Commentary
6 Top Takeaways From CES 2024
- by Dave Morgan , Featured Contributor, January 11, 2024
I’ve been coming to CES for decades -- not every year, but most. I’ve talked to literally hundreds of people here this year, and feel like I’ve been able to get a pretty good pulse on the top issues on most folks' minds. Here are my top six takeaways (bear in mind, of course, I still have another 24 hours to go, so I might change things a bit if I wrote this tomorrow):
CES is fully back! The COVID impacts that were devastating to CES, Las Vegas and industry events like this are clearly over. Everybody is here, from all over the world.
Back to the future on talent. Almost everybody I have talked to, certainly those in leadership and management roles, said that the COVID era work rules of lots of “work from home” and a lighter touch on direction and accountability, are over, as well.
advertisement
advertisement
It’s clear that a tougher economy, a crowded marketplace, and companies trying to live up to inflated valuations and salaries from years past no longer have the ability to be soft on workforce expectations. It’s back to the future there!
Consolidation, liquidation. Overcrowded markets, overinflated valuations, pumped-up compensation structures and high cost of capital are all conspiring to make companies focus on profitability and cash flow, aiming for a tight, super-aligned-to-profit generation cost structure, instead of ephemeral, early-stage company metrics like ARR (average recurring revenue).
Just like a massive, multiplayer game of musical chairs, the big question is whether all companies, particularly those in TV programming and ad tech, will find a chair. Some will consolidate. More will be liquidated.
Reset of “alt measurement movement.” Over the past few years, we’ve seen more than a dozen companies raise billions of investor capital collectively at huge valuations, hoping to grab a chunk of the multibillion-dollar TV and premium video ad currency market.
So much for that. Big topics in Vegas include the layoffs and the resetting of business models in this sector, the clear resilience and survivor power of longtime dominant player Nielsen, and the tough economics and consolidation of the large TV companies, who are the ones who fund the currency market.
As was described to me last evening, the “alt measurement movement” doesn’t look like it will ever get to the adult table of currency revenues. Best to take a zero off those crazy valuations!
AI everywhere. Of course, AI is the big topic here. Everyone is talking about it. Every company has added it to their press releases, their one-sheeters, their presentations and their booths. By far the best discussion on the topic I have seen here is from Shelly Palmer. He has been focused on AI for a decade. He is the best.
Workflow redesign, automation. The rising cost of capital, the focus on profits, the need to get more with less and the emergence of AI to 10X productivity and output means are putting workflow redesign and automation at the top of a lot of industry discussions here. It’s easy to talk about, but hard to do. Let’s see where this one ends up in a year.
Are you wondering why I haven’t listed drones, virtual reality glasses, foldable TVs or kitchen-top smokers? It’s because I haven’t been to the convention floor yet.
I’m actually headed there now. More on that next week!
Good review, Dave. Thanks.
Regarding the "alternative currency" drive for national TV ratings the cat was out of the bag when one of the parties said that it was not intended that any of these "currencies" would be the new standard and that their use---or non-use----was up to each seller. That told me that the sellers were using this supposed movement as a clever ploy to pressure Nielsen into doing what they wanted---produce more stable ratings for even the smallest audience shows and include every possible "viewer"---including out-of-home "audiences" ---so said "viewers" could be monetized.
And, frankly, I can't blame them for this nor for successfully resisting attempts by some of us to get attentiveness incorporated into the national ratings---as a standard that all buyers and sellers use. The last thing the networks need is a finding that "commercial audiences" are much smaller than is assumed---even if that is the truth.
The big losers, of course, are the advertisers though I doubt that many of their CMOs or brand managers even know about this---let alone care. Sad, but that's what you get when you stand aloof---media is so boring, isn't it---- and fail to participate with your time and money.
Ed I agree that there is a big appetite for measurement for even the smallest audience shows, inclusion of every possibe viewer and in any way and any time (i.e. OOH audience).
Have you come across the same appetite for small/niche content operators to pay for it? Do they realise that the smaller the audience the more investment has to be made?
John, an interesting question. When the cable channels became established and gradually developed their viewing bases they all had to subscribe to Nielsen to sell their GRPs. And as it happened, the price they paid per measured viewer was far higher than what the much larger audience broadcast TV networks paid--but this was accepted as most cable channels were more profitable---percentage-wise---than the broadcast TV networks due to their carriage fees. By the 1990s an average cable channel was making a 20-25% pre-tax profit while the norm for the broadcast TV networks was about a fifth of that.
Fast forward to today and it seems to me that a similar disparity will prevail in pricing---but the problem may be that many of the lesser---or very low rated---- streaming services wont be able to afford it as they may be money losers. So the big guys will have to foot the small guy's bills to a considerable extent by paying more than they otherwis might---but so what---as they will be selling inflated "impressions" not "viewers", to advertisers who don't seem to care whether their messages are seen.
Ed, that's why the collective 'broadcasters, streamers etc.' should create a consortium.
The consortium should appoint a research company / or companies that can accurately provide the requisite data that is defined by the consortium (which needs to include media buyers and advertisers requirement inputs). The consortium then overall owns and manages the audience data and therefore need to create a rate-card to pay for the research costs plus management and operational costs. That would be spread across broadcasters, streamers, media agencies and marketing organisations who each pay their slice of the cake.
Ed, John, a few of the challenge to a consortia doing this: 1) huge competitive advantages to the nuances applied to different metircs - for example, YouTube might have lower attentiveness than Netflix, but higher digital outcome rates; 2) big, big upfront costs to get it started - someone has to pony up many hundreds of millions to get it started, and TV companies, for example, are super cash poor these days, and media buyers and clients have never put up real money for currencies; 3) Nielsen has multi-year contacts in place with all major sellers today that carry billions of collective committment, which can't be terminatd for many years, and are are staged to expire in different years making it hard to prevent sellers hae to double pay for a bunch of years, something that most of them don't have the cash or courage to do.
Agree, Dave.
But a few points. In the days when advertiser "sponsors" controlled many shows in prime and other dayparts, they---the advertisers -----did fork out money to subscribe to Nielsen as these were "their shows" that were being measured. I know as I sat through many Nielsen presentations to our clients---as a very young guy at BBDO. When the networks assumed control ocver their content the advertisers simply stopped subscribing to Nielsen. However it's not true that the sellers account for almost all of Nielsen's national rating income---as some think. The agencies as well as some producers, various financial analysts, etc. probably pay about 20%. However this is hardly enough to force decisions that the sellers may object to.
Regarding a serious effort to unseat Nielsen in the "audience" measuring business even if some entity plunked down the big bucks needed to start up such a rival service and pass all of the tests it must deal with, the sellers would probably have to continue buying Nielsen for a fairly long time, not only to honor their contracts but also as a failsafe against the newbie screwing up ---or producing "harmful" data. Which means that many sellers would be stuck with both---and that---as you say---isn't something they would want to do in these profit-squeezed times.
While I get the advantages of having a real JIC in the U.S. for national TV the only way this could work would be if the sellers had no more than equal weight---and influence--- with the advertiser/agency side. That means that advertisers would have to spend a lot of money they are reluctant to spend for TV ratings. Until that changes it's a very long shot that we will ever have a true JIC in The States.
Dave and Ed, I completely agree with those issues.
But I am an optimist and if Oz can do it I don't see why the US can’t. For decades our TV ratings were done using diaries up until 1991. The three large commercial networks could see that continuing with 4-week diaries (I think 8 p.a.) was grossly inadequate. The opportunity they saw was driven by technology - the battle of People Meters. So they put their money on the table and went out to market and called for a five-year contract.
After a relatively short 'battle' Nielsen Media Research Australia won and in 1991 People Meter data were released daily. N.B. that time frame relates to the major metropolitan cities (c. 65% of the population) and the regional areas went online later during 1991 as it was harder to establish the panel. The regional broadcasters are separate entities but affiliated to the metropolitan broadcasters with separate contracts.
The 'Big Three' commercial broadcasters were in essence the underwriters and created OzTAM which reported to them. They opened the People Meter ratings opportunity to the public broadcasters (ABC and SBS) who joined the OzTAM committees and had equal say. They also included the advertising agencies (prior to the break-out of media agencies), and the advertising industry bodies to have representation and an equal say. The final decisions still remained with the big three commercial broadcasters for OzTAM to implement.
The financial model was (IMHO) fair and equitable with the Big Three paying a collective majority and the other broadcasters and the (media) agencies were on a sliding ratecard. In the mid '90s when cable gained some mass they also joined the service and paid their share. The result was agreement as we all sat around the table to specify what the essential primary data would be (e.g. average minute, frequency calculations, demographic definitions, market boundaries etc.).
What we are seeing now is the release of non-rating metrics such as 'impressions' (I'm not impressed LOL), duration calculation, verification of age, geography and demographics, lack of de-duplication, reach calculations that exceed 100% et. al.
I realise how hard it is to change currencies. Even harder is how to validate other data sources to inject into a macro audience system. We also need to accept that the future will need to have carefully managed panels for duplication factors (yes I am aware of the COVID impact on the panel and its handling), and that we need to accept validated third-party data injected into the final data.
John, it's not a question of changing "currencies" as the new plan which generates "impressions" based mainly on big data set usage findings will still turn out what many will accept as average minute---or specific commercial "viewing" estimates. The issue is which company will provide such information as there can only be one supplier if we are referring to a standard currency---not any or all of the optional, "alternate currencies".
Unfortunately, in the States, the media sellers are almost completely in control of the TV rating services---national and local--- and this also applies to magazines and radio. Why? They do most of the funding. Advertisers just aren't interested in investing the time required to get up to speed on this fairly complicated subject, nor are they inclined to spend a dime to back a more balanced view of what a national TV rating service should be like.If you ask them they will, no doubt, say, "Our media agency handles that for us".
But the media agencies aren't well placed to do so--especially if it involves spending expert time and money---and the buying community has even less incentive as it is not responsible for ad impact---just "audience" buying. For the buyers to functioning smoothly they must make accomodations with the sellers and get accomodations in return---meaning that both sides "understand" each other's problems.
While I wish it were otherwise, the disparity in funding plus the politics and the silos that we operate in make a true "JIC" a distant hope---not a likely thing.
I think you missed my point Ed.
In essence after we switched to People Meters, and then Nielsen owning the ratings was ended, the industry amalgamated and kept lots of our pre-existing 'currency' providers (field, processing, software tools etc.), refined and standardised the set metrics to stop the BS, also added new metrics agreed by all when needed, and shared the costs equitably (roughly proportional to income generation).
I'm in now way saying it was easy, but it has been successful. I remain an optomist and I realise your battle in the US is much bigger than AU faced.