Commentary
'Not Enough' Ad Pie: New TV, CTV Advertisers' Small Slices
- by Wayne Friedman , Staff Writer, December 17, 2024
New TV and streaming advertisers? There might not be that many coming -- especially in EMEA territories (Europe, the Middle East and Africa).
Could the same be true in the U.S?
When asked about the prospect of new TV marketers, Deborah Armstrong, senior vice president and general manager for media networks and advertising EMEA for Walt Disney, said at a recent industry event that it is “not enough.”
She focused on issues that have plagued linear/streaming business in this country -- the lack of real third-party measurement, accessing and using first and third-party data, and making TV more akin to digital media, in terms of return on investment (ROI)
That said, Armstrong did tout that Disney+ has been an overperformer -- “exceeding” expectations in the 12 markets where advertising inventory is available for the streamer.
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Looking at the more highly scrutinized connected TV (CTV) world, Roku, the big U.S.-based streaming TV distributor, sees a different picture -- at least in the U.S.
It projects 20,000 new small and medium-sized businesses will enter the marketplace -- almost entirely those with total annual advertising budgets of around $500,000, by one estimate.
We don’t know how many of those will actually be pulled in also buying linear TV. But guess that legacy TV-network based media companies will push any newcomers to add boosted visibility on their linear TV platforms -- even as that business continues to be in a slow decline.
The promise comes in giving new smaller, digital-first advertisers a bigger platform -- with the most reach -- to sell their wares.
Over recent years, virtually all legacy TV-network based media companies have started up and business units/teams to target these potential TV newcomers over the years.
But not all will believe there is major value here for their marketing efforts. Look at some recent big digital-savvy company success stories. Netflix, for example, spent a very underwhelming $7.1 million in advertising in touting its content over the past 12 months, according to EDO Ad EnGage.
More glaringly -- in the automotive category -- the popular EV (electric vehicle) marketer, Tesla has spent zero in TV advertising.
“Too much money is not coming to TV and it’s going elsewhere” adding that “the pie is flat.”
Believe other non-TV media platform exposures-- earning media, paid or otherwise -- will continue to do well for some brands. That piece of the pie won’t be coming back anytime soon.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
The basic issue that confounds streaming services trying to run profitable businesses is that contrary to what was heralded five years ago, not everyone has dumped linear TV in favor of streaming. Quite to the contrary, streaming is now attaining only about 2 hours of viewing per adult daily---not 4-5 hours as supported linear TV in its heyday. Worse, barely half of streaming viewing is ad-supported and as the streaming services feature many fewer commercials per hour than linear, their collective share of "TV" ad GRPs is only about 17% compared to 83% for linear TV.
Despite this, streaming has been getting a fair share of ad dollars relative to its total viewing stats by charging higher CPMs. ---but now the time buyers are forcing the CPMs to drop. In this context, . looking to be saved by a supposed influx of small advertisers is unrealistic. The solution is to keep program costs in check---by using cheaper forms and more reruns--and selling more commercials per hour at rates that are "competitive"to linear---not far in excess of it. Meaning that the solution is to operate more like linear. As for the FASTs--free ad supported streaming services---many who survive will find that this business model---long abandoned by linear TV---doesn't work and will be forced to adopt the hybrid approach---low subscription fees plus more ad clutter in their content.