Leading executives at The Future of TV Advertising U.S. highlighted the growing importance of streaming, with one seller saying streaming is no longer an extension on the media plan but foundational, while an agency said clients who are heavily into DR had started building frequency rather than incremental reach on linear TV so were now using more OTT and connected TV.
Household addressable TV advertising was established in the U.S. using the two minutes of inventory per hour that Pay TV operators are entitled to sell against channels they carry. The vast majority of linear TV inventory still belongs to the programmers however, and work is underway to open up this ‘national’ inventory for addressable advertising as well, dramatically boosting scale for targeting via the television set. Programmers, Pay TV operators and buyers are committed to making this happen and many of them gave an update on progress at The Future of TV Advertising U.S. recently.
The Pay TV set-top box provides an increasingly important subset of connected TV and Sky Media in Germany, working with FreeWheel, is demonstrating how this STB CTV can be managed to maximum effect. Sky serves IP advertising into on-demand IP video including boxsets and the inventory can be bought direct or programmatically, with both demand sources integrated into fully unified auctions that understand total campaign requirements – not just highest bidders. Sky Q inventory is also available to advertisers in an aggregated, multi-publisher audience buy via FreeWheel Media and this acts as an incremental revenue source for Sky Media and a way to build CTV scale for buyers.
Ampere Analysis has modelled the revenue sacrifice that major studio groups must make if they want to stop licensing their content to third-parties including cinemas and also give up on Pay TV channel revenues in order to feed their own direct-to-consumer streaming services exclusively. To replace this income fully they would need 180-200 million D2C subscribers and this figure works for all the studio launches despite their different price points. It is a theoretical model, and the analyst firm is not saying this is what studios should do. Nevertheless, this analysis neatly explains why D2C is driving Pay TV operators, broadcasters and even mid-tier channel owners to invest in more original content.
Analysts have been forecasting a post-boom slowdown for subscription streamers, after many consumers were converted to SVOD a year early because of lockdown. With SVOD stacking also reaching a ceiling for some household budgets, the focus now is on sustaining strong growth rates. More and deeper partnerships between streamers and platforms, including Pay TV, are considered the answer. These should include discounts – and maybe significant discounts if you take several subscription streamers in the bundle.
The latest figures from research companies including Omdia, Ampere Analysis, Parks Associates and Digital TV Research show the growing power of SVOD and AVOD and the continued decline of Pay TV in North America. Among the highlights: U.S. spend on OTT services has doubled in two years; Global SVOD subscriptions will hit 1.6bn by 2025; Disney+ will be the second largest SVOD in Western Europe by 2026 with 55m paying subscribers; North American AVOD revenues will triple by 2026.
Putting an end to audience under-delivery and make-goods, and over-delivery with its wasted inventory
Audience-based buying allows broadcasters to guarantee a total audience rather than particular ad spots. Once adopted, it enables dynamic inventory re-allocations based on overnight audience figures or STB return path data to ensure no campaign over-delivers or under-delivers. xG GamePlan from Imagine Communications harnesses the cloud to optimise this inventory management, reducing the likelihood of make-goods and the costly admin that goes with them, and minimising the chance of audience over-delivery and wasted inventory that could have been sold to another advertiser or used for content promotion. Nine Network in Australia demonstrates the full power of this solution in one of the best examples of how inventory planning can be revolutionised.
The cost for Pay TV operators deploying addressable TV advertising is one-tenth of what it was a few years ago and it should now be affordable for even small service providers, whether they collaborate with other operators or work alone. Widespread support for all STB types is one of the building blocks for scale, and goes on the ‘Done’ checklist. According to one ad-tech leader, the single biggest challenge now is getting broadcasters onboard so we can ramp up addressable inventory.
There is no doubt we are at the tipping point in the long transition from all-broadcast to all-streaming and Videoscape Europe, the thought-leadership event for premium streamed television, is focused on what this means for Media & Entertainment strategies. The conference is focused on digital transition, seizing the global growth opportunity, next-generation content discovery and engagement, and how we successfully replicate the free-to-view model in the streaming space. Confirmed speakers include NBCU, ITV, Struum, Twitter, ViacomCBS Networks International, Revry, Rakuten Advertising and Foxxum.
Imagine an SVOD service that was called ‘Not Netflix, Amazon or Disney, but everything else’ and hosted content from the next 300 most important SVOD services in a market, with the ambition of being the fourth VOD destination everyone goes to. Your monthly subscription is converted to credits that can be used to view content assets from any of the partners. That, in a nutshell, is Struum, a service that launches in the U.S. this spring with nearly 40 SVOD partners already signed up. And the company intends to go global.