Future TV Advertising Forum recently returned to Canada for its fourth year, with a focus on buyer/seller relationships, media effectiveness and how brands grow. The big takeaways from this year’s event were:
- Media agencies are reporting, and brands are acknowledging, a greater appreciation for TV as a medium than was evident just two years ago. There are plenty of things about TV that buyers want to change, from price inflation to inflexible deals, but the dominant sentiment is that they want to work with TV.
- TV works, both long-term and short-term, but still needs to get better at proving it.
- Despite some notable media owner innovations, this remains a slow-moving market, although progress should accelerate in the next year.
- The broadcast linear TV market is still holding up, but media owners are vulnerable to any decline in cost-effective reach, especially as BVOD is under-developed. Advertiser use of TV is qualified – they use TV because they need its reach.
This year’s event kicked off with a look at how the proliferation of non-broadcaster streaming services could lead to new ad-supported inventory where marketers can reach their target audiences, assuming a multitude of small-scale, thematic and special interest ‘OTT’ offers can be easily integrated into the advertising planning and reporting ecosystem. Roku, which supports third-party content owners on its device/OS platform, believes it can aggregate streaming audiences to a scale that will interest big media buyers who typically buy off broadcast TV or BVOD.
Roku has its own sales house and Christine Summers, Regional Sales Manager for Canada, confirmed that the company will help content owners on the platform sell their audiences, but only once they reach a reasonable scale individually. Speaking about the long-tail OTT market in general, Michael Ingemann, Managing Director at Cadreon, IPG Mediabrand’s ad-tech unit, said niche audiences are interesting. “They can be very powerful and provide an opportunity to talk to very concentrated and distinct audiences,” he commented.
Ingemann highlighted the need for programmatic access to the audiences. He also noted the big challenge an increasingly fragmented media landscape presents to agencies – the need to remove siloes in order to see and manage the customer journey end-to-end across all screens and platforms.
Roku supports subscription, TVOD and ad-supported monetisation models for content providers and has its own curated channel, Roku Channel, that is 100% ad-supported. Summers said the growth of Roku Channels represented a “doubling-down on AVOD” at the company.
The role of advertising versus subscription in the fast-evolving media landscape was an early topic of conversation at the Toronto event. Josef Hrebik, Canadian Media and Entertainment lead at the consulting/research firm Accenture, is convinced that more streaming will not mean everyone disappears behind an ad-free paywall. Using Hulu and its ad-supported and premium ad-free tiers as evidence, he said: “People want the option and choice [of ads or no ads] and when given that choice they usually pick ad-supported.”
Hulu has 28 million subscribers and 20 million of them – 70% of the total – choose the ad-supported option, Hrebik observed.
Guy Bisson, Co-founder and Research Director at Ampere Analysis, had more good news for both ad-funded media owners and advertisers desperate to maintain reach as viewing shifts from linear: Hulu actually makes more money from an ad-supported subscriber than from a premium-tier household. “They make $11 on advertising per month per subscriber for the ad-supported tier, which means total revenue of $16.99 with ads [since there is also a $5.99 fee for this tier]. That compares to $11.99 for the premium ad-free tier [made up of $11.99 subscription fee and zero ad revenue]. That is $5 a month extra per customer.
“That is why Hulu pushes that [ad-supported] tier so hard. That is why, when you go into Hulu and try to subscribe, ad-free is an optional add-on and why they dropped the price of the ad-supported streaming service earlier this year.”
Bisson noted that Canadians have quite a high tolerance for advertising compared to some European countries – though not as high as in the USA, where Hulu is based. One-third of Canadians say they don’t mind seeing ads around programming, based on research by Ampere Analysis.
Bisson painted a complex picture of interrelated forces that incumbent media owners in Canada need to master as the world goes more digital. On the one hand, the higher the penetration of SVOD in a market (using global data) the more television’s share of advertising goes down [as it loses out to digital, hurt by falling audiences]. But the flip-side is that the stronger the television advertising market is, the bigger the share of the online advertising market that video takes.
Finally, the use of BVOD in Canada is much lower than in Western Europe and the USA. The inference is that Canadian broadcasters have given streaming disruptors an easy ride so far. BVOD is an under-developed market in this territory but that means there is an opportunity to recapture and leverage that market, Bisson pointed out.
Bisson forecast that we will see more ad-supported streaming in future, pointing in particular to the use of hybrid (ads plus subscription) business models. “We are increasingly seeing a land-grab in the AVOD space,” he told an audience of media owners, brands and agencies. “There is a strong opportunity around hybrid; that is one of the big developments we are going to see, and it is where the opportunity lays for broadcasters because that is what they do. Hybrid is really going to influence where we move beyond SVOD and beyond ‘premium’ [ad-free].”
He also highlighted the opportunity for broadcasters in all markets to collaborate with joint streaming platforms (following the Hulu model and the forthcoming BritBox (UK) and Salto (France) initiatives). These leverage the broadcaster brands and give them the aggregation and content discovery power that Bisson thinks is essential in the digital world.
No new advanced ad tech initiatives were revealed by media owners at this year’s show, but Corus gave an update on its audience-based buying using its Cynch platform. This is live and means you can segment audiences based on lifestyle, behaviours and need state, for example. One-fifth of all Corus TV buys now go through a data-enriched targeting process using this technology, Greg McLelland, EVP and CRO at the channel group, reported. Advertisers can now buy ‘fashionistas’ or suburban families with three kids rather than just buying against demographics.
There is some collaboration around audience segmentation among media owners. Rogers and Corus are using some common segments that advertisers can buy against and McLelland said they are working with other broadcasters to expand the harmonisation of segment definitions.
McLelland reckons TV has closed the gap with digital when it comes to data driven targeting and proving outcomes. “We are getting pretty close to what you can do in the digital world, and 95% of Corus clients can measure the effectiveness of TV with their own attribution models,” he said. “They are more content to spend more money on television as a result, because they know it works.”
The attribution can be very short-term. One Corus client, the furnishings company Wayfair, has its products featured in home lifestyle programming on the HGTV channel. “They know when the products have been seen and how many lights they sell in the next hour after that,” he revealed.
McLelland made a point that is currently being emphasised by media owners in the UK: television is a full-funnel medium. “It is great for the long-term and also for the short term – it can do both,” he declared.
Nancy Surphlis, Chief Investment Officer at Omnicom Media Group, one of Canada’s biggest media buyers, also acknowledges this. “Our clients know television works short-term because sales are up. Some brands go on television and all of a sudden they see things happen, short-term.”
The Canadian bank CIBC is trying to introduce real-time TV attribution, but this has been a struggle, and its Senior Director for Media and Customer Marketing, Melissa Williams, emphasised the need to demonstrate short-term outcomes.
“We have spent a lot of time proving the long-term value of television but one of the hardest things for us has been proving the shorter-term value. We know that TV drives activation but struggle to get that measured.”
She said her company can see what happens online after advertising, but matching exposure to outcomes takes longer than in digital. “It is hard when you need the results for the next quarter and people say that maybe they can show you how TV performed in three months’ time.”
Despite that, CIBC is increasing its TV investments and Williams wishes it was easier to invest in the medium at short notice. “Banking and finance is a relatively volatile sector and if we need to spend X [on marketing] by next quarter [in order to reach business objectives] that is not as easy to do when you call up television people [compared to digital].
“It is a lot easier to execute [short notice media investment] on digital. But we definitely believe in the value of television and spend lots of time ‘selling it’ internally.”
For Expedia, more comprehensive set-top box data, and easier access to it, are on the wish-list. The company likes to match household viewing insights against its own customer data and Maryann Rusnak, Senior Media Manager, CA Brand Marketing at the travel service said this is harder to achieve in Canada compared to the U.S. The company has to work with each individual Canadian media owner to build its model today, and data is not available for all broadcasters, she said.
Rusnak emphasised the need to make all marketing channels work together and said, “When we invest in TV, we see the benefit across all our [marketing] channels.”
Referring to fears raised at the conference about industrial-scale digital ad fraud, Rusnak painted a bright future for Canadian TV. “We have made great strides to invest in television. TV is not dying in this market. The benefits of TV are massive, and I think investments will ship back [to the medium] and sky-rocket.”
This conference gave a sense that media buyers are starting to think more long-term again. Speaking during a session dedicated to creativity and creative effectiveness, Lyranda Martin Evans, Vice President, Executive Creative Director at DentsuBos Canada, highlighted the danger of neglecting brand spending. “If you have a sale on hamburgers, you get a spike in hamburger sales, but [without a strong brand] you won’t get customers when you are not holding the sale,” she warned, using an extreme example of activation-reliant marketing.
Williams said CIBC is trying to push more money into TV and other traditional media. “Like a lot of advertisers, it is possible we pushed too far into digital,” she admitted.
Binet & Field have famously declared that a 60:40 investment split between brand and activation (respectively) is the optimum for marketing effectiveness, as an average across all categories. One brand at Future TV Advertising Forum was asked why this advice had not yet influenced where people are spending their budget in Canada, and the reply revealed the kinds of cultural/structural challenges that come with trying to ‘go long’ after a strong focus on activation.
The brand executive emphasised that brand mattered 100% but revealed that their personal goals are set to drive sales, thus leading towards acquisition marketing.
Denise Rossetto, Chief Creative Officer at the creative agency BBDO Toronto, expressed sympathy with CMOs [due to the pressure on them to juggle media investments in a complex media landscape]. But her advice was that “the biggest risk is not doing a long-term play.” Part of her job, she feels, is to ‘reframe’ the risk/benefit analysis clients have to make.
Rossetto has noticed a small shift in sentiment among clients who moved away from TV ads and are now asking for TV ads again. She said the companies in question are noticing that some of the emotional connection to their brands has suffered from less TV. This observation was backed by Richard Fofana, VP Strategy at the media agency UM.
Rossetto said sentiment is shifting back towards storytelling and emotional ads in order to build brand. “I feel that some clients have missed it,” she confirmed.
Coming back to innovation, views were expressed that linear TV is not in crisis in Canada but it would be good if the buy-side could prepare for the possibility that one day it is (Williams, CIBC) and that disruption has not yet reached the levels when Canadian media owners will feel moved to drive addressable hard (Kristie Painting, CEO at Wavemaker Canada).
Al Dark, SVP, Media Sales at Rogers, predicted the Canadian television ecosystem will be much more addressable 12 months from now, especially as more IP-enabled set-top boxes are connected in cable homes and usage of TV Everywhere services grows.
Media buyers at this event presented a fairly positive attitude about TV but there is no room for media owner complacency. Rossetto at BBDO inferred that support for TV is highly qualified. “The starting point [with clients] is ‘How can we get the same amount of viewership as television without using television.”
Ari Elkouby, Executive Creative Director at the agency Wunderman Thompson also had a warning. After years of pitching creative campaigns to procurement officers and even CFOs at brands in the post-austerity years, with everyone driven to focus on efficiency, he recalled that, “TV was a big bullseye that they went after. Digital was hyped up, maybe a little too much, to deliver the efficiency without thinking about the long-term impact of it.”
Elkouby pointed to predictions of another recession. “If correct, we will be in a similar position, where people in charge of the dollars will ask if TV is the right place to spend and whether we can do this through digital instead.”
If we thought the media landscape is already disrupted, Niraj Dawar, Professor Emeritus, Ivey Business School, Canada, presented the argument that marketing has changed relatively little in comparison to what is coming within the next five years. The juggernaut that is hurtling towards the marketing and media industries, he suggests, is artificial intelligence, and in particular AI wrapped inside digital home/voice assistants.
He reckons these AI-enabled assistants will become an important intermediary in the brand-consumer relationship – relieving people of purchase logistics and brand decisions across a wide range of everyday products. “Once an AI knows what to order and when, and in what quantities and at what prices, and it compares products and the consumer does not have to think about these things, there is no reason to advertise to the consumer,” he argued.
He said advertisers would need to understand the algorithms AI systems use to make decisions for consumers. Dawar characterised the new relationship as consumers saying to brands, ‘Have your machine talk to my machine’.
“There will be very little that advertisers can do to reach consumers direct. If brands are wondering how Walmart became so powerful, they are going to find that in the next five years that these [AI] platforms are going to be 5-10 times more powerful than Walmart.”
He asked whether we even need brands once AIs are trusted to make choices for us, since brands evolved as a way to establish trust in products and simplify purchase decisions. And just to emphasise, he is predicting this disruption for 2024, not 2034.
Compared to AI, price inflation, pricing transparency, deal structures and trading mechanisms might sound hum-drum but Future TV Advertising Forum provided a rare (and possibly unprecedented) opportunity to see Canada’s biggest media owners line up opposite the biggest media buyers, literally, to thrash out their differences on stage across issues that are at the heart of media business and media relationships.
Though good humoured, this was a meaningful exchange that highlighted points of friction and sometimes the opportunity to solve them. You can read a summary of the dialogue below.
The buyers were represented by: Nancy Surphlis at Omnicom; Brad Hugill, Managing Director, Canada, Magna Global; and Sebastian Rennie, Chief Investment Officer, GroupM Canada. The media owners were represented by: Greg McLelland at Corus; Alan Dark at Rogers; Stewart Johnston, President, Bell Media Sales, Marketing and TSN, Bell Media; and Jean Mongeau, General Manager and CRO, CBC & Radio-Canada Média Solutions.
- Surphlis: There was more certainty about where you spend your media budget four years ago.
- Rennie: Today’s economic climate means there is more uncertainty about how clients will want to manage their media budgets.
- Surphlis: Increased pricing uncertainty [where the prices charged to agencies by media owners can change] is leading to spending uncertainty.
- Rennie: We would like to find a way forwards – maybe there is a role for Think TV as an intermediary. A share-based approach, as seen in the UK and Australia, is a possible solution.
- Mongeau: A share-based model is possible, but this requires a conversation with all stakeholders.
- Dark: Media owners also have less visibility about the future than ten years ago.
- Dark: We are not wedded to the agency deal and could do separate client deals
- Hugill: Likes the idea of a share-based deal, and could also talk about (budget commitment) ranges
- Rennie: Dynamic pricing means this is a very opaque market and we have no opportunity to understand the market forces and justify TV pricing.
- Mongeau: Price transparency should not be a problem – this is not a black box.
- Johnston: Pricing is very fluid, but it is not opaque.
- Surphlis and Dark: Both agree that everyone needs to press ‘reset’ on the approach to pricing.
- Surphlis: We have to sit alone and tell clients why prices are up, yet audiences are down, due to supply and demand. I would like sellers to explain the reasons to them, so we sell the idea of TV to them.
- Dark: We would love the opportunity to explain transparency, and explain the cost of content and the cost of innovation and infrastructure investments.
- McLelland: We spend huge amounts on content – the supply and demand curve must be honoured
- Rennie: Seasonal average [i.e. the audience figures used for trading in Canada] is not a good representation and heavily favours media owners
- Dark: Greatly agrees, and says broadcasters need to fix that. I believe it will prop up the value of TV and work in favour of broadcasters, as TV is under-valued.
Future TV Advertising Forum Canada will be back next year. The next three events in this series are Future TV Advertising Forum Amsterdam (Monday , September 16), FTVA Manchester (Wednesday, November 6) and Future TV Advertising Forum London (December 10-11).