Month: December 2020

The key details

• First and foremost, there’s (more) money to be made on Instant Articles. RPMs on Instant Articles rose 48% year over year for the top 100 publishers using the format in the U.S. and Canada, and 27% for the top 500 publishers using them globally, Facebook said.
• The number of publishers using Instant Articles grew this year, with more than 5,700 publishers either starting to use or returning to the format. Overall, around 50,000 Facebook pages worldwide use Instant Articles, according to Facebook
• Facebook said it has plans to build out even more features next year, including expanded video ad capabilities and more in-depth analytics — the platform will provide more information about articles such as scroll depth, top-performing articles, via its creator studio.

This is the second major announcement Facebook has made about Instant Articles this year. In January, the platform shared news about several improvements to the product, including an automated ad yield tool that inserts either a CTA button or an ad in various parts of an article, depending on which is likely to yield more revenue for publishers.

The January announcement also mentioned a pair of changes designed to integrate Instant Article content more tightly into the rest of Facebook. For example, Facebook added a new recirculation button to the bottom right of the Instant Article template designed to keep readers engaged with publisher content for longer periods of time. It also added support for Instant Article pages to Facebook Stories, which Facebook says is used by 300 million people every day.

A second half surge
There is no clean explanation for the improved revenue performance; a Facebook spokesperson said different things drove improvements for different publishers but did not elaborate or provide specifics.

Facebook’s RPM calculation does not calculate value from CTA buttons, which might generate revenue off Instant Articles themselves, the spokesman noted.

Advertiser-specific demand for Instant Articles was not part of the picture. “We are cautious about investment [on IA] unless it’s direct or we include a partner to ensure contextual brand safety,” one media buyer said, explaining that because Instant Articles remains open to all publishers, clients remain wary of it.

Regardless of the reason, the uptick began in the second half of 2020. Justin Wohl, the chief revenue officer of Salon, noted that the RPMs on Salon’s Instant Article pages sat steady at about $8 through most of the spring, then began rising in August.

Thanks to another substantial jump over the past 90 days, Salon’s RPMs on Facebook Instant Articles now sit north of $15, 30% higher than its mobile site RPMs. “I have no complaints,” Wohl said.

Demand via Instant Articles right now is so strong, Wohl said, that Salon is using the format purely for ad revenue, rather than as a tool to capture email addresses or drive subscriptions, a priority many publishers have explored. “There’s no reason I’d turn that off,” he added.

A long road back
A few years ago, publishers spoke about Instant Articles mostly in the past tense. The format, which originally attracted major news publishers including The New York Times and the Washington Post, quickly lost publisher support as monetization disappointed and Facebook appeared to shift its focus to native video.

But beginning in 2018, revenue from Instant Articles began improving. By 2019, the programmatic fill rates had improved to the point that Instant Articles’ RPMs were reliably better than what some publishers could earn on an open exchange. “It was a steady climb,” said Grant Whitmore, the founder of the media and ad tech consultancy BeeSpoke.

Trustworthy?
For all the effort Facebook is putting into repairing its relationship with media companies, many publishers are watching the positive growth warily, partly because they do not understand its causes.

“It’s safe to say average CPMs on Instant Articles are up in Q4, but it’s not clear if that increase is due to market demands or specific product enhancements,” said an executive at one publisher that uses the Instant Article format and asked not to be identified while discussing Facebook.

That executive said the effective CPMs they were seeing through Instant Articles were up about 10% year over year, and pointed to a number of possible reasons why demand could have shot up, including significant political ad spending around the election along with the heavy spending that typically comes in at year’s end.

Whether this year’s boost is sustained or not, the gains have been meaningful enough that some publishers feel comfortable riding with the format. “We’ve stuck with [Instant Articles] so far,” that executive added. “mostly because of the revenue benefit.”

So let’s set aside looking ahead until the next edition of the Future of TV Briefing and end the year looking back at how the TV, streaming and digital video industry changed in 2020.

This year everyone — from major media conglomerates to TV advertisers to digital video producers — had to adapt in ways they hadn’t needed to before. While the shift to streaming has been in plain view for years, in 2020 TV network groups had to speed up their own internal shifts, and connected TV platforms, streaming services and digital video platforms accelerated their own development cycles in response to the streaming viewership surge. Meanwhile, the traditional TV advertising industry had to find a newfound level of flexibility, as did TV, digital video and commercial producers who had to pivot to remote productions. But not everyone adapted well to 2020, which marked the first full year of the streaming wars — as well as its first casualty.

Streaming took center stage

For the better part of the past decade (at least), streaming has been on pace to usurp traditional TV as the dominant way that people watch shows. Technically, that has yet to happen. Even in the second quarter, when shelter-at-home orders were at their strictest, adults in the U.S. spent, on average, 4 hours and 8 minutes per day watching shows on traditional TV compared to 1 hour and 12 minutes spent streaming programming on CTV, according to Nielsen. But at some point, that balance will change, and that tipping point is nearer now that the companies making the shows are prioritizing streaming.

Disney, NBCUniversal and WarnerMedia each announced massive reorganizations to put streaming at the center of their operations. The moves make it likely that even more movies and TV shows that would have been otherwise slated for release in theaters or on linear TV will premiere instead on the companies’ respective streaming services, as WarnerMedia is already doing to Hollywood’s dismay. Adding to that likelihood is the fact that 2020 served as the first full year of the streaming wars. Following last year’s debuts of Disney+ and Apple TV+, this year WarnerMedia’s HBO Max and NBCUniversal’s Peacock rolled out, while Discovery and ViacomCBS each announced plans to launch (or relaunch) their own standalone streamers in 2021.

The ad-supported front of the streaming wars also heated up. While ViacomCBS’s Pluto TV remains the dominant free, ad-supported streaming TV service, Amazon, Roku, Samsung and Vizio stepped up their challenges by adding more 24/7 streaming channels to their respective FAST platforms. Meanwhile, Peacock provides Disney’s Hulu with its biggest competition yet among ad-supported streamers making actual TV programming available to people without pay-TV subscriptions. But Pluto TV continues to add more of that kind of content from programming libraries of ViacomCBS as well as AMC Networks.

Flexibility overtook TV and streaming advertising

The TV upfront market survived 2020, but TV advertising’s model of large, long-term commitments took a mortal blow. The downside of advertisers locking themselves into year-long deals was put on display in March as advertisers in industries most directly hit by the pandemic, such as hotel and airline brands, tried to free themselves of as many advertising commitments as they could. TV networks accommodated these short-term relief requests. But in the process, they set up this year’s upfront for a sea change in which cancelation options became a primary deal point as advertisers sought a greater ability to get out of their commitments should they choose.

Another seismic shift occurred in this year’s upfront market. While the bulk of upfront budgets remained with traditional TV, connected TV emerged as the ultimate winner. Not only did Amazon, Roku and YouTube make upfront gains thanks to their CTV inventory, but TV networks used their streaming inventory to offset linear commitment declines. The money moving to streaming did come with a cost, though. Sellers discounted the prices of their streaming inventory to entice advertisers to redirect their dollars. The sellers’ hope is that, once they have gotten advertisers in the streaming door, they will be able to increase their ad rates, but as demonstrated by their flexibility demands, buyers like to preserve precedents set in their favor. 

Then again, the both the linear TV and streaming ad markets are tightening to the point that it’s hard to see ad prices going anywhere but up. The lower-than-expected viewership since major sports’ returned to TV pushed advertisers to turn to TV’s scatter ad market to reach audiences, but that has sucked up so much inventory and pushed up prices to the point that advertisers are switching over to the streaming market, which has also been maxing out with one media executive saying their streaming inventory sold out before Thanksgiving through the end of the year.

Producers took their work home

The production industry basically came to a halt in the middle of March. In the weeks leading up to the production shutdown, producers had been stockpiling shoots so that the programming landscape wouldn’t come to look like the early days of YouTube when webcams dictated production quality. Zoom-shot programming still became a new genre, but producers quickly developed the capabilities and processes to remotely produce shows and videos that more closely approximated a traditional production than a webcam confessional. 

In the second half of the year, TV show, digital video and commercial shoots began to return to physical production. But by no means did production return to normal. In addition to new health and safety protocols that limited cast and crew sizes and prolonged production schedules, producers had to figure out how to arrange shoots that could be completed quickly in case the pandemic caused them to be canceled without insurance to cover the cancelation costs. While TV and streaming shows have continued to return to production with pauses when cast or crew members test positive for coronavirus, a surge in coronavirus cases since the fall has reasserted the need for remote production for digital video and commercial shoots, making what was a stopgap measure likely to be a long-term — and cheaper — aspect of production.

Quibi got taken out

This year marked the first casualty of the streaming wars, though Quibi was really the casualty of the company’s own making. While some blame can be placed on the pandemic subverting its strategy to be the streamer of choice for on-the-go audiences, the bigger blunders were the absences of a hit show to hook audiences, a large programming library to keep their attentions and a CTV app to make its TV-quality shows available to watch on an actual TV. 

There are plenty of lessons to take away from Quibi’s demise. For starters, any streaming video service should include the TV screen in its distribution strategy (even TikTok is doing this). Also, having hit shows are important (see: Disney+), as is a strong programming library (see: Disney+). And if you’re going to operate an ad-supported tier, ensure that advertisers will have an audience to see their ads, if not on the service in question than on another property, like how NBCUniversal is using its TV networks and digital properties as a safety net for Peacock. And finally, if a set strategy clearly isn’t working in light of shifting audience preferences and a changing business climate, adapt. It was the only way to make it through 2020 and will likely see media companies, advertisers and producers through 2021 as well.

Confessional

“As an industry, we have done a godawful job of convincing the consumer that advertising subsidizes the entertainment ecosystem.”

— Agency executive

Stay tuned: TV networks’ advertising debts

The TV ad industry effectively operates via I.O.U.s. An advertiser agrees to pay a TV network a certain amount of money and in exchange the network guarantees to deliver a certain number of viewers for the advertiser to reach. If the network falls short, the guarantee turns to a debt the network now owes the advertiser. As the pay-TV subscriber base has eroded and traditional TV viewership has declined, these debts have piled up and are reaching a rubicon.

This year’s NFL season has served to showcase TV networks’ advertiser debt dilemma. As The Wall Street Journal reported, rescheduled games are pushing networks like NBCUniversal to lower ad prices to make up for the likely lower viewership of the new airing. Compounding matters, networks have already accumulated debt from previous games and other programs — including ones that aired more than a year ago — that fell short of viewership guarantees.

The combination of low viewership and piled-up debt means there is less and less inventory available for networks to use to make up for more and more viewership shortfalls. Additionally, that inventory scarcity combined with still-strong advertiser demand means that networks risk leaving money on the table if they use the inventory to settle old debts rather than to strike new deals at potentially higher prices. This dynamic is leading some networks to consider new ways of erasing their ledgers, including simply refunding advertisers, according to agency executives.

“In some cases, they have liability from two years ago. That stuff is at 10% to 15% cheaper CPMs than the new inventory. So just getting it off their books is beneficial because they’re giving it away at the discounted 10% to 15% rate,” said an agency executive.

Numbers don’t lie

86.8 million: Number of subscribers for Disney+.

2: Number of seasons of “The Office” that will be available to stream for free on NBCUniversal’s Peacock, with the full series limited to the streamer’s paid tiers.

50 million: Number of people that use Amazon’s Fire TV connected TV platform each month.

$1.175 billion: How much money Sony’s Funimation is paying to acquire anime-centric streaming service Crunchyroll from WarnerMedia.

Trend watch: Streaming rebundling

First, streaming undid the traditional pay-TV bundle. Now, it’s in the midst of a rebundling phase. As traditional TV network owners step up their streaming businesses, they are increasingly trying to set up their own versions of the pay-TV bundle.

TV network groups are becoming streaming network groups. Companies including Disney, WarnerMedia and ViacomCBS are putting together portfolios of streaming services that can be sold as a bundle or used to upsell audiences.

• Disney popularized this approach with the Disney+-Hulu-ESPN+ bundle it introduced in 2019 with the launch of its titular streaming service.
• ViacomCBS is continuing to use its free, ad-supported streaming TV platform Pluto TV to promote its subscription-based streamers, such as the recent addition of a Showtime channel to Pluto TV.
• To go along with HBO Max, WarnerMedia is considering launching a standalone, subscription-based streamer for CNN as well as a new free, ad-supported streamer for its TV and movie library, according to The Information.

TV network owners are turning into aggregators. Companies including Disney, Discovery, NBCUniversal and ViacomCBS are using their streamers as platforms to package in programming from other companies.

• Disney’s Hulu and ViacomCBS’s Pluto TV have been the most explicit examples, having originated as platforms primarily for third-party programming.
• NBCUniversal’s Peacock carries 24/7 streaming channels from outside media companies, such as Gunpowder & Sky, Jukin Media and Tastemade.
• Discovery is licensing shows from A+E Networks for Discovery+.

These rebundling attempts show how stratified the streaming ecosystem is becoming. To establish themselves as must-buys for streaming subscribers — and for advertisers in the case of the ad-supported streamers — these companies are trying to set themselves up as one-stop shops a la Netflix. Otherwise, they risk becoming mid-tier media companies in a market that could split between a handful of massive platforms and a long tail of niche players.

“Ultimately there’s going to be four or five media companies,” said one agency executive. “It looks like AT&T are here to stay. NBCUniversal. Disney. ViacomCBS ain’t there yet. Discovery’s not big enough to be there by themselves. Maybe there’s a legacy group of companies that work together to go direct to consumers.” In other words, a bundle of bundlers.

What we’ve covered

TV ad market tightens up even more, but may loosen up soon:

• In TV’s scatter market, ad buyers saw the amount of available inventory dry up and prices soar in the weeks immediately leading up to and following Black Friday.
• Inventory may open up and prices are expected to drop by Christmas, when the market reaches its annual low point.

Read more about the TV ad market here.

Digital video and commercial producers increase testing to protect talent on shoots:

• Digital video and commercial productions typically rely on freelance cast and crew members, which can increase their exposure risks.
• To mitigate the risk, producers are taking extra precautions when testing people before and when they arrive on set.

Read more about production testing here.

Publishers ready for rocketing ad spending from streamers in 2021:

• Pop culture and entertainment publishers saw streaming services become a top advertiser category in 2020.
• The increased activity among streamers has also been a boon to publishers’ affiliate commerce businesses.

Read more about streamer ad spending here.

Marketers struggle with logistics and divining what Super Bowl ad themes will click with consumers:

• A major challenge for Super Bowl advertisers this year is figuring out how to shoot their commercials.
• Another obstacle is determining what Super Bowl viewers’ moods will be when watching the ads.

Read more about Super Bowl advertising here.

What we’re reading

Disney+’s big day:
Successful as Disney+ has been since launching in November 2019, the past year was basically a prolonged beta period for Disney’s streamer in light of what the company has in store for 2021, according to The Verge. During Disney’s investor day on Dec. 10, the company effectively showed it is making real the vision it originally had for Disney+ with planned premieres of new shows and movies from across Disney’s portfolio that spans Disney, Lucasfilm, Marvel and Pixar.

Hollywood’s programming pipeline:
Ever since the coronavirus crisis shut down physical production, a major question looming over the TV and streaming landscape was how soon might the industry run out of programming. The urgency surrounding that question has lessened to an extent, according to Vanity Fair. Productions have adapted to shoot remotely and, more recently, physically and safely. Meanwhile, TV networks and streaming services have acquired and licensed shows and movies to fill out their schedules and libraries as production returns and new programming results.

Indigenous people’s lack of representation:
Indigenous people continue to be underrepresented in the entertainment industry, according to The Hollywood Reporter. Even after this summer’s spotlight of diversity, equity and inclusion following the killing of George Floyd, there remain examples of Native and Indigenous people being excluded or not receiving equal treatment in programs depicting them, such as in ABC’s “Big Sky” and HBO’s “Lovecraft Country.” As with the lack of diversity, equity and inclusion when it comes to other underrepresented groups, like Black and Latinx people, addressing the issue is not simply a matter of putting more Black people, Indigenous people and people of color on screen or behind the camera, but also ensuring they are treated fairly.

Business Insider, which has more than doubled its subscriber base since the beginning of 2020, is looking at its new partnership with American Express to continue on its growth path, according to Selma Stern, BI’s svp of consumer subscriptions. She declined to disclose the total number of BI’s subscribers and those associated with the American Express relationship.

Last week, BI started offering American Express credit card holders free six- or 12-month trials to the digital publication, depending on the type of credit card they use. This was the first brand-focused partnership specifically designed to drive subscriptions for BI and Stern said that American Express agreement had potential because its card holders have a high population density of small- and medium-sized business owners as well as others in the high-end business segment.

The Washington Post also sees an opportunity for subscription bundling with non-publisher brands, the news publication’s chief marketing officer Miki King said in the most recent Digiday Publishing Summit in October.

In particular, she said, companies and organizations in education, healthcare and finance industries are the most appealing as there is a decent amount of overlap with the paper’s coverage and the interests of the customers these partners can offer.

“Any of the areas where people are seeking info beyond what the provider of that service can give to them” offers a real opportunity for the Post, King added.

The Wall Street Journal has an additional reason for bundling with non-publisher brands.

Over five years, WSJ has accumulated over 40 bundling partnerships in 25 countries, but alongside the traditional bundles with other publishers that make up a portion of those deals, Jonathan Wright, global managing director of WSJ’s parent company Dow Jones, said that partnerships with non-publishers have blossomed in specific regions like Asia. 

And while commercial partnerships that include subscription bundling has “played a central role in accelerating our international subscriptions growth strategy,” it can also be used as an add-on to more integrated partnerships with sponsors, Wright said.

In 2019, WSJ and Standard Chartered Bank signed what Wright called a “significant partnership deal” that gave WSJ and Barron’s subscriptions to the bank’s “top-tier” Asia-based customers. He would not disclose the terms of the deal. Other partners in recent years have included trading platforms, telcomm companies, membership groups, airlines and language schools, he said.

Wright said that the reason for the success in Asia in particular is “the fact that we maintain local language publications, which allows us to connect with a broader spectrum of partner publications regionally.”

The benefit of connecting publisher and non-publishers together through this subscription bundling model goes beyond the top-line subscription revenue grab and the membership perks that a company’s customers get with the access to free subscriptions, according to James Henderson, CEO and co-founder of subscription software company Zephr.

“People often think it’s just about driving subscriptions, but it’s not. It’s about driving to a connected relationship where you continue to earn the right to be connected, but you are the business that can leverage the first-party data relationship,” Henderson said.

And both the publisher and the brand can use that information to inform their businesses.

These partnerships are “mutually beneficial,” Dow Jones’ Wright said, because while the subscriptions are free to the non-publisher linked consumers, “partner organizations have also been able to improve their own key metrics, such as acquisition, engagement and retention of their customers by using our subscriptions and content.”

For more junior staff at some creative agencies, the pressure to over-deliver is more pronounced than ever. “It feels like all of us who are quite junior are competing to be seen to be productive and visible, all over every project and conversation,” said a creative ad agency art director who requested anonymity. “I definitely wouldn’t dare take time off sick at the moment, even if I was half dead. If I get let go in the ‘new normal’, there are going to be so few creative jobs out there to go for if anything happened.”

At other agencies, executives have taken to Slack to exaggerate symptoms and prove how badly they’re suffering, in order to feel justified taking a sick day or skipping a meeting due to illness. Inevitably that has some negative consequences for team morale. “People seem to boast on the Slack channel about how they’re suffering,” said a U.K.-based PR executive who asked to stay anonymous for fear of reprisals. “They use vivid descriptions of symptoms to justify why they can’t write a report or go on a video call. I feel really uncomfortable taking a sick day now,” she added.

Something unhealthy has happened in the workplace culture, where a combination of digital presenteeism and self-justification in a public channel has replaced a private call to a manager to explain that you’re currently too ill to work, said the same PR executive.

Amy Kean, founder of creative agency Six Things Impossible, believes the ad industry’s hustle culture is to blame for the growing pressure to perform and be visible. The result is an unhealthy level of guilt in the workplace. “People feel guilty for not logging on at exactly 8.59 a.m, for not having enough meetings, for not sending enough emails, for not attending those tired, organized-fun, pasta cook-alongs with colleagues at 7 p.m. on a Friday night,” she said.

“Constant guilt means constant pressure to make yourself visible during the day, rather than being trusted to enjoy the space and freedom to get shit done,” added Kean.

Naturally, deciding whether you’re too sick to brave the chilly, crowded commute is an all-or-nothing call on the whole day, compared with deciding to dose up, pull your laptop into bed after an extra nap, catching up later on more focused communication. But this newly emerging insecurity around taking sick days seems at odds with the kind of corporate values organizations may proudly display on their websites.

Not all experiences are bad. Some businesses encourage staff to log-off properly when they’re feeling ill and take the time to recover. Even furloughed workers are encouraged to call in sick where applicable to claim full sick pay rather than their percentage of furlough salary, according to other agency sources.

Nevertheless, the challenges that have arisen as a result of enforced remote-working require more from employers. “Corporate culture narratives look great on your website or a PowerPoint slide along with some pictures of your annual volunteer session at the soup kitchen, but unless you’re regularly auditing how your workforce feels, you can’t be ‘all in this together,’” said Kean.

“I’ve been in companies with thousands of workers who send out ‘satisfaction surveys’ and then report back to the board whether the happy score has gone up and down. That’s it. These new working conditions need more than that,” she added.