielsen.
To your second point, ad-supported streaming. If one eliminates short form videos on YouTube and factors in the lessened degree of commercial clutter on many of the AVOD services, the amount of advertising GRPs available to national TV advertisers via AVOD shrinks dramatically---to probably only one tenth of the total for all of TV ---- and maybe less. The idea that national TV advertisers could shift as much as 30% of their dollars to streaming---as put forth by certain TV networks recently just doesn't compute when the availablilty of AVOD GRPs in comparable scheduling and program content situations is considered. Perhaps in a few years---but not now.
Ed, I agree with you. Not surprising. Several data points over the last few months were putting us in the range of 26% streaming and 6% Netflix. Great to see this confirmed by Nielsen.
But on your second point, I really could not agree more. The shear amount of ad impressions are just not there. If we have 26% of viewing that is streaming what do we think the % of ads are in streaming? 3-5%?
I simply don't get why more services don't follow the Hulu and Peacock models. Why can't they provide consumers tiered choices and when consumers choose the ad tier you cut the ad load and make them all addressable/relevant?
Is there a technology issue or a philosophical issue? I guess there is a philosophical issue at Netflix but what about the others? I am still in disbelief that Disney+ has no ads.
If we saw the uptake on the ad tier similar to the Hulu model (2/3 take ads) we could more than double the 3-5% and all the ads in AVOD would have higher CPM's because of increased relevancy and decreased ad load. Seems like a win, win, win.
Final thought, one of the harder things to measure is AVOD ad delivery as part of one wholistic campaign. Several companies are making progress but I am surprised this is not fully resolved.
Thanks, Tracey. I, too, was surprised that Disney+ didn't offer an ad-supported option, though there is Hulu, of course. I think that the TV folks are just feeling their way into AVOD---mostly as a defensive operation to snag as many cord cutters as possible as a hedge against future declines in "linear TV" ad and re-transmission incomes. Both have levelled off. and will probably begin declining.
Regarding the better targeting aspect, the key remains with the advertisers. How many will release their brands for selective buying---based on their needs but with higher CPMs so they can take advantage of the improved situation that is developing for "addressable TV"? At present, far too many dollars are being locked up in corporate CPM-driven buys. On the positive side. this may start to change as advertisers are hit with substantial CPM hikes---even for linear TV buys---as we are now seeing for the broadcast portion of the current primetime upfront. A few more years of this and attitudes may start to change.
By the way, a new study by Nielsen notes that 40-45% of Disney+'s average audience consists of children and teens---that could be a problem for Disney+ going forward.
Good point on the key remaining with the buyers. So many years after the upfronts I have thought "this has to change" due the escalating CPM's. But with this upfront's pricing up 20% and traditional linear supply down about the same it seems like addressable is the only way forward as it is a way to create more supply. With more and more addressable coming into the market (linear and AVOD) the supply is increasing. This is a fascinating puzzle unfolding in front of our eyes. Corporate CPM-driven buys are just too easy to buy. If addressable was not so hard to buy I think it would be growing much more. Inertial and pain do make for fluid transitions.
Great point Tracey. One of the biggest challenges to changing the way that TV advertsiing works today is that isn't genally never been so broken that it had to be fixed for media owners and large, multi-brand marketers. This way this upfront has payed out is a great example. Sure, all could benefit from greater targeting, optimization and yield management. But buillding the systems, estabilishing the processes and retraining/replacing most of the folks who buy, sell and manage the ads would be expensive, time consuming and complicated. Selling and buying in bulk on GRP's with sex/age demos is the easy button in media.
Dave and Tracey, on the buying side it's clearly the advertisers' ----or clients'---responsibility to demand changes---especially about the ways time is bought---but instead of doing this and supporting such demands by granting those brands that would benefit more freedom, they do exactly the opposite---forcing them into corporate upfront deals, then jiggling the CPMs to make off-target shows---and there are many---palatable to the brands that get stuck with them. And the bean counters are still empowered to crunch the agency time buyers---all based on CPMs. Meanwhile, various big shots at the same advertising companies keep making speeches at media industry gatherings pleading for better targeting, cross platform metrics, etc. and demanding that the sellers make the needed improvements---without the advertisers providing any funding or staff work to help make it happen. As for the agencies, for the most part, they are doing what their clients really want---not what they say they want.
So true Ed. Most of what is not good in the advertising world is there because too many advertisers optimize for cost not return.
Great points here. The advertisers' behavior, not speeches, is what drives the market. Moving more money to addressable brings on higher cpms, fraudulent impressions, and apart from mobile, device based -- not person based -- impressions. Anyone selling addressable impressions love them. They generate huge cpms -- even when they might not be viewable.
So agree about the behavior not speeches point. THE main reason I left my agency role. The minute they wanted to decentralize buying of a very complex but valuable and not fraudulent addressable TV slice and have me focus on speeches I was like no way. I also would agree that addressable TV is device level and hopefully the way I negotiated the premium CPM's left room for the increased value if we could get to people but also gave incentive for sellers to improve delivery via addressable. So many issues to solve here. Complexity, measurement, fraud in CTV, increasing legitimate supply in AVOD, education, identity (especially IP based) and the whole agency support issues. We could all be at this a long time. Progress is being made but way too slow.
Great post Dave.
I think given this data from Nielsen that we can now quantify how small the bubble that we work in really is. We also need to be cogniscent of the reality being the inverse of opinion. Brian Stelter summed it up perfectly.
Regarding the CPM issue - I agree. CPM shoud be an outcome rather than an input.
I'm unfamiiar with US CPMs but on June 21 Laurie Sullivan reported a WARC chart of Amazon advertising average cost-per-click. June 2021 was $1.20.
So how does the CPM of $1,200 for an Amazon click (<> a sale) compare to typical CPMs across a range of targets?
John, regarding the CPM question, many digital advertisers do not use CPMs as traditional media calculates them, they only pay when there is a clickthrough, So a cost per click of $1.20 is not comparable to a CPM as is used by advertisers who are only interested in how many people "viewed" their ads. In other words the direct response or search advertiser who only pays per click through may get any number of opportunities---a huge number or a small number---it doesn't matter----but none have any value or are paid for unless they click through to the advertiser's website. In contrast,the branding advertiser pays for a specific number of "views", hence the resulting CPM is comparable to other CPMs ---also calculated on a specific number of "views" ----for alternative media buys.
Indeed, that is true Ed.
But what is a typical click-through conversion rate? Wordstream last August pegged it at 2.35%.
So if a $1.20 per click has a 2.35% conversion rate (per Wordstream), then we're talking about 1,000 click-throughs would deliver around 24 conversions for a cost of $1,200, which equates to $50 per converted click. If you're selling (say) t-shirts then where is the value - if you are selling cars etc it's a good deal.
Yes, John, but the advertiser who pays by the click through doesn't care about the ad "impressions" that were required to generate them and, hopefully, any conversions. The media seller is told,simply, here's my budget for this buy. Keep pumping out "impressions"---targeted or otherwise--- until you use it up at an agreed upon rate of $1.20 per click through. Once that goal is attained the ads simply disappear---until the next buy. The main point is that the ad "views" vary numerically for each buy but the click through rate is the same. In the CPM buying world, if two buys of $10 million each generate a $15.00 CPM---a typical norm for TV-----both buys garnered exactly the same number of "impressions". Not so with two click through buys ---even if they both paid the seller $1.20 per click through.
Ed, With all the data we are stitching together in advanced TV do you see a world where at least a portion of traditional inventory is priced on performance metrics like click through rate? Except for tune in and without interactive TV (both a TV forms of click-through IMHO) the performance indicator would have to change and likely there would be multiples depending on the advertiser. But let’s say as an example, viewed the TV ad and then visited the site. The advertiser would set a budget and price per site visit and when achieved the campaign stops. There are many measurement vendors that can do this for TV such as iSpot. I wonder if or how many deals are being constructed this way now? I am sure there are many advertisers doing the math on their campaigns but are the deals constructed to pay for performance? I have never done DR TV deals, but I thought this is how it works…pay for phone calls if you will. It feels like there is more and more talk about traditional TV deals constructed on impact guarantees and not just viewed CPM deals. Wondering where we are going with this, how big of deal it might be, are we ready for it and how long it will take to get there. I am always left with two questions; how would a world like this impact inventory management and what about some factor for the creative. With limited supply and crappy creative, I can only image the seller hesitancy but I can see the value from the buyer POV. Again, I am sure the buyers are doing this math on the side (or at the end of the campaign) but will it ever be the core foundation of traditional TV deals? What do you think?
Tracey, from what I see the way that advertisers are organized is the main limiting factor. Execptions, aside, the vast majority of national TV advertisers would consider driving website visits as a sales promotion function and treat it as a bonus add-on or perk as opposed to having tangible value for their branding efforts. Typically sales promotion and branding are handled separately---one by the sales people; the other by brand managers. And, typically, sales promotion---which is basically short term thinking----is handled in-house or via specialist agencies, while branding and attendant upfront/scatter TV buying is handled by traditional agencies and their media buying arms. While there is some degree of coordination, it's rare that media buying, itself, is coordinated as the sales promotion folks would almost never make long term upfront deals---if they knew how to negotiate with the networks---which they don't.
Add to this the fact that a large amount of national and local 'linear TV" ad dollars are spoken for by the insistence that they be placed in news, sports or specials---no matter what ---plus lack of interest by mass market commodity advertisers and the amount that is available potentially for "addressable TV" is limited to maybe 25% of the total spend. In this context, I honestly don't see a major upside for click throughs as becoming a key buying metric for "addessable TV or, for that matter for AVOD. This is because most of the buys will be made for the branding folks and this is not one of their key metrics---even if it should be.
Continuing my reply. In my opinion, what needs to be done is selling the "addressable TV" idea to CMOs and brand managers, with solid evidence that it yields tangible results and, therefore, shouldn't be considered a low CPM option but an ROI option. This won't be easy but banging one's head against the buyers is not going to unlock the door as they are not CMOs or brand managers. And they are not judged by ROI or ad awareness or sales metrics---ony by eyeballs and cost-per set of eyeballs.
If enough CMOs were sold on trying "addressable TV" because for the first time they are really engaged with the idea and shown the pitfalls of how they are buying time now, many may test the concept and this is certain to yield some positive results, which, in turn will become known in CMO circles---they talk to each other---and more will test the waters. What happens next is anyone's guess. Sometimes it will pay out; sometimes not and often there will be mixed results---good for some brands, not appropriate for others, etc. But what is needed is getting through to the real decision makers---the CMOs--- and not with a lot of media numbers but with a sensible marketing pitch.
Tracey, very good points.
I am with Ed on the potential solution. It needs to come from CMO's of more digitally focused marketers and most likely out of the performance budgets. As you know, TV media buyers have a tough time buying addressable since it's more work than buying linear TV in GRP-based wholesale deals. They aren't being paid fees to match the extra work of addressable and can't make money buying addressable unless they can directly participate in an arbitrage on the inventory, which is how many make it work today, but clients don't always like that.
For performance buys, they can look at cost per visitor or cost per acquisition it is all about ROI and they are more comfortable paying a higher "investment" (CPM) if the measured "return" justifies it. Not so with other TV media, where the focus is on costs not returns.
Ed, Above when I said the performance indicator would change and there would be multiples depending on the advertiser I did not mean to say that site visit would be the only performance metric. For the hundreds of addressable campaigns I have done, every single one had a CPM rate AND performance metrics. The CPM is what the client paid but if they did not meet the performance metric it was really hard to keep them investing. Also, I think addressable does work for EVERY client it is a matter of negotiation to get the price that works and connecting data assets to provide performance proof. In some case you can’t negotiate the rate down far enough and then you stick with traditional buys but that should change as more addressable inventory comes into the market.
These performance metrics have ranged greatly. From sales at the bottom of the funnel to brand awareness at the top. (I have to say sales lift is an easier metric to capture than brand awareness due to several constraints, but it can be done, sort of). I have long felt that TV buys have not received their fair share credit for driving conversion but yes branding is a key element for the majority.
On your point of getting to CMO’s, you are right. I have to say that was always my hope but due to agency structures that is easier said than done. I had my best result reaching the account directors vs the media buyers. The account directors are generally the ones with the closest CMO relationships. For the most part I felt they got it. Going to a client's CMO without the support of the account director is a quick way to get yourself in deep trouble.
Dave, You hit on a very good point. As I think I was the first to ever develop a business out of addressable buying I have tried every model imaginable. I still feel a model that motivates an agency to negotiate the best rate and pass on pricing to a client that achieves their performance objectives is the best way to go. Basically, the spread between the negotiated rate and the client CPM is how the agency covers the costed of the significantly added amount of skilled labor. It feels like someone is going to step up and provide a model that I referenced in my first comment…client sets a budget and pays on a performance indicator. I could not get much traction on this idea several years ago as agencies are so risk averse and then there is the issue that the media agent does not control all aspects of success…most importantly creative. Recently I have been working with solutions that can add the creative quality into the attribution equation so maybe there is hope but it likely the seller that will figure this out and reap the rewards for it…or maybe you.
My God so much has to change to really improve TV for all parties involved but it seems inevitable to me (hence the reason I have not given up). We need to start by make addressable in all its forms on TV much easier to buy and not by hiding the parts that require skill in some slick UI.
I think there is enough content in these comments to write several more articles. Keep up the good work as you really make us really think.
Tracey, I wasn't suggesting that the agncy media planners or buyers go direct to their client CMOs about "addressable TV"---I agree, that would certainly bend not only account managements' nose out of joint but also that of the client media directors.
This is a job for the sellers, either in unison, or with a major player leading the charge. Also, it would need funding to obtain the kind of research on ROI that is needed and a well trained team of top sales and research people ----not simply the everyday sales force---to make the pitch. If the CMOs are reluctant to attend such presentation---which is likely--it might take the top folks at the sellers to secure the invite using their rank to motivate the CMOs to attend. In such a pitch the sale must be made very effectively without lapsing into standard media hype and BS as there probably won't be a second chance. And there should be a call to action---most likely a test---with a plan already worked out to monitor---and measure---- the results---so the CMO feels the need to make a desicion---or seriously consider one. It's quite a different posture than normal time sales which is often initiated by a buyer. Of course, the agency---account management and media---- would be filled in---but not at the expense of blocking access to the CMOs.