I just returned from Orlando and the jam-packed ANA Masters of Marketing event. It’s so nice to have our conferences back and to be able to reconnect with so many colleagues, both old and new.
As you might expect, there was a lot of discussion about what was happening in the broader economy, how some of the big digital ad giants were faring, and the continued, strong growth of streaming TV advertising.
Meta (formerly known as Facebook) announced a third-quarter revenue of 4% year over year -- and, worse, a profit decline of 52%. Some Wall Street analysts have taken the company’s stock price targets down as much as 50%. Google’s YouTube ad revenue fell 2% year over year and the overall profit of Alphabet, its parent company, was down 24%, and its stock fell by almost 10% yesterday, which only looks good when considered relative to the 22.4% that Meta stock dropped.
But the industry wasn’t talking doom and gloom in Orlando. Actually, there was a lot more discussion about P&G’s earnings call last week, when its chief financial officer announced it was cutting back untargeted linear TV ad spend and planned to replace it with targeted, reach-optimized campaigns on streaming TV.
Yep, a long-time industry bell cow wants to lead the industry into the streaming ad world.
There are going to be some certain winners in this world -- among them Amazon, Netflix, Roku and VIZIO. There are some companies for whom this might deliver mixed results, including TV companies like Disney, Comcast and Warner Bros. Discovery, all of which will both lose and gain some business,
And, clearly, there are some losers. Google’s YouTube should be a winner given its significant and growing viewership on connected TVs, but its ad revenue declines signal a broader vulnerability, probably to competition from TikTok.
Meta clearly has no play at this point in the streaming TV world.
Tweener TV companies are probably also going to be on the losing side, having neither the scale to build and optimize distribution and pricing of their own streaming programming, nor the niche positioning of some of the smaller companies that might be able to stand with groups of passionate super-users.
There seems to be no question that streaming TV advertising is in for a multiyear growth surge, but not everybody in the TV, video or digital ad ecosystem is going to benefit from it. What do you think?
Great commentary Dave! There is no question that this move away from untargeted linear TV is a show of leadership from P&G, and a win for consumers seeing relevant ads. I would however not rule out addressable linear media as a signifcant reach vehicle. Clearly there will be upside in thus for the TV OEMs (Vizio, LG, Samsung, etc), however with the right design of tech stack and user experience, it is an excellent reach extension to linear media publishers.
Harold, I'm not so sure that P&G is moving a substantial amount of its linear TV spending to streaming ---mybe some---for certain brands, but not necessarily for its many commodity brands in the soap, food and household supplies categories. In order to make targeting really work---and I'm all for it when the cost trade-offs make sense----you would have to improve targeting by 50% just to break even if you dumped linear TV across the board, including very low CPM cable. Also, you need to abandon the upfront corporate buy "futures" market CPM discount system and go scatter--- for each brand individually---which raises your CPMs substantially.
The only really vulnerable linear TV component is broadcast TV scatter, where the CPMs are fairly close to streaming and this is where I expect P&G will make most of its shifts. But the broadcast TV networks are only one piece of the national TV ad spend pie and they still make sense for the commodity brands if time is bought in the upfront, so it remains to be seen exactly how much of a shift P&G has in mind.