Month: December 2019

“The underlying economy, while OK, isn’t that strong,” said Brian Wieser, GroupM’s global president of business intelligence. “That is one factor impacting 2018 and 2019. In 2020, there’s no reason to believe that phenomenon goes away. It might slow [growth] a little.”

In recent years, digital companies’ increased spending has helped boost the overall outlay on advertising, but GroupM’s latest report expects this to taper off somewhat, without January’s implementation of the California Consumer Privacy Act having a significant impact. But it’s unclear how much digital spending GroupM expects to go the duopoly or Amazon, as its report does not break out statistics for specific online platforms. In general, advertising on traditional mediums is projected to decline (with TV especially taking a hit), even as the share of out-of-home advertising is expected to grow.

‘Anomalous’ growth rates
Increased spending on digital advertising has bolstered growth rates in recent years. And digital companies like Facebook, Amazon, Netflix, Alphabet, eBay, IAC, Uber and Booking.com will likely be responsible for $30 billion in advertising spending in 2019, according to GroupM. Over the next few years, as the rapid growth of these companies slows, so will their ad spending, GroupM projects.

“Eight companies alone spent $26 billion in advertising in 2018 and probably $30 billion this year and probably the majority [of this] in the U.S.,” Wieser said. “In the next tier, the Chewys, Wayfairs and others [have been] spending hundreds of millions. I believe these are the companies that are driving so much of the growth that we’re seeing and causing these anomalous growth rates.”

GroupM predicts that after 2021 the advertising market’s annual growth rate will likely be about 3%.

Digital still dominates
By the close of 2019, digital advertising will log a 20% increase, and in 2020 this sector will grow 13%, according to GroupM. Overall, digital advertising will account for a 50% share of media spending in 2020, according to the report.

“The total pool of available spending doesn’t change much,” he said. “We saw this with GDPR very clearly. A change in the supply of a medium does not meaningfully, if at all, impact the change in demand. The two are not necessarily related at all.”

Political advertising is projected to exceed $10 billion
For 2020, GroupM predicts, the total political spending in the U.S. will range from $16 billion to $20 billion, with 60% of that devoted to media spending. GroupM estimates $9.8 billion alone will be forked out for political advertising.

TV spending is declining
For television, 2019’s advertising revenue has declined 7%, to $65 billion. While streaming video services present advertisers “attractive environments” with “enhanced targeting capabilities,” they won’t make up for the ongoing TV budget reductions by advertisers, according to GroupM, which expects the decline to continue. Other traditional mediums like print and radio are unlikely to experience increased advertising next year, according to the report, which forecast radio spending to be flat and print’s share to decline.

A grow spurt out of home
Out-of-home advertising, however, will buck the trend of traditional media’s decline, according to GroupM. OOH levels will reach $8.3 billion this year, an increase of 8%, according to the report. That will occur just as the industry has pushed into digital OOH options and marketers have relied on mediums other than digital ones to catch consumer attention, according to GroupM’s findings. As digital OOH options expand and more programmatic buying opportunities become available, OOH growth will likely continue but at a “more modest 4%-5% growth levels over each of the next five years,” the report predicted.

Negotiations between Amazon and agencies began this past summer, although upfront TV buying usually occurs toward the end of the year. Three buyers said Amazon offered a starting cost-per-thousand price of 40 pounds ($51.76) for a broadly targeted adult audience. That works out to be two to three times the price of ads Sky has sold for similar Premier League games. A pay-TV broadcaster, Sky holds the lion’s share of the league’s U.K. broadcasting rights.

“If you’re an advertiser, you’ve got such [good] access to football anyway, why on earth would you want to pay that?” asked one buyer.

“They missed the TV trading season by a long way,” said another buyer. “They seemed a little bit naive [about] how the U.K. market traded TV.”

Thus far, advertisers of consumer goods and in the automotive and leisure categories have purchased ads for Amazon’s Premier League livestreams, according to a person familiar with the matter. Ultimately, the final ad prices will differ by agency and advertiser, after negotiations.

Amazon declined to comment.

Much like Sky, Amazon is selling advertising on “tiers,” depending on the attractiveness of a particular match to viewers. What’s different is that Amazon’s pricing will require advertisers to pay for all viewers rather than, for example, a targeted audience of 16- to 34-year-old men.

Many industry observers view Amazon’s initial foray into English soccer as a test, similar to its prior venture to broadcast the NFL’s Thursday Night Football games in the States. Amazon will begin to exclusively air a three-day midweek schedule of games, starting with Tuesday’s matches between Burnley and Manchester City and Crystal Palace against Bournemouth. After this week’s round of matches, coverage will continue on Dec. 26. (a U.K. holiday), with a schedule that also includes many overlapping games.

Amazon is airing some prize lineups among the 20 games it has snapped up this season, including the fierce Merseyside derby between Liverpool and Everton on Wednesday evening. Thus, Amazon is hoping its streaming of popular competitions like this will encourage more people to sign up for Prime, which costs 7.99 pounds ($10.34) a month for a U.K. subscription.

Buyers said Amazon estimates that a top game will pull in an audience of more than 1 million viewers and near 500,000 for a lower-tier match. By comparison, last season Sky aired 16 live matches with an audience of more than 2 million on average, while BT Sport logged a record audience of 1.7 million for a single game, according to the Premier League. One buyer said Amazon’s figures could be affected by the sheer number of games carried on a given day, with many at the same time, which could cannibalize some viewership.

Almost half (46%) of English Premier League fans in the U.K. don’t have a subscription to the two premium sports services that currently broadcast live games, Sky Sports and BT Sport, according to Ampere Analysis’ online survey of 2,000 U.K. respondents in September. A similar percentage of Premier League fans (43%) now subscribe to Amazon Prime.

Amazon Prime subscribers who watch Premier League matches are likely to be younger than 34, have a relatively high household income and live in households with children, according to Ampere’s research. For advertisers, this represents an attractive audience that could warrant the high price tags.

And Amazon’s biggest point of differentiation — and of potential pricing power — will be on the measurement front. Participating advertisers will have access to such metrics as the number of views of their products on Amazon’s retail site, as well as the tally of searches and sales increases linked to subscribers who viewed the livestreamed ads, buyers said. Other industry observers will need to rely on Amazon’s release of wider viewing figures.

“We are waiting with bated breath to see what information we’ll get out of Amazon as to the viewing figures, how guarded they’ll be about how many people actually watch,” said Zenith UK managing partner Richard Kirk last week at a conference held by market research firm WARC in London. “The [point of view] we are taking on as an agency is the less [they] tell us, we’ll basically take it that not a lot of people watched it. I’m sure if it’s a success, they’ll rave about the number of people that watched it.”

Amazon has experimented with streaming the games of other major sports leagues, including when it struck a deal to carry the NFL’s Thursday Night Football games. Amazon’s ad sales approach in 2017 was similar to its current Premier League strategy, although buyers were initially required to also buy non-NFL Amazon ads across destinations on Amazon.com, The Wall Street Journal reported.

Recently, ad buyers have said it remains to be seen whether the quality of Amazon’s soccer broadcasts will match those of its traditional pay-TV rivals. Amazon has assembled a star cast of pundits including former Arsenal striker Thierry Henry, British manager Harry Redknapp and Manchester United goalkeeper Peter Schmeichel, who all appeared in a marketing campaign for the launch. Amazon is undoubtedly praying for streams that are free of tech glitches, like last year’s issues that marred its U.S. Open coverage in the U.K., as as The Guardian reported.

“The most important thing [Amazon] can deliver is the quality of coverage [that viewers] can expect from a traditional broadcaster,” said Misha Sher, Mediacom’s worldwide vp of sport and entertainment.

WTF is the Data Transparency Label?
The Data Transparency Label is a standardized labeling system that ad tech vendors can use to clarify the quality of data they sell. Similar to a nutrition label, the Data Transparency Label reveals to advertisers previously hidden details, such as where the data came from, how it was collected, whether it was manipulated or modeled, along with any rules for defining it for a particular audience segment. A total of 20 standardized fields appear. Each field is intended to give marketers, agencies, data providers and publishers a clear outline of what’s in data segments and allow industry players to employ a common taxonomy.

Why does the industry need another standard?
Granted, advertisers should have been already asking their data providers for such details. But now the creation of a standardized labeling system will let everyone involved in a programmatic deal, whether the publisher, ad tech vendor or trader, know exactly what’s in the data segments involved.

Why will the Data Transparency Label benefit advertisers?
With fallout from the implementation of the EU’s General Data Protection Regulation and the passage of the California Consumer Privacy Act, global advertisers are having second thoughts about how they target audiences online. For example, American Express wants publishers to provide an alternative with their own data (which people have already consented to share with advertisers), while other companies like Nissan are threatening to drop any ad tech vendors with shady data practices. For either approach to work, media buyers must conduct an audit of the publisher or vendor they’re buying from. The presence of the Data Transparency Label will mean advertisers can access the information they need to start an audit in a way that allows them to compare different vendors with one another.

Will the Data Transparency Label benefit only advertisers?
The Data Transparency Label could have a big impact on publishers. As use of second-party data (which is typically the property of media owners) becomes more popular, marketplaces that sell it are emerging.

“With third-party data now in decline, this gives back the power to publishers as they become the only party in the ecosystem that can collect, process and segment user data,” said Amit Kotecha, marketing director at data platform provider Permutive. “We believe all publishers can become data providers of [information from] their own first-party audiences. Instead of trading media with third-party user IDs, the advertising industry will trade media through audience IDs.” He added, “The publisher’s inventory will be valued based on the quality of their data and their audience.”

The Data Transparency Label sounds interesting. Where do I sign up?
Data brokers 3W.relevanC, Dstillery, Epsilon, Hearst Magazines, LiveRamp, Meredith, Neustar, Oracle Data Cloud and Pandora are among the first batch of companies to try out the data transparency label. Since the initiative launched in the summer, nearly 20 companies have either started the process to adopt the new labeling system or completed a formal compliance program for it, said Dennis Buchheim, gm of the IAB Tech Lab. Based on early forecasts, it’s likely the data transparency label will become more widely available in the second half of next year, said Buchheim. In parallel, Tech Lab will continue to promote the initiative via educational webinars and information sessions for marketers and agencies, which will be largely focused on how the additional transparency and segment metadata can be applied to improve tactical data selection and campaign efficiency.