Month: June 2020

In effect, what was once a tax is becoming a discount, threatening to lead cost-conscious advertisers to spend their money outside the upfront.

“Scatter pricing going below the upfront, if that happens, then the precedent is set because then why buy in the upfront? The whole point of the upfront is to get better pricing,” said one agency executive.

Advertisers typically pay 10% to 30% higher prices in the scatter market compared to the upfront, according to two agency executives. In some cases, the divide can be more dramatic, with scatter CPMs 40% to 80% higher than upfront rates, according to a TV network ad sales executive. However, since March the gap between scatter and upfront prices has narrowed and even inverted.

Scatter ad prices, on average, have fallen to 30% below upfront prices, according to Standard Media Index, a research firm that compiles advertiser spending and pricing data from agencies. However, the aforementioned precedent has not been set — yet. 

Scatter prices have not dropped below upfront rates for some of TV’s most prized inventory. Broadcast networks’ primetime inventory usually costs 25% to 40% more in the scatter market but now can be had for roughly the same price that upfront advertisers pay, per Standard Media Index. 

That suggests that, even as upfront advertisers have cut back on their commitments, they have clung to the inventory most likely to fetch them a large audience. The continued demand for that inventory is why TV ad buyers are angling to create more flexibility within the confines of their upfront deals rather than redirect those dollars to the scatter market where they run the risk of that inventory no longer being available. And that could be what keeps the upfront kicking once live sports and networks’ hit shows return.

“As high-quality programs start to come in the fall, you’ll see that delta widen [with scatter prices returning above upfront rates],” said James Fennessy, CEO of Standard Media Index.

However, sports and sitcoms won’t save every TV network. For networks to keep advertisers in the upfront, they need to offer what is not available in the scatter market. And so they have been.

To keep upfront advertisers from canceling their commitments, networks have offered to guarantee additional ratings points and inventory upgrades for advertisers that maintain their upfront commitments, according to agency executives. 

Additionally, the moves by networks like NBCUniversal and Univision to reduce their ad loads are seen by agency executives as attempts to maintain some scarcity, which is the engine powering the upfront. If there are fewer ad slots available, advertisers will feel some pressure to lock up that inventory in the upfront rather than wait to see what might be available in the scatter market. “They’ve got levers on their side to decrease supply,” said a second agency executive.

Confessional

“If you’re selling a short-form show, there’s still no better place to sell it to than Quibi, even if there’s no audience. Facebook seems to be out of that game. Snapchat is fine, but the budgets are small, certainly compared to Quibi.”

— Media executive

Stay tuned: Platform video ad recovery

The RPM crisis on video platforms like Facebook, Snapchat and YouTube appears to be subsiding. Some publishers have begun to see their platform video ad revenues rebound to March levels, though they remain short of their pre-crisis numbers.

One media company had seen its Facebook video ad CPMs plummet by roughly 50% between February and April, but in May, CPMs rose to be about 20% shy of the February average, according to an executive at this company. Another media executive said their company has seen RPMs and CPMs “on most platforms back to where we were in early March.”

The media executives largely attributed the recovery to their companies post more videos and longer videos to the platforms so that they can carry more ads to offset the lower ad prices. Now the question is whether media companies will be able to maintain that output and whether the revenue will remain on an upward trajectory.

Numbers don’t lie

$130,000: Cost to run a Hashtag Challenge on TikTok, the platform’s flagship ad format.

-27%: Decline in national TV ad dollars in April compared to last year, according to Standard Media Index.

Trend watch: Ad-free vs. ad-supported viewership

We all know that streaming viewership has surged since March. But ad buyers have wanted to know whether that surge corresponds to an uptick in ad-supported streaming or whether people are just watching a lot more Netflix.

“Pre-Covid, we were seeing it was 50-50 between ad-supported and non-ad-supported [streaming viewership],” said one agency executive. “During Covid, we’re guessing it’s more ad-supported.”

That guess appears to be correct. Both ad-supported and ad-free streaming services have seen viewership grow since March, but the growth has been stronger among ad-free streamers, according to Barclays analyst Kannan Venkateshwar.

However, while Netflix’s and Amazon’s viewership increases have outpaced Hulu’s, YouTube has received the biggest viewership boost, according to Venkateshwar’s analysis. Meanwhile, since March, free, ad-supported streamers Pluto TV, Tubi and Vudu have had an uptick in downloads and sign-ups, though that is not the same as viewership.

Quibi watch: Show cancelations

Less than two months after launch, Quibi has decided not to renew some shows, discussed changing others and canceled series that had yet to be produced, according to Bloomberg.

While Quibi founder Jeffrey Katzenberg has blamed the coronavirus crisis for the service’s struggles, examples continue to mount of how the company has misjudged its debut.

• Quibi’s brand-centric advertising strategy did not stir up enough interest in its programming, and its head of brand and content marketing Megan Imbres left the company a few weeks after its launch.
• Quibi’s roster of “Daily Essentials” shows have proven to be “not that essential,” in Katzenberg’s words.
• Advertisers, unimpressed with Quibi’s viewership so far, have asked to defer their payments to the company, according to The Wall Street Journal.
• Quibi’s audience so far has been older and more female than the company expected, according to Bloomberg.

What we’ve covered

Media companies will need to wait until 2021 for IGTV ad revenue:

• Instagram has started testing ads on creators’ IGTV videos and sharing 55% of the revenue.
• Media companies have been told the monetization program won’t open up broadly until next year.

Read more about IGTV here.

How Roku aims to win over TV and digital advertisers in this year’s upfront:

• Roku will offer incremental reach guarantees for TV advertisers to avoid overlap with their linear TV campaigns.
• Roku will also guarantee lifts in site visits and app installs for advertisers using its OneView buying tool.

Read more about Roku here.

TV advertisers want new rights to pull out of ad deals:

• Cancelation options will be a major focus in this year’s upfront negotiations.
• Advertisers will prioritize three main categories of cancelation options: cancelation windows, cancelation amounts and expansion rights.

Read more about TV advertising here.

The Bundesliga offers a glimpse as to how sports will restart:

• The soccer league’s first match after a 61-day hiatus drew record ratings.
• A question is whether the Bundesliga can maintain that high level of interest once more sports recommence.

Read more about the Bundesliga here.

What we’re reading

YouTube’s uphill battle for streaming TV ad dollars:

YouTube has once again made TV the centerpiece of its upfront pitch, but the video platform still isn’t an easy sell to streaming TV ad buyers, according to The Wall Street Journal. YouTube remains plagued by perception and reality. Some advertisers still see it as a largely a site and mobile app. And many advertisers don’t see its content as comparable to TV. It probably doesn’t help that YouTube is in the process of releasing its highest profile show.

Hollywood’s plan to resume production:

A group of Hollywood studios, guilds and producers has drafted guidelines to resume production and sent the guidelines to California’s and New York’s governors, according to Deadline. The document deals with how to protect people on set from contracting coronavirus, and it calls for a compliance officer to ensure shoots follow the procedures.

Create your own streaming TV bundle:

Bloomberg has developed an interactive tool for people to see how much money they need to pay a month to stream their favorite shows. If your total comes in under $35, you’re controlling your streaming budget better than most people (and certainly better than me).

The fast-moving and highly fractious situation has again thrown advertiser and publishers into a state of uncertainty and fear. For many marketers, the instinct is again to go quiet and reassess how the situation unfolds, much as the approach was in the first month of coronavirus.

“Nobody was imagining we would have to be replanning for these sorts of circumstances yet again,” said Barry Lowenthal, chief executive of media agency The Media Kitchen. 

The range of curfews across the country and instances of vandalism throw in other practical media planning and optimization dilemmas around whether advertising is appropriate in locations where stores aren’t open or where offering food delivery, for example, could put staff in danger.

“This is different than Covid-19 where the advice to clients was closer to ‘Keep calm and carry on’ — right now, there are bigger and deeper societal issues to address when the country is in trauma,” said Joshua Lowcock, chief digital and global brand safety officer at UM.

“Be empathetic” is the key piece of advice Lowcock is giving to clients that are still in-market. “And don’t be in-market if it puts your team members or the public at risk,” he added.

For news publishers, the latest unrest comes at an already painful time. The coronavirus crisis has triggered mass layoffs, furloughs and closures of titles following a major decline in the ad market and the expectation of a prolonged economic downturn. And while traffic to news sites soared during the first few weeks of the pandemic, some advertisers that were still spending during the period sought to actively avoid coronavirus content, or even bad news. 

The current news cycle presents many keywords and categories — such as “death” and violence” — nervous advertisers might look to avoid. From May 29 through June 1, the number of pages flagged as “negative news” on contextual targeting platform Peer 39’s network was 12.9% of the overall volume, up from 10.7% in the two weeks prior to Floyd’s death. The Peer 39 negative news category includes content about crime, accidents, death, disasters, terror and war.

Daniel Avital, chief strategy officer at Cheq, a tech vendor that offers a brand safety tool that analyzes the context of the content on a page rather than keywords, said 90% of clients had requested some form of tightening of restrictions for stories related to the U.S. protests. The 10% that hadn’t requested to be excluded, had largely decided to proactively support news organizations as part of their brand safety policies, said Avital. 

An early poll of GroupM clients found that close to 60% of those surveyed had actively chosen not to blanket-block news related to the unrest, but some are in discussions about whether to pause campaigns, said John Montgomery, the agency’s executive vice president of global brand safety. A source at one large U.S. news publisher said they had yet to see a major dip in advertising yield related to the current news cycle.

Even still, the possibility that premium news organizations might be penalized in covering another era defining — but ultimately negative — story in the last few days could present another major blow. In the last few days, dozens of reporters and photographers have been attacked or arrested while covering the demonstrations, according to the U.S. Press Freedom Tracker. Meanwhile, President Trump has continued to use his Twitter account to deride the press.

Tracy De Groose, executive chair of U.K. news media trade group Newsworks, said the fallout from and situation leading to Floyd’s death marks an incredibly important story that will broaden and continue to run.

“Of course there are genuine sensitivities around the context of advertising placement but I would encourage advertisers and agencies to regularly check their approach, and block lists, to ensure they are not commercially censoring the free flow of journalism around this incredibly important and evolving issue,” said De Groose.

For now, many marketers are turning to messages of support and solidarity on social media. Yet the parade of brands posting similarly worded messages against black backgrounds is somewhat similar to the initial “in these uncertain times” coronavirus response, which was quickly lampooned for its sameness and reliance on platitudes rather than pledging helpful action or financial support.

“Brands just need to do better,” said Christopher Kenna, CEO of diversity focused media network Brand Advance. “There’s no right or wrong answer [in engaging with the current situation] as long as you can say hand on heart that ‘this is authentic for us’ and everything you do around that feeds into that authenticity.”

For the predominantly white company executives and leaders who have historically benefited from the systemic injustices that their black and brown employees are regularly subjected to, March said they have to put in more effort to authentically address the issues within their own company and the social climate at large. 

“In the same way that a lot of people have to work harder to achieve some form of the American dream in their lives, I’ve got to work harder to have an even level of moral standing. It starts with owning [your privilege] and recognizing it,” said March.

In the latest edition of the Digiday+ Talks, where we focus on instructive content, March dove into what is required of managers in this moment to lead the company while also supporting employees internally.

Managing in a crisis

Right now, there are a lot of events happening in the world that managers need to know how to respond to both in the context of communicating with their employees, but also for communicating with their customers.

March offers some advise for how to lead your company outwardly and inwardly during times of crisis and major world events:

• Don’t do things just for the moment. Much like March tells his clients who are building campaigns around major events, he said there is a bigger impact from doing something consistently over time than there is taking one big action to look good in the moment. For example, one client that was advertising against the World Cup in Brazil, he told them it didn’t make sense to advertise just during the event and then abandon the Brazilian population right afterwards. Sticking around reinforces your support of the community and shows your authenticity. This is important to keep in mind when reacting to the protests or the pandemic or whatever other events your company might be reacting to right now. 
• Give your employees space. “Space is required right now. I think something that I didn’t appreciate until I looked some people in the eye is the honest-to-God stress and mental anguish that some people are under,” March said. “You have to respect that,” especially if you have nothing to compare it to in your own experiences. 
• Run your business for the people who will work here three years from now. “If I can make this place somewhere where you have career opportunities and it is an exciting place to work … then I’m doing my job,” said March. In the beginning of the pandemic, that meant needing to do layoffs in order to ensure the company would be here in three years. But in explaining this to his staff, he said it helped to decipher who the reliable employees are that will be around in the long run. 

Hiring a more diverse team

March said that a couple years ago, he was frustrated at the pace at which his company was hiring black and Latino employees. He spoke with his company’s employees of color to ask how they found their job at Noble People or in the advertising world in general, and found that some of his best employees did not come from a four-year university background. 

“There is nothing that I’ve seen learned at a four-year university and all of these glorious internships that makes an entry-level person any better than a kid out of high school,” said March.

• “I [push diversity] because I believe it’s good business. If the country is becoming more racially diverse and I am selling things to more racially diverse people, I should be better at it if I’ve got a more racially diverse agency than my clients who are outsourcing this kind of radar to another company,” said March. 
• Noble People’s recruitment efforts were then expanded to include two-year universities as a way to introduce this career path to other types of people and broaden the base of potential candidates. “I’m not expecting you to know what media planning is or what the advertising agency world is to work here. I need you to be culturally connected, hard working, interesting and I’ll try to give you the rest,” he said.
• March said that requiring a four-year degree can be a copout for a mid-level manager who doesn’t want to invest in a certain degree of training. And while it may be harder to train an entry level person the basic ropes of the job, he tells his managers that at the other end of the effort placed in employees, it will yield an agency that more accurately reflects the country of people that it is selling to. 

The future of work and diversity 

In a lot of cases, the future of work will consist of more remote workforces than ever before. Many employees who can move away are choosing to get out of crowded city environments. Some companies have found that all their employees’ jobs can be done just as well at home as they were in a shared workspace, therefore the need for an office space has gone away all together. 

As a result, there is a level of accountability from upper management that March said could potentially be lowered by not having a central gathering point for a company. “I worry more remote work doesn’t play in the favor” of diversity, he said. 

• Remote work has a lot of pros, but the con is not being able to look people in the eye on a day to day basis, March said. When everyone is in their own isolation, it becomes more comfortable and management does not get the opportunity to walk into an office space and realize that the company does not look like what the country looks like. 
• The other side of remote work is that there is not the physical divide between office and home to limit to help end a workday. March said that it is important for management to show appreciation of that level of dedication to the business in order to keep those good employees with the company. 
• “If I expect people to treat my business as there’s, regardless of time, then I have to treat their lives like they’re important, regardless of the hour that it happens,” said March. business owners come out ahead if they behave like people and support the issues and causes that are important to their employees.

Head of studio Matt Risley was midway through moving to U.K. city Leeds — home of the studio — before the pandemic hit, putting a pin in the moving plans and keeping him temporarily in London. But the new ways of working suit the studio for now.

“We’re set up to be agile and scrappy, these are multiskilled creatives who can make stuff in their bedrooms,” said Risley.

Currently, there are 20 people working for the studio, it plans to have 30 by the end of the year, under a third will be commercial roles.

“Editorially everything is now aligned, we’re closer to commissioning than social has ever been before. Being that embedded within the company means we can find new opportunities.”

The studio aims to compete with branded content arms like Vice’s Virtue, Jungle Creations and LadBible and has hired ex-Unilad commercial director Matt Ford to drive sales. Ex-Mother exec Sophie Lloyd is heading up the initiative as branded entertainment and creative leader.

“The brand has kudos with marketers,” said Laura Wade, EMEA vp of content and innovations at agency Essence.

Channel 4 may not be able to keep the same velocity as other digital-first publishers but it will have the quality content clout. Although combining the best parts of premium broadcast content and the more reactive dialogue from social media will be the challenge, she said.

If done well, 4Studio will attract more mass-market brands wary of social media to invest under the guidance of Channel 4 at a lower price point and quicker turnaround time.  

“Social was always an add-on to a linear digital deal, what’s exciting for us is working purely in social with channel 4,” said Wade. “Linear TV may not resonate with a certain audience we want to approach, being reactive and agile without having to drop half a million on TV is what is appealing.”  

So far, 4Studio has published a handful of branded content series over the last couple of months. One for teen not-for-profit the National Citizen Service, which consists of four short documentaries following different initiatives led by young people making a difference in their community. Most of them, like this five-minute doc about a 17-year-old opening a restaurant to fight food waste, had nearly half a million YouTube views.

“You can create content in a more agile and cost-effective way, but you shouldn’t embark on this because you think its a cheap option,” said Dan Wood, head of partnerships at Mediacom, which has worked with Channel 4 on creating branded content partnerships for TV and with 4Studio. “Good quality work needs investing in. We find it’s probably easier to get a healthy ratio to balance [production and media costs].”

“The biggest challenge [for broadcasters] is the migration of younger audiences to social platforms and away from TV,” said chief investment officer at Havas Media Group, Simon Bevan. “[Youth-focused channel] E4 was Channel 4’s bastion for driving younger viewers, but that lost out to ITV2 and ‘Love Island.’ Now is the right time now the market is disrupted.”

Agencies say 4Studio marks the further convergence of broadcast and social platforms and the credibility of the latter. Previously, broadcasters have been reluctant to view social platforms as anything other than marketing vehicles for shows. 

“There’s appetite from our clients for social content,” said Lewis Shaw, managing partner, head of investment at Manning Gottlieb OMD. “The market is always evolving and democratizing. Last year you wouldn’t have thought that LadBible would be asking questions at the Prime Minister’s daily briefing.”