Commentary
Expect Video Audiences To Be Harder -- And More Expensive -- To Reach
- by Maarten Albarda , Featured Contributor, June 7, 2024
Before those in the know subject me to their scorn: Yes, there is a lot of ad inventory. This is certainly true if you are not too bothered about when and where your video ads show up. But if you do care a little and want to place your ads in a target-appropriate, somewhat safe and vetted break, your options are limited, and they won’t come super-cheap.
There are a few reasons for this, none of which are going to go away anytime soon.
Number one is that viewers really do not like ad breaks in the middle of what they are watching. Many streamer subscribers pay the extra few bucks to be able to watch their content ad-free. How large this group is, is not very easily established. But let’s ballpark it at a third of all subscribers. That is a lot of households where, at least on a streaming platform, you do not have access.
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Streamers know that viewers do not like ad breaks. NBC’s Peacock often front-loads its movies with an ad break, promising viewers that, soon, the requested content will start and will not be interrupted. It will be interesting to see how Peacock will manage the ad breaks around the Olympics. I’m sure they will not want to interrupt Simone Biles’ routine with a Geico ad!
Warner Brothers Discovery decreases its ad load in prime time, to avoid irritating its largest viewing base, while trying to entice them to buy up to the ad-free experience. This seems counterntuitive to every TV ad salesman’s experience, but I am sure that Warner Brothers Discovery can back up this strategy with numbers.
So viewers are opting out, and platforms are restricting themselves as well. Both factors mean there is less inventory to sell/buy, which means only one thing for the cost of the airtime.
And it will not get any easier any time soon. In fact, the industry agrees that consolidation of platforms and streamers is only logical. There are too many platforms vying for viewers, and content is expensive. Hulu, Disney and ESPN are bundled. Warner Brothers Discovery talked with Paramount earlier this year, only to break off the talks. Now Sony seems destined to take over.
Fewer platforms will undoubtedly also mean less ad inventory, and a higher price for what is available. At the same time, platforms like YouTube and Instagram are experimenting with more ad loads and different ways to show them. Consumers are upset, but the platforms know there is a market out there with more demand than supply.
As a marketer or advertiser, there isn’t much you can do, other than budget wisely, and monitor relentlessly. Many marketers are gearing up to set budgets for 2025. If any form of video is going to be part of your media mix, expect to pay a premium if you want your ads to appear in front of a real audience, at a time you know they watch, and with content you know works for your target.
Thank you Maarten! Question, if we're in a crisis because the container (aka audiences) to deliver ads is becoming more scarce, then why don't planners do more to verify that the actual thing (the ads) that goes into the container are going to maximize the value of the container? Why don't sales lift studies take the actual ad creative into equal consideration? Why don't MMM scientists incorporate a creative coefficient by default (versus only the container)? Pardon the bingo word, but "AI" has now bridged the creative resaerch world to the programmatic world. Which means that every single ad and exposure can now contain a predicted and accurate performance signal. We're finding this to work with our Synthetic Attention. Cheers!
Maarten, as the various streamers struggle to become profitable, they are going to greatly increase their commercial clutter as this is the only way to compensate for buyer demands for lower---not higher ----CPMs. It wont be long before the TV networks start bundling their still impressive linear TV GRP volume with their much less common streaming GRPs so that the overall---or combined ----GRPs are what are guaranteed and the two platforrms aren't competing with eachother. Other changes are in the works---for example, advertisers are balkng at the lack of commercial breaks in streaming content. They don't want their ads droppd into content randomly to interrup scenes that viewers are enjoying, nor do they want their ad messages repeated over and over again in the same episode. All of these irritants ---to viewers as well as adveretiers must be addressed---and soon.
Still, you raise valid points.How many streamers are using ad blokers and what impact does this have on reach? The answer---when it finally comes may be sobering. And then there's the basic point--which I often raise---namely, there just enough streaming viewing to support the many service wannabies trying to cash in on this platform. There's more. A few streaming services---10-12---- account for 90% of the viewing. Will these few gobble up almost of the available ad dollars? Will they be able to reverse their downward CPM trend by offering superior targeting when most streaming TV ad dollars are being bought by corporate---not individual brand-- upfront time buyers? etc. etc.