Month: December 2020

TV networks had initially anchored their fledgling streaming operations to their lucrative linear TV businesses. But now, in light of this year’s streaming viewership surge and the pay-TV subscriber base’s continued erosion, these companies need to not only to unmoor their streaming businesses but lash their traditional businesses to them and even be prepared to throw those legacy lines overboard. “Somebody does have to burn the boats,” the media executive said.

Somebodies seem to be doing just that. WarnerMedia CEO Jason Kilar is effectively holding a torch to the AT&T-owned conglomerate’s theatrical film business by announcing it will premiere its entire 2021 film slate on HBO Max on the same day those movies will be released in theaters. Meanwhile, NBCUniversal CEO Jeff Shell is reportedly considering setting alight some of the Comcast-owned conglomerate’s cable TV networks as he reorients the Peacock parent around streaming. Then there are ViacomCBS CEO Bob Bakish and Discovery CEO David Zaslav who each seem to be similarly centering their companies around their forthcoming streaming services, Paramount+ (the renamed, revamped CBS All Access) and Discovery+.

A decade ago, these executives would have been considered out of their minds. But in 2020, they’re considered behind the times. Disney may have only launched Disney+ a little more than a year ago, but even ad buyers — a group that continues to spend the bulk of their budgets on traditional TV — consider these networks a little late to the game, especially the likes of ViacomCBS and Discovery that are not yet considered in the game because their respective streamers do not launch (or relaunch in the former’s case) until next year.

“By the time those guys hit the market, the other guys will have already seen [audiences solidify their streaming viewership habits],” said one agency executive. “I feel like this was the worst time to lose a year.”

However, NBCUniversal and WarnerMedia are showing it’s not too late. And while the latter appears to evince boat-burning at its brightest, the company may actually be the most careful with how it is playing with fire on the linear TV side of its business. 

NBCUniversal’s Peacock has had 26 million people sign up for its service, including the addition of 4 million sign-ups since September, NBCUniversal’s Shell said at an investor conference on Dec. 8. To be clear, sign-ups does not equal subscribers or active users. But the figure at least indicates that Peacock continues to pique people’s interests, though NBCUniversal will eventually need to release actual user numbers to show the service has an audience of viewers — not passersby.

Meanwhile, WarnerMedia’s movie gamble already seems to be improving HBO Max’s prospects. With 28.7 million HBO Max subscribers at the end of September — including people who receive HBO Max as part of their pay-TV subscriptions to HBO — the Warner Bros. releases will help to speed up WarnerMedia’s push to hit 50 million HBO Max subscribers by 2025, AT&T CEO John Stankey said at an investor conference on Dec. 8.

The addition of the films to HBO Max could even give the streamer’s forthcoming ad-supported tier a boost. It’s unclear whether the films will be available to ad-supported subscribers; an HBO Max spokesperson declined to provide an answer when asked. But either way, ad buyers have already taken more of an interest in HBO Max following the announcement because they expect some percentage of people who sign up for HBO Max to stream “Dune” or the other films may choose not to cancel their subscriptions after a film’s 30-day streaming window but instead opt to remain HBO Max subscribers and potentially downgrade to the likely cheaper ad-supported tier. The film release announcement “certainly gives us a different consideration of HBO Max than we would have had a month or two ago in terms of how we hedge our bets there,” said a second agency executive.

But, while WarnerMedia appears to be going all-in on streaming, it actually isn’t. The company shrewdly secured distribution deals with pay-TV providers to make HBO Max available to people as part of their linear HBO subscriptions. Because of that, WarnerMedia is able to claim 28.7 million subscribers with access to HBO Max despite only 8.6 million of those subscribers being pay-TV subscribers who have activated their HBO Max subscriptions. But also because of that, WarnerMedia faces less of an uphill climb in growing HBO Max’s subscriber base. In fact, the number of pay-TV subscribers who have activated their HBO Max subscriptions has already grown to nearly 12.6 million accounts, Stankey said on Dec. 8.

By contrast, the TV network groups that are most close to burning their linear TV boats seem to be putting themselves at a disadvantage by doing so. Discovery and ViacomCBS have not yet announced any distribution deals with pay-TV providers to make Discovery+ and Paramount+ available to people who subscribe to their respective linear networks. Meanwhile, NBCUniversal has only been able to secure such deals with its parent company Comcast and Cox, though it offers a free, ad-supported tier for Peacock that makes it more likely pay-TV subscribers would use the service. 

The absence of the pay-TV distribution deals would appear to situate the companies’ streamers as separate from, and incremental to, their linear businesses. These services are meant to appeal to people who don’t pay for their linear networks and carry the potential bonus that some linear subscribers — proverbial “superfans” — may opt to also sign up for their streamers while retaining their pay-TV subscriptions. But in reality, the setups are cannibalistic by nature. In their attempts to attract cord cutters, the companies are effectively baiting their linear subscribers to cut the cord and risking that they won’t. The latter possibility is a hedge that actually jeopardizes the sizes of their streaming audiences and their corresponding pitches to advertisers. After all, as with the TV networks, advertisers are also taking gambles as they redirect dollars from traditional TV to streaming. 

“Basically we’re trying to make bets on how quickly we think these platforms will scale,” the second agency executive said.

Confessional

“I’ve had a couple partners come to us and want to think of creative solutions on how to deal with liability, potentially including cashback.”

— Agency executive on TV networks considering refunding advertisers for ad delivery shortfalls rather than offering traditional make-goods

Stay tuned: Production precautions

Productions have already adopted protocols — like testing talent and crew members, requiring people wear protective equipment like masks and limiting shoot sizes — to protect the health and safety of people working on shoots. But with coronavirus cases rising, producers are reaching a point where they cannot take enough precaution.

Testing has become a critical component of TV and film productions’ safety protocols and is finally becoming a standard part of commercial productions after an agreement struck with the Association of Independent Commercial Producers announced on Dec. 3. However, producers cannot content themselves with testing people days before a shoot or on-site the day a shoot starts. They are finding they need to do both in order to mitigate the risk of someone being exposed after taking a test before a shoot or an on-site test returning a false negative.  

Many producers are doubling up on testing. They are having talent and crew members take tests 72 hours before a shoot that return results in 24 hours. These tests are considered more reliable than the rapid-results tests taken on site. But then, to guard against a person contracting the coronavirus after that 72-hour test, talent and crew members are tested on-site the day of a shoot. It’s unclear how much more expensive this makes productions’ Covid-related costs.

However, for commercial and branded video productions, even these precautions are not enough. One producer who works on branded videos said that their clients have kept all productions remote since October as cases trending upward. “There is no guarantee,” this producer said.

Numbers don’t lie

-15.1%: Forecasted year-over-year decline in TV advertising revenue in 2020.

$1.1 billion: Money that pay-TV providers may refund subscribers because of this year’s sports cancelations.

30%: Share of Hulu viewers that watch more than 10 hours of programming on the streamer each week.

WTF is Nielsen One?

Just when ad buyers had all but given up on the hope for a complete cross-platform measurement product, here comes Nielsen to say it is creating one. On Dec. 8, the measurement provider announced that it is developing a cross-platform measurement product called Nielsen One that will span traditional and digital media — once it becomes available in two years. 

WTF is Nielsen One?

Nielsen One is Nielsen’s forthcoming omnibus measurement product. It aims to be the single measure of ads running and content consumed across linear TV, connected TV, mobile and desktop. Instead of having different measurements for linear TV than for digital, an advertiser will be able to receive reach and frequency stats spanning all platforms and then be able to break down that number on a per-platform basis, according to Scott Brown, head of audience measurement at Nielsen.

What will happen to Nielsen’s current TV and digital measurements?

They will be effectively phased out and folded into Nielsen One. For example, the C-3 and C-7 ratings that Nielsen uses to measure how many people may have seen a TV show within three or seven days of its first airing — those will go away, though an advertiser will be able to view their Nielsen One measurements using those windows if it chooses, Brown said.

When will Nielsen One become available?

The new measurement product will launch in the fourth quarter of 2022. Then by fall 2024, Nielsen expects to merge its existing measurement products into Nielsen One. The interim period is supposed to give advertisers and media companies time to transition to the new measurement standard.

If Nielsen One doesn’t launch for another two years, why is the company announcing it now?

Because it needs to get advertisers and especially media companies and platforms on board. Nielsen will only be able to report measurement for ads and content everywhere they appear if the companies distributing those ads and content allow it to do so. So Nielsen will need to spend the time between now and 2024 signing measurement deals. Nielsen’s primary focus is expanding its connected TV measurement, Brown said, noting the company already has deals done with Amazon, Roku, Hulu, YouTube and Vizio. Nielsen will also form a “cross-media working committee” of industry executives next year to decide how the measurement data is presented within Nielsen’s platform, such as what level of transparency advertisers will receive.

What do advertisers think?

“Cautiously optimistic” is putting it nicely. “I don’t have super high expectations, but as an industry we’ve got to figure out what we’re doing with Nielsen,” said one agency executive. This person was wary of how all-encompassing and in-depth the measurements that advertisers receive will be, especially given how elusive cross-platform measurement has been. “Clients deserve better than what they’ve been getting. There’s a good sense of urgency around the topic given the complete shift in consumer behavior during Covid. That will help.”

What we’ve covered

TV industry continues to lag in addressing lack of Latinx representation:

• TV and streaming buyers continue to consider shows involving Latinx stars and creators as a niche genre.
• Latinx representation in TV and streaming has not improved significantly in recent years

Read more about Latinx representation here.

Discovery unveils Discovery+, its DTC streaming service:

• Discovery is the latest major TV network group with a streamer aimed at cord cutters.
• However, Discovery+ has yet to sign distribution deals with Amazon, Roku or pay-TV providers.

Read more about Discovery here.

Why marketers are ringing in the holiday season with more influencers:

• Requests for holiday influencer campaigns have increased by 20% to 30% compared to last year.
• Marketers are likely turning to influencers because of traditional production challenges and costs.

Read more about influencers here.

How NTWRK made over $100,000 from selling goods via Snapchat:

• NTWRK sold more than 400 platinum money counters that cost $250.
• The media company usually sells these products in its own app but is expanding to social platforms like Snapchat.

Read more about NTWRK here.

What we’re reading

NFL’s rights talks:
The NFL’s TV rights negotiations have slowed down, according to Sportico. Heading into 2020, the league had been been looking to secure its next round of TV deals as soon as possible. The NFL was in a solid bargaining position, coming off a season with strong viewership that made its games even more valuable to TV networks trying to stem the bleeding in their linear TV businesses while standing up their streaming operations. Then the pandemic hit. Not only did it weaken traditional TV networks’ businesses, but also has forced the league to limit in-person attendance and reschedule games, likely contributing to the league’s lower viewership this season. Now the NFL’s upper hand has been somewhat lowered, and reportedly so has the urgency in getting deals done.

YouTube’s video premieres:
YouTube is trying to push appointment viewing. The digital video platform has updated its Premieres feature, which channel owners can use to schedule video debuts, by providing new ways to gather an audience ahead of a video’s launch, according to TechCrunch. Creators and publishers will be able to add trailers promoting an upcoming premiere as well as customize the countdown feature. Additionally, the live pre-shows that channels can conduct before a premiere can now be set up to segue directly to the new video. Individually, the new features are somewhat minor, but they suggest that YouTube still wants to make TV-like appointment viewing a major part of its platform that people are using more and more on their TVs.

Disney+’s subscriber stronghold:
Disney’s streaming service has already hit its 2024 subscriber target, and while there are any number of reasons for that — from Baby Yoda to the Verizon distribution deal — the company’s other streaming service, Hotstar, is a major contributor, according to Marker. The Disney-owned Indian streaming service accounts for roughly one-quarter of Disney+’s subscriber base. Hotstar will also likely play a big role in the future of Disney’s streaming business, as will India in the future of the overall streaming business. In India, with a population of more than 1.3 billion people, the streaming market is set to expand to more than 500 million overall streaming subscribers by 2023, with Hotstar projected to reach 100 million subscribers by 2025.

This past year, the entertainment pop culture site Fandom, which reaches 315 million monthly unique users globally, saw revenue from streamers rise 63%, chief revenue officer Ken Shapiro said. Clark Benson, the CEO of Ranker, which covers entertainment among other pop culture and lifestyle topics, said streaming services became the number one advertising category for his sites this year, and he expects even more growth in the category in 2021. A third chief revenue officer, who asked not to be identified, said streaming revenue has grown into a multimillion-dollar source of revenue for their company and is expected to grow more next year.

“Publishers have benefited from this flood of promotions, and I don’t think that’s going to let up at all,” said Andrew Wallenstein, the president and chief media analyst of the Variety Intelligence Platform.

“Shelter at home culture has made the streaming audience fishes in a barrel,” Wallenstein said. “And to take advantage of that audience dynamic, you had to be marketing at maximum intensity, especially because there’s seven, eight, nine other companies doing the exact same thing.”

Through the first three quarters of 2020, brands spent over $205 million promoting streaming services, and another $119 million promoting specific programs available on streaming services, per Nielsen Ad Intel.

As diffuse as the streaming landscape seems at times, it is really dominated by less than a dozen brands, including Netflix, Hulu, Disney+ and HBO Max.

The spending from this small cluster is making up for what had been a tough year for the media and entertainment category as a whole. While media and entertainment ad spending, year to date, is down 28% year over year, pre-recorded media, the sub-category that includes streaming services, is up 71% over the same period, according to Standard Media Index.

And much of the spending in that category has been digital, a major reason why digital ad spending in media and entertainment is down just 14% year over year, compared to the 35% drop Standard Media Index recorded for television.

In many ways, publisher sources said, the ad spending among streamers has been emblematic of the spending patterns that defined digital media in 2020: Lots of quick, small-dollar campaigns — often just $30,000 to $50,000 at a time — run among trusted partners.

While they’re not the glamorous, high-touch campaigns that sales teams usually lust after, they are plentiful, and easy to execute, often relying on standard media formats that can easily be plugged into publishers’ pages. “We’ll take that any day of the week,” Ranker’s Benson said, who noted that Ranker’s close rate on those kinds of programs is above 50%.

The campaigns come in steadily too. Unlike retailers or certain kinds of consumer goods advertisers, who might only send out RFPs around big shopping tentpoles or seasonal holidays, streamer RFPs come out all year, as they look to continually promote the new films and television shows they’ve invested so much in creating.

“If you talk to the streaming services, their biggest concern is churn,” Fandom’s Shapiro said. “They don’t want a consumer to come in on Christmas Day, watch Wonder Woman, then go, ‘I’m out!’”

Opportunities to generate affiliate commissions abound as well. This year, Meredith developed and launched an on-site lead generation module designed to direct readers on sites such as Entertainment Weekly to the streaming services that offer the shows their editorial team covers, said Will Lee, svp of digital for Meredith Entertainment Group.

“We’ve leaned in editorially wherever we can help provide more coverage (volume) of the many streaming options, but also more content that helps audiences discern which of those many options is the right fit for them,” Lee said.

The ad spending is emblematic in another way. The publishers that have done best among streamers have very detailed first party data that allows advertisers to target niche communities of fans, either of content that a service offers or that a rival service has; advertisers will use the latter kind of segments to do what’s called “conquesting,” where they target customers of rival platforms, Shapiro said, hoping to find customers by marketing against their rivals’ services.

The addition of major movies to several streamers’ slates could ratchet things up even more. Last week, HBO Max announced — to an uproar — that every major theatrical release Warner Brothers had planned for 2021 would be available on HBO Max too.

“A medium as marketing-dependent as film is going to put even more weight behind marketing streaming,” Wallenstein said. “Warner has put a lot of pressure on the rest of the field with SVOD.

“I don’t think anyone can just stand pat.”

• First-party demographics: It’s impossible to arrive at a strong confidence result for many types of content viewed in isolation

• First-party context: Many publishers want to sell beyond their immediate focus areas, and for some topics, like news, the context is especially hard to sell at high CPMs.

• First-party logged-in data gaps: Few publishers have enough logged-in data to make accurate inferences. Indeed, according to data published by ID5 at their recent Identity 2021 conference, nearly half of all publishers have less than 10 percent of customers logged in. Relying on those sample sizes to infer across the remaining 90-plus percent is a questionable practice. 

Ultimately, any platform proposing first-party data alone as a viable solution in 2021 leaves revenue on the table for publishers. Meanwhile, technically accomplished uses of high-quality third-party data can fill in first-party data gaps. After all, third-party data is just someone else’s first-party data. That’s hardly a cutting edge insight, but it’s too easy to forget it. So, if first-party data is taking a lead role,  third-party data should still be a solid supporting act, at least with the right data operation. 

How publishers can solve their third-party data struggles

Third-party data struggles most when it comes to opacity in the source, recency, accuracy and relevance. But these areas provide publishers with excellent opportunities to extract some of that first-party goodness from third-party assets. They can be unpacked in the following ways.

• Opacity in the source: Typically, the further downstream publishers are from a data source, the greater the chance there will be a drop in quality. For example, data that originated in a bidstream from unknown publishers and then passed through aggregators before hitting the DSP is poised to underperform. As such, concerns about the origin of data are legitimate. When Carbon’s data science team analyzed consented URL strings from large players in the space, 10–50 percent proved to be from sites with sensitive data, including child-oriented content, health, well-being related content and more.

• Recency: It’s hard for publishers to see a timestamp on the data publishers are purchasing — which is astonishing given that most practitioners know data and cookies have a very specific shelf life. Marketers are forced to accept paying the same for a 29-day old cookie as they do a 29-hour old cookie. Why is that? Because recency is a difficult element to guarantee if it’s not baked into the data operation from the outset — and few data companies have accurate recency as a result. When data is scored for intent, recency should be front and center in the algorithm. 

• Accuracy: There is some achingly low-quality third-party data out there. A recent example is this gender profile of a single user: Male | female | male, female | female | female | male. There is obviously some need for greater accuracy, in this case.

As an industry, we must do better.

Revenue data is critical to doing better

So what does better look like? Firstly, there’s another data source most platforms ignore — the value of revenue data as revealed by the bidders. Adding this data into the mix in real-time allows for a transformational understanding of both audience and context to enrich both first-party and third-party data at every stage. It’s an area overlooked by too many data companies. Data-science teams must focus on extracting that unique data source and join it up to first- and third-party data to produce a weighted view that maximizes the value of all the available data resources.

ID consortiums and the future of data

If first-party data was the buzzword of 2020, then ID consortiums look likely to be the 2021 equivalent. In theory, an open consortium of compliant data is wonderful, but it seems as though some companies are merely racing to become the next walled garden — and the jury is still out on quality. Case in point, a recent study from BDEX found that a full 25 percent of device identifiers are invalid. 

Now, as the data and identity market matures —  and as privacy regulations become more complex — these factors are making third-party data work more complicated as well.  But when did ad tech stop trying to solve the hard problems?

For as long as there is still upside in third-party, publishers should be extracting value from it. The juice is worth the squeeze, it turns out, but the squeeze won’t be easy. Still, these challenges can be solved, and when the industry gets to the solutions, publishers get a better shot at survival, stability and a chance to thrive.