Commentary
TV Ads Will Straddle Streaming AND Linear For Years To Come
- by Dave Morgan , Featured Contributor, October 28, 2021
The human juice is back in the ad business. Conferences and events are back. Wall Street’s on-and-off love affair with ad tech is back. And, so important for so many of us, New York City is back!
I was one of the many hundreds at the Association of National Advertisers’ Masters of Marketing conference in Orlando two weeks ago. Advertising Week New York last week drew many industry leaders and advertisers to Hudson Yards and well-attended sessions. Industry dinners are certainly back, as evidenced by the return of Luma Partners’ annual Future of TV dinner, attended by the TV and CTV powerbroker cast of characters that only Terry Kawaja can assemble.
BMO Capital Markets had its Fall Ad Tech Reception, headlined by prescient media and Internet analyst Dan Salmon presenting his annual report valuing the adtech and martech markets and key companies. And the venerable Michael Wolf of Activate Consulting presented the company’s mind-blowing “Activate Outlook for Technology and Media 2022.”
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At every one of these events, a key theme was the future of TV and streaming and how advertising would play in that future world. “Will CTV and streaming finally deliver on the forever promise of our industry, that all TV advertising will finally become digital too?” This issue, in one form or another, came up on virtually every stage, in every hallway conversation, and during almost every drink and dinner.
There were slides and charts galore on the topic, but probably no slide better captured the future economics of video than Wolf’s:
Kawaja, Salmon and Wolf are all bullish on the future of streaming and CTV, but all talked or wrote about how its future will likely be intertwined with and anchored by linear TV as well. Linear isn’t going away any time soon.
What does a dual channel TV future of both streaming and linear mean for the ad business? The implications are significant.
One, we will have to de-silo the streaming and linear world, and truly integrate offerings around a more holistic, multichannel notion of “TV” bridged, bought, packaged, sold and measured by content, audiences and outcomes, not just channels.
Two, we will need to truly nail cross-channel TV planning and measurement fast. Buying on only TV or digital metrics and rough heuristics won’t cut it anymore.
And three, the definitions of content, audiences, measurements and outcomes will need to be consistent across companies. Yes, each company and walled garden will have some unique characteristics that it will highlight, but apples-to-apples comparisons cross-company will be critical.
What do you think? Are we ready for a TV world straddling streaming and linear for years to come, maybe well into the 2030s?
Sold. Sign me up!
I just posted the same thing on another forum, Dave. so, of course, I agree. Since it is likely that "pay TV" will settle in at about 40% penetration over the next five years, with over-the-air reception adding another 14-15% coverage, "linear TV" isn't going away---just getting smaller, then, probably, stabilizing in coverage. This is due to several factors---first, the cable systems will develop new ways to hook or retain subs---more flexible channel choice options, selling them other services at a discount---like telephone and internet connections, burglar alarm systems, stc. ---and giving them virtually free smart TV sets for subscribing. Second, the programmers----broadcast networks, cable channels syndicators and stations will need and want to maintain audiences from "linear TV" as well as streamning/digital venues---so they can obtain needed ad revenues from both sources. This will be accomplished by presenting all of their content---including news, sports, specials, syndicated shows like "Wheel Of Fortune" and "DR. Phil", etc.,on both platforms---either at the same time or, perhaps, with "linear" access available shortly after streaming/digital. Even "original" content, such as edgy drama, fantasy movies,etc., which are used to lure SVOD/AVOD subs, will wind up on "linear TV" ---though somewhat later---as a way to amortize their production costs. And then, they will earn more dollars in syndication. It will, indeed, be a symbiotic business relationship---and a sound business plan---if they don't screw it up.
I call this "New Linear" and I think it's going to be the most exciting time of innovation and progress in TV in my twenty plus years in the biz. I could not be more excited! #FutureOfTV.Live
I find it hard to believe that "pay TV" will settle in at 40% of HHs. That's a number that sits at 71% right now according to LRG. I also find it a little tough to believe that a full 15% of the nation will get TV via Antenna in five years time but ok, I'll accept it on faith of your wisdom. But 40% pay TV? That's quite a decline from today's number.
Brian, don't forget that most of the homes that use OTA for signal reception are also SVOD/AVOD subscribers---about two thirds now, more later. So that's merely their way to get broadcast content---news, sports, etc. without buying the whole cable bundle.
Ed, I'm totally with you on your porjecttoins and I do believe in the vision of "linear TV" that you describe. On the advertising front, I do believe that we will see a more holistic "TV" emerge with tools, platforms and measurements spanning it all. Like Brian, I am also very optimistic about what the next years could look like if folks get their business models correct.However, I do believe that it will take more than not just screwing it up. I do think that we will need real innovations to bring it all together, particularly for advertisers.
For agencies that have separate TV and Digital buying teams.... how do we get the TV teams to plan a portion of their dollars for Streaming TV? It's all TV....same screens... why keep it separate? I'm not talking about pre-roll, Youtube or other digital video.... I'm talking pure, 100%, full-length TV programs on the same screen as Linear TV.
Debbie, I can't speak for Dave but you have hit on one of the major problems facing CTV and AVOD, namely that at agency after agency these types of buys are being handled by "digital" people not "linear TV" time buyers. Accordingly, they are usually add--ons , not a basic part of the"brands'"regular " TV" plans or buys---and, as a result they, are often less that might be the case were the whole process integrated --as you say, because it's all "TV". Worse, even if the agencies were to try to "train" their separate "digital" and ""linear TV" teams so they could operate in tandem---or better yet, so they could all be in the same department and go by the same rules they would meet resistence. Adding to the chaos, the CTV and many AVOD sellers use digital methods and metrics which are neither compatible with nor meaningful for many "linear TV" branding campaigns. So they compound the problem ---by trying to force direct response-oriented methodologies upon brands which neither need them nor understand them.
How does all of this get changed?
It's not going to be easy but I would say that since agency clients don't seem to care and pay so little serious attention to the media finction, there's little incentive for the agencies to change their split personalities regarding the two kinds of "TV" buys. Perhaps if the sellers began to talk to both the digital and the "linear" time buyers and learned how the latter operate and how they think a partial meeting of the minds might begin---but if the sellers keep trying to convert the "linear TV" people into "digital people" that's probably not going to do the trick.
Debbie, I totally agree. The agency buying silos present an enormous problem and I agree with Ed that the solution will have to be driven by clients demanding integration. But, as Ed points out, they will have to care a lot, be proactive and willing to invest to make it happen. Many won't. But, as the forever optimist, I know that those who do will win.