State of the Screens #36


Welcome to the thirty-sixth edition of State of the Screens.

1. Return to New Year’s Day, Classic Rose Bowl, Boost CFP Overnights

TV ratings for the College Football Playoff semifinals were up big compared to the previous two years.

Ratings change compared to previous years:
1) 2018 vs. 2017: ↑ 26%
2) 2018 vs. 2016: ↑ 42%

The big change. Moving the games from New Year’s Eve to New Year’s Day.

The peak viewing time was between 9:00–9:15 PM EST.


Below are the 5 most-watched cable telecast of all time:
1) 2014 CFB National Championship (Oregon/Ohio State): 33.4m
2) 2014 CFB Semifinal (Ohio State/Alabama): 28.3m
3) 2014 CFB Semifinal (Florida State/Oregon): 28.2m
4) 2010 CFB National Championship (Oregon/Auburn): 27.3m
5) 2017 CFB Semifinal (Georgia/Oklahoma): 26.8m

College football has fared better than the NFL, but ratings declined during the regular season.

% change between 2016 and 2017:
1)
Fox: ↑ 23%
2) FS1: ↑ 4%
3) NBC: ↓ 3%
4) ESPN: ↓ 6%
5) CBS: ↓ 10%
6) ABC: ↓ 18%

Below are the 5 most-watched college football games during the regular season:
1) Alabama/Auburn (CBS): 13.7m
2) Georgia/Auburn (CBS): 13.5m
3) Ohio State/Wisconsin (Fox): 12.9m
4) Florida State/Alabama (ABC): 12.4m
5) Ohio State/Michigan (Fox): 10.5m

The big question. What impact will an all-SEC national championship have on ratings?

The last all-SEC national championship game (Alabama/LSU in 2012) was the lowest-rated finale over the past 16 years.

Quote from Chuck Neinas — Former Commissioner @ Big 12 Conference:
“We met the day after the game and said, ‘We need to look at a different system,’”

2. What’s Behind the Rapid Progress of Advanced Audience Targets in Linear TV

Brands are increasingly utilizing “digital” like data and targeting with traditional TV advertising.

How big is the market? A recent analysis from Credit Suisse projected that audience buying on traditional TV could be a$100B business by 2030.

That is 40% larger than the entire TV advertising business is today!

Quote from Joshua Summers — CEO @ clypd:
“There are two sides to this, and they’re exactly as you laid them out. But there’s a chasing of dollars across the border. Digital folks want to expand their ability to sell into linear, and linear folks want to expand the ability to sell into digital. Each side has the same goal: to cross that line.

Marketers want to increase the effectiveness of their buys, no matter where they’re delivered. And the way they’ve learned to do that in digital is through advanced data sets, whether it’s first-party, CRM-type lists or third-party data sets. They want to be able to leverage that.”

Flashback. Nielsen announces Comcast agreement to incorporate set-top box data for local TV audience measurement

3. Amazon Eyes Video Advertising Expansion


How aggressive will Amazon be in the video advertising space in 2018?

Crazy stat. The Fire TV stick was the #2 product on Amazon this holiday season and had double the sales compared to 2016.

Connected TV ranking by market share in the U.S.:
1) Roku — 23%
2) Chromecast — 22%
3) Amazon Fire — 21%
4) Apple TV — 13%

More:
1)
Niche Content Is Finally Going Mainstream

2) 2018 will be a pivotal year for Facebook’s video ambitions

3) Snapchat May Force Users To Watch Three Seconds Of Ads Before Skipping

4. IAB Podcast Ad Revenue Study: An Analysis of the Largest Players in the Podcasting Industry

Advertising in podcasting has grown 85% over the past year.

Podcasting advertising revenue (% change):
1) 2015: $69M
2) 2016: $119M (↑ 72%)
3) 2017: $220M (↑ 85%)


Share of ads by delivery type:
1) Host Read: 60%
2) Pre-Produced: 40%

Share of ads by objective:
1) Direct Response: 73%
2) Brand Awareness: 25%
3) Branded Content: 2%


5. And The Top Ad Categories For 2017 Are: Auto, Banks, Insurance

Auto dealers ran 12m+ radio spots last year which was 62%higher than the next closest industry (finance).


Local radio is counting on $564M (↓ 9% vs. 2014) from theupcoming mid-term elections.

Radio is expected to account for 7% of the political spend in 2018.

Flashback. BIA/Kelsey: Local Radio Ads Will Inch Up To $14.2B In 2017

Politics is expected to account for 4% of all local radio advertising in 2018.

State of the Screens #35


Welcome to the thirty-fifth edition of State of the Screens.

1. IAB: Digital Ad Revenue on Pace For $85bn in (Another) Record-Breaking Year

Digital advertising (U.S. only) is on pace to hit $85B in 2017.

Digital ad spend comparison (% growth):
1) 1H-2016: $33B
2) 1H-2017: $40B (↑ 23%)

Mobile share of digital spend continues to skyrocket:
1) 1H-2012: 7%
2) 1H-2013: 14%
3) 1H-2014: 23%
4) 1H-2015: 30%
5) 1H-2016: 47%
6) 1H-2017: 54%


76% of the 9M local businesses (7M) are now buying digital advertising.

Digital video ad spend comparison (% growth):
1) 1H-2016: $3.8B
2) 1H-2017: $5.2B (↑ 37%)


Quote from David Silverman — Partner @ PwC:
“We should no longer think of the internet as mobile vs desktop, advertisers are simply following consumers, who live their lives online — whether on a smartphone during a commute, on a desktop at work, or on a tablet for entertainment in the evening. Digital is an intrinsic part of every American’s day.”

Share of spend by ad format:
1) Search: 47%
2) Banner: 31%
3) Video: 13%
4) Other: 9%


CPMs are increasing (% growth):
1) Banner: $15 (↑ 6%)
2) Video: $24 (↑ 5%)

Mobile ad prices are projected to rise 45% between 2017 and 2018!

2. Comcast, DirecTV, Dish, Charter Set Rate Hikes for 2018

Most of the major pay-TV providers are all set to raise prices in 2018.

Average % increase in pay-TV prices YoY:
1) Charter: ↑ 6–8%
2)
DirecTV: ↑ 3–7%
3)
Dish Network: ↑ 3–7%
4) Cox: ↑ 3–6%
5) Comcast: ↑ 2–3%

More. Cable Prices Have Risen Faster Than Inflation For Each Of The Past 20 Years


Why is this happening? 872K U.S. households dropped pay-TV in Q3–2017 alone which amounts to a 3% drop in the subscriber base. The networks are also raising the price that they charge the pay-TV providers to carry their channels.

Remember broadband. The majority of profit for Pay TV providers comes from selling broadband rather than the actual pay-TV service.

Flashback:
1) Cable operators need to raise standalone broadband to $80 to offset cord cutting, analyst says

2) The Average Cable TV Bill is Set to Exceed $140 by 2020


More. Surge Pricing: How Binge-Streaming Hits Your Electric Bill

3. The Viewability Challenge: Should Advertisers Care?

The big question. How should brands evaluate the quality of their video advertising?

Current MRC standard — 50% of video ad should be in view for at least 2 consecutive seconds.

This focus on viewability raises two key questions:
1) Is it fair to apply the MRC viewable video definitions to social? 
2) Do we have the tools to accurately and fairly measure viewability?

Facebook and Nielsen partnered on a study to explore at what point video ads started to deliver value for the advertiser.

How much impact occurs in the first 2s of a video impression?
1)
38% of brand recall
2) 23% of brand awareness
3) 25% of purchase intent


Wow thats fast! Mobile views on Facebook have been found to improve brand recall in as little as 0.25s !

The bottom line. An ad can not have an impact if it is never viewed by the consumer. The question is how long does the consumer need to watch for the desired impact to occur?

Flashback. Demanding More Stringent Measurement, Some Brands Are Using Their Own Viewability Standards

HP standard — 100% of video ad must be in view for at least half of the video length (Ex: 15s of 30s ad)

New GroupM standard — 100% of video ad must be in view for it to count as a view, but with or without sound and regardless of auto-start.

HP estimates that 20–30% of digital inventory meets this standard.

More. How Brands Can Still Win Over Customers as Attention Spans Decrease on Social

The average piece of mobile content on Facebook is viewed for 1.7s compared to 2.5s on desktop.

4. Bloomberg Aims to Take on CNN With Launch of TV Service on Twitter

Bloomberg has launched the first round-the-clock streaming TV service on Twitter.

The content will be unique rather than rebroadcasted footage from Bloomberg TV.

A team of 50 in New York, London, and Hong Kong will produce the content.

Recent success for Twitter:
1) 8m people streamed one of the presidential debates
2) 830 events were live streamed in Q3–2017

Flashback. Twitter Announces 16 New Livestreaming Partners at Its First NewFronts Presentation

Ad packages on the new Bloomberg service (TicToc) will sell for between $1.5 — $3.0M.

More:
1) 2018 Will See Rise Of ‘Post-Cable’ Networks

2) CNN Is Axing Snapchat Daily News Show ‘The Update’

5. NFL ad revenue is rising amid a ratings decline


Average NFL viewership (% change):
1)
2016: 16.5M
2) 2017: 15.0M (↓ 9%)

Average NFL ad spot cost (% change):
1)
2016: $468K
2) 2017: $474K (↑ 1%)

The bottom line. It costs 11% more to reach 1 viewer in 2017 compared to 2016.

Sports rights on TV are growing rapidly even us consumers are cutting/shaving pay-TV.

The NFL is fairing better than TV in general.

% change in revenue YoY for January-November:
1) NFL: ↑ 2%
2) National TV: ↓ 3%

% change in NFL ad spend by vertical:
1) Insurance: ↑ 41%
2) Alcohol: ↑ 23%
3) Quick Service Restaurants: ↑ 11%
4) Consumer Electronics: ↑ 4%
5) Automotive: ↓ 4%
6) Financial Services: ↓ 6%
7) Telecommunications: ↓ 8%

Estimated sports league revenue from TV rights:
1) 2017: $19B
2) 2012: $23B (↑ 21%)

% change YoY in cable news ad spot cost:
1)
MSNBC: ↑ 23%
2) CNN: ↑ 7%
3) Fox News: ↑ 6%


6. Cord-Cutters Unite: 82 Percent Of Sports Fans Willing To Ditch Pay TV

h/t: @bryanwatkins

The good news. Sports fans are more likely to have pay-TV.

The bad news. 82% would cut/shave their pay-TV package if it was no longer required to watch live sports.


$23 is the average that sports fans would pay for a separate service that allowed them to watch live sports.

75% of consumers said that they “can’t handle” using more than 4 services in addition to pay-TV.

State of the Screens #31


Welcome to the thirty-first edition of State of the Screens.

1. NBC: Inconsistent Measurement (And Bad Ads) Are Holding The Industry Back

Is the current ad model sustainable? This is the question that industry leaders recently wrestled with.

Quote from Linda Yaccarino — Chairman of Advertising @ NBCUniversal.
“NBC is committing to making television smarter, … That means improving the consumer experience, weaning ourselves off of a single currency metric, becoming more focused on meeting real business objectives. Who knows, [maybe] even reducing [our] commercial load across [the] board.”

The challenges:
1) Consumers dislike intrusive/irrelevant ads
2) Marketers are frustrated with measurement that is not based on ROI

Quote from Bob Rupczynski — CVP, Global Advertising @ McDonald’s.
“There are occasions where we’re willing to pay more for a message targeted to a consumer’s needs, … We will never walk away from building the McDonald’s brand, but the more targeted and efficient we can get, the more we can drive an outcome for a specific subset of a segment.”

More. Pivot from Video

Quote from M.G. Siegler — General Partner @ Google Ventures. 
“But again, it’s hard to see how all of that translates to the Netflix era of television, let alone online. Because I don’t believe it does. In our ever-more-busy lives, we simply don’t have time to sit through minutes of content in hours of time to accommodate advertising. Yes, traditionally the advertising has paid for that content (and as such, our time), but the world is changing. Advertisers might be able to buy our “live” time, but our “non-live” time is increasingly not for sale. There’s simply too much else to do. “

More. How Cable Companies Learned to Love Netflix (or Hulu) and Chill

2. The Surprising Impact of Buying Attention Vs. Audiences

Last week we wrote about second-by-second viewership analysis using ACR data. This week we are going to look at second-by-second analysis for attention using eye-trackingsoftware.

How does eye-tracking measurement work? TVision installs sensors on panelists’ TVs, tracking eye movements of multiple people in a room.

Engagement by age group:
1) All ages: 100
2) 65+: 114
3) < 18: 90

Engagement by gender:
1) Male: 101
2) Female: 99


Below is an example of a Yoplait Go-Gurt ad.


Below is an example of the best time to reach moms.


The big question. How soon will we be buying ads based on the amount of time targeted consumers spend with our content rather than mass reach?

More. Attention: The Gorilla In The Room

3. T-Mobile finds success with six-second ads

% of TV ads 30s or longer by year:
1) 2014: 67%
2) 2015: 65%
3) 2016: 56%
4) 2017: 54%


More. Discover Financial Airs Its First Six-Second Spot


4. Media Use: Smartphones Up, TV Down — With TV Viewers Growing More Selective

% change over past 5 years:
1) Individual show ratings: ↓ 25%
2) TV viewing/person: ↓ 15%

The most interesting finding was that viewers were watching fewer total networks even as their choices expanded.

If everyone is watching fewer networks, then shouldn’t it be easier to reach them with advertising? Yes, but they are watching different networks which requires buying more networks to reach the same number of viewers.

The number of viewers who watch 1–2 networks per day has doubled.

% of viewers reached through one primetime spot on each of the big 3 networks:
1) 35 years ago: ≈ 100%
2)
Today: 5%

An advertiser would have to buy ads on 135 different TV networks today to equal the reach from major networks 35 years ago!

5. ‘It’s not just for banner ads anymore’: The New York Times is making all of its ads available programmatically

The New York Times has made all of its digital ad units available through programmatic channels.

Why does this matter? A major publisher like the NYT opening up most/all of its inventory to programmatic shows that they no longer view it purely as a threat (lower CPMs, etc.).

This is part of a larger shift to digital which has led them to set a goal of 10m paid digital subscribers.

6. Connected TV Inventory Explodes, Video Advertisers Enjoy Results

Why do advertisers like connected TV advertising? It is the closest thing to TV ad quality with 97% completion rates without the viewability issues that have plagued mobile/desktop.

Why do networks like connected TV advertising? The CPMs that they can charge are 3–4X higher than mobile.


State of the Screens #30


Welcome to the thirtieth edition of State of the Screens.

1. Why People in Mississippi Have to Watch the Giants

Ever wonder why CBS/Fox show you a specific NFL game?

Quick answer. Whatever game they estimate will get the highest rating in your market.

Long answer. It’s complicated!

CBS selects a unique game for each of it’s 200 local affiliate stations.

Quote from Rob Correa — SVP of Programming @ CBS Sports.
In other words, it’s not as easy as, “Hey, everybody either really hates or really loves the Patriots, so let’s just put that game on everywhere.”

Other factors that they consider:
1) Home blackouts
2) Flexing
3) Cross flexing
4) Prime flexing
5) Constants
6) Mandatory pullouts
7) Primary markets
8) Secondary markets
9) Protected games.

The timing of selection (days out):
1) Initial list — 12
2) Final list — 6

The maps below show the 1:00 p.m. EST and 4:25 p.m. ESTgames by market during week 11.



Flashback. The Biggest NFL Schedule Release Story Is Whether ESPN Gets Stuck With Bad MNF Games Again

2. The Nielsen Total Audience Report: Q2 2017

New quarterly numbers from Nielsen showing explosive growth for mobile.

Total media usage in Q2:
1)
Q2–2016–10h 16m
2) Q2–2017–10h 48m (↑ 5%)

The big question. How much of this is dual screen?

Time spent by platform in Q2 (2016 vs. 2017):
1)
Live TV — 3h 55m (↓ 6%)
2) Mobile — 2h 27m (↑ 43%)


65+ is the only age group with growing consumption of live TV.


Connected TV households in Q2:
1)
Q2–2016–60.7m
2) Q2–2017–69.5m (↑ 12%)

59% of all U.S. households have at least 1 connected TV.

Broadcast only households in Q2:
1)
Q2–2016–13.6m
2) Q2–2017–15.7m (↑ 15%)

Broadband only households in Q2:
1)
Q2–2016–4.1m
2) Q2–2017–5.9m (↑ 44%)

3. TV stations are about to track you and sell targeted ads, just like Google and Facebook

The Federal Communications Commission (FCC) approved a new broadcast standard (ATSC 3.0) that will allow for internet-like targeting of advertising with local broadcast TV.

What are the benefits?
1) Addressable advertising
2) Improved video quality (4k)
3) Improved audio quality

This is currently being tested in the Phoenix market with the following broadcast groups:
1) E.W. Scripps Company
2) Fox Television Stations
3) Meredith Local Media Group
4) Nexstar Media Group
5) Tegna
6) Telemundo Station Group
7) Univision

Flashback:
1) ATSC 3.0: What you need to know about the future of broadcast television

2) World first, as RTL and partners perform IP-into-broadcast real-time ad replacement

Four broadcast groups are also working on a new set of standards for local TV advertising.

The four include:
1) Nexstar Media Group
2) Sinclair Broadcast Group
3) Tegna
4) Tribune Media

Our thought. Addressable advertising combined with improved workflow would both be cheered by advertisers.

Addressable = $$$. Networks charge up to 8x more for addressable advertising on TV compared to non-addressable.

4. Netflix, the Oscars, and the Battle for the Future of Film


A long read (20 minutes) on the complicated relationshipbetween Netflix and the Academy Awards.

The big rub. Netflix refuses to follow tradition in terms of theatrical release. Netflix usually does the minimum to qualify for the Oscars which involves debuting in at least one theater in Los Angeles for one week.

Quote from anonymous academy member:
“The issue I have with Netflix is they won’t play by the rules. They could go theatrically ahead of the release on their platform, but they won’t … I don’t suspect that they will be given a fair shake, at least not in the best-picture category, until they do. Or until the exhibitors die away and traditionalists whose lives were spent creating films to be seen on the big screen leave the business. I don’t see it changing overnight.”

Oscar wins for streaming services:
1) Best original screenplay (2017) — Manchester by the Sea (Hulu)
2) Best actor (2017) — Manchester by the Sea (Hulu)
3) Best foreign-language film (2017) — The Salesman (Hulu)
4) Best documentary short (2017) — The White Helmets (Netflix)

5. How ‘Free’ Killed Video, And What We Can Do To Save It


Google purchased YouTube back in 2006 for $1.65b.

Not bad for a company that was less than two years old!

There are now 5,880 video startups with an average valuation of $4.5m ($26.4b total).

More. A Decade Ago, Google Bought YouTube — and It Was the Best Tech Deal Ever

300 hours of video are uploaded to YouTube every hour.

The average YouTube partner earns $0.32 per 5k views — or a CPM of $0.06.

Note: 1 video view ≠ 1 ad impression (revenue)

More. GroupM: “Facebook has unique definition of video”

6. T-Mobile says its 6-second World Series ads were a home run

T-Mobile reports that the 6-second ads that ran during the World Series were twice as potent in recall and likability as the brand’s standard ads in prime-time.

YouTube also ran 6-second ads during the series.


These shorter ads are intended to fight our ever decreasing attention spans.

More. Few Viewers Are Giving the TV Set Their Undivided Attention

eMarketer estimates that 178m U.S. adults will use a digital device while watching TV.


More. Pre-Mature Decoration: Brands Deck the Halls, But Are Viewers Paying Attention?

TV[R]ev used second-by-second data captured through smart TVs to track when consumers tuned out of specific advertisements.

Tale of two ads:
1) Gap — ‘To Perfect Harmony’ Featuring Janelle Monáe (Attention Index: 49)


2) Dish Network — ‘The Spokeslistener: Mister Snowman’ (Attention Index: 155)


Translation? Ad #1 was 3 times more likely to get interrupted as #2.

Interruptions include:
1) Changing the channel
2) Pulling up the guide
3) Fast-forwarding or turning off the TV

Prediction. This type of measurement will completely change how we produce/test/choose creative. The largest brands in the world are starting to understand how little of their ads the consumer is actually watching and that is why so many are interested in 6-second ads.

7. Ad-Supported OTT Isn’t A Fad, It’s The Future

Roku had 6.7b hours of streaming during the first half of 2017 and 47% of those hours were ad supported.

Flashback. Streaming TV Viewers Complete 98% of All Video Ads, According to New Study


The big shift. The best place to watch TV is still on an actual TV, but how the content/ads are delivered is evolving.

More consumers watch their favorite shows through an online source than through a broadcast/cable source.


The pay-TV landscape grew 0.6% in Q3, but that was led by growth in streaming subscribers.

Subscriber growth in Q3:
1)
Traditional pay-TV — ↓ 872k
2) Streaming pay-TV — ↑ 962k

10 of the 12 providers below lost subscribers.


State of the Screens #12


Welcome to the twelfth edition of State of the Screens. Keep the feedback and ideas coming as we continue the dialogue on the convergence of television and digital advertising.

1. ‘Game of Thrones’ Season 7 Premiere Shatters HBO Ratings Records

16.1m viewers tuned into the Game of Thrones premiere on Sunday.

% growth from 2016:
1) Total — ↑ 38%
2) TV — ↑ 27%
3) Streaming — ↑ 60%

Viewership for the premiere grew by 4.4m between 2016 and 2017.

How does this compare to an event like the Super Bowl?

Total Viewers:
1)
Super Bowl: 113m (7X)
2) Game of Thrones: 16m

Television:
1)
Super Bowl: 111m (11X)
2) Game of Thrones: 10m

Streaming:
1)
Super Bowl: 1.7m
2) Game of Thrones: 6m (3.5X)

Share from Streaming:
1)
Super Bowl: 2%
2) Game of Thrones: 37%


Click here for my full tweetstorm.

2. Netflix Surprises With Big Subscriber Gains, Shares Soar

Netflix blew away Wall Street expectations adding 5.2m subscribers vs. a projection of 3.2m. They beat the target by 63%!!!!

The stock is up 30% this year.

They have now broken 100m subscribers with more than half coming from outside the U.S.

Netflix has customers in 109 countries and 80% of the subscriber growth was outside of the U.S.

Revenue grew to $2.8b or roughly $9 per subscriber/month.

Assuming an average ad CPM of $25, an average user would have to watch 359 video ads per month to match that level of revenue.

Premium content. Netflix currently has $15.7b in content obligations and recently received 91 Emmy nominations.

3. Nielsen Total Audience Report Q1 2017

Nielsen released the data for Q1 with a specific focus on how each generation consumes media.

Time spent by platform in Q1 (2016 vs. 2017):
1)
Live TV — 4h 21m (↓ 5%)
2) Mobile — 2h 19m (↑ 40%)


Bottom line. People are spending more time in front of screens which is why you see 40% growth in mobile with only a 5% decline in live tv.

The challenge for advertisers is budgeting between the various screens.

4. The ad industry feels like Silicon Valley is killing creativity

The ad industry knows that they need shorter creative (6s, etc.), but isstruggling with storytelling in a compressed environment.

A few challenges:
1) Connecting w/ consumers — 
Creative executives worry that 6s is not enough time to connect with customers in a similar way to the 30sallotted in most TV spots.
2) Pricing for creative — Fixed costs for creating both formats is very similar. Will brands expect to pay less?
3) Pricing for ad spots — Do these spots cost 1/5 less to run? For example, if a 30s spot has a CPM of $25 does the 5s cost $5?

Quote from Jason Sperling — SVP, Chief Creative Development @ RPA.
“actors haven’t gotten cheaper. Production costs haven’t gone away.”

Quote from David Campanelli — SVP, Director of National TV @ Horizon Media.
“We know that most of the time the 15-second ad is less effective than 30. Not usually half as effective, but less effective,”

A good example of a 6s ad currently being tested by Acura:


5. The 25 Best Ads of 2017 (So Far)

AdWeek breaks down the top 25 ads so far this year.

12 of the 25 are video w/ format and length:
1)
The New York Times, “The Truth Is Hard to Find” — horizontal / 1m 6s
2) The Atlantic, “Am I Typecast?” — horizontal / 2m 51s
3) 84 Lumber, “The Journey” — horizontal / 5m 45s
4) Samsung, “Ostrich” — horizontal / 1m 50s
5) Coca-Cola, “Pool Boy” — horizontal / 1m 1s
6) Volvo, “Moments” — horizontal / 3m 11s
7) Apple, “Earth (Shot on iPhone)” — horizontal / 1m 1s
8) Nespresso, “Comin’ Home” — horizontal / 1m 1s
9) Hornbach, “Regret Nothing” — horizontal / 1m 7s
10) Jose Cuervo “Last Days” — horizontal / 2m 1s
11) PlayStation, “Gravity Cat” — horizontal/ 4m 18s
12) Connect Internet, “Ice Bucket Challenge” — horizontal / 46s

A few questions to ask while watching some of the best examples of storytelling in advertisng:
1)
How many of these stories fit into a 15s, 30s or 60s?
2) How many of these stories were shot and/or would be a good fit for mobile video (vertical, etc.)?

6. Pew Research Center: Local TV News Fact Sheet

Pew Research Center does a deep dive on the State of the News Mediawith a specific focus on local news.

Local TV station revenue normally follows a cyclical pattern based on the political cycle.

Station Revenue by year (TV only):
1)
2010 — $19.4b
2)
2011 — $17.9b
3)
2012 — $20.3b
4)
2013 — $18.4b
5)
2014 — $20.0b
6)
2015 — $18.5b
7)
2016 — $20.6b
8)
2017 — $19.8b*
9)
2018 — $21.1b*

Digital revenue broke $1b for the first time in 2016.

Air time dedicated to news continues to grow (hours per day):
1)
2003–3.7
2)
2008–4.6
3)
2013–5.3
4)
2016–5.7 (↑ 54% since 2003)


More on this topic. Local Advertising Revenues Will See Double-Digit Increases, Surpass $174 Billion by 2021

Top platforms for $174b local spend (% of total):
1) Direct Mail: $37.1b (25%)
2) Local TV: $20.9b (14%)
3) Online / Interactive: $18.6b (11%)
4) Newspapers: $16b (11%)
5) Mobile: $16b (11%)
6) Local Radio: $15.6b (10%)

7. Streaming services led by Netflix pile up 2017 Emmy nominations

57% (4 of 7) of the nominations for Best Drama aired on a streaming platform like Netflix and Hulu.

Netflix alone had the same number of nominations (for Best Drama) as broadcast and cable tv combined.

Most nominations by network:
1)
HBO — 111
2) Netflix — 91

Top investments in original content:
1) Netflix — $6b
2) Amazon — $3b
3)
HBO — $2b

8. How TV Tuned in More Ad Dollars: Digital Doubts, Drugs and Desperation

Networks try to sell 75–80% of their annual inventory during the upfront period.

Broadcast revenue from upfront ad commitments is expected to grow 3–4% this year.

Television ad revenue is projected to drop 1.4% in 2017.

How can overall revenue drop if commitments at the upfront grow? One possible explanation is that advertisers are moving more money into the upfronts and out of the scatter market.

Increase digital commitments:
1) NBCUniversal — ↑ 42%
2)
Fox — ↑ 40%
3)
Disney/ABC — ↑ 20%

More on this topic. Online Publishers Try Reducing Ads to Boost Revenue

More on this topic. ‘Yield isn’t everything’: How Turner shifted programmatic private

9. Gameday for Disney to Boost ESPN Growth

Disney continues to grow cable revenue despite subscriber declines.

How are they able to do this?
1)
Increase per month cost for channels like ESPN
2) Add provisions in contracts with cable companies that stipulate a minimum number of packages that must carry ESPN

The average annual price increase for ESPN is 5%.

Example scenario:
1)
Subscriber growth — ↓ 2%
2)
Monthly subscription cost — ↑ 6%
3)
Total fee revenue — ↑ 4%

10. Follow-ups from previous editions

1) Why CNBC International is shifting its video strategy to YouTube
2) ‘Views can happen by accident’: Publishers are thinking more about watch time — and YouTube
3) The Tipping Point of TV
4) How Important is the OTT Device Market if the ‘Future of TV is Apps’?
5) Sources: TV Networks, Including ESPN, Bracing For Drop In Ad Revenue For Football Games
6) Global online video consumption and advertising to increase by a fifth in 2017

State of the Screens #9


Welcome to the ninth edition of State of the Screens. Keep the feedback and ideas coming as we continue the dialogue on the convergence of television and digital advertising.

1. CNN thinks it’s figured out what a post-cable network looks like, and it’s betting $70 million on it

What is Great Big Story? A streaming video network that primarily creates 3–5 minute videos.

How is CNN involved? CNN recently invested $40m ($70m total) in GBS at an estimated valuation of $250m.

The average age for each network:
1)
CNN — 58
2)
Great Big Story — 27

Facebook and YouTube have been primary distribution channels up to this point.

What is GBS going to do with the capital? Creating content around the clock will be an immediate step.

Stealth cable network? The move to 24-hour content should get them added on streaming pay-TV services like Sling TV and DirecTV Now.

Their content currently reaches 30–60m people per week.

Users watching on a connected-TV have an average session of 38minutes.

2. Is six seconds enough time to tell a brand story? It is for Fox, the first broadcaster to follow YouTube’s ‘bumper’ lead

Background on 6-second video — In April 2016, YouTube released a 6-second “bumper format”.

The big debate — Does this format work? Can you deliver a message in 6 seconds?

Fox recently announced that they will offer the 6-second format through digital channels before making it available through linear tv.

Ad spots during 60-minute show w/ 16 minutes of ads:
1) 30-second ads — 32
2) 5-second ads — 192

What will happen to the ad pod? Are shorter ads dispersed throughout the content rather than the big chunks that we have today? Will that have a possible impact on ad avoidance?

A great example (h/t: @ali_jae) from Tide:


Quote from Joe Marchese — President, Advertising Revenue @ Fox Networks

“We are in the storytelling business, not necessarily the advertising business,” he said at a press conference at Cannes Lions. “We’re in the advertising business as long as it allows us to tell our stories to more people. When it becomes a detriment — when it starts to turn people away — it hurts our storytellers.

“Unfortunately we haven’t found the right mix of ad products yet, but one of the things we’re looking at is how to make the most of people’s time. We don’t have to use as much as possible; we can get creative and tell the message in a short form way.”

“It used to kill me” when someone would ask why TVCs had to be 30 or 60 seconds long. “I’d be like, because we trade tens of billions of dollars around it and we need standardization.”

3. Susan Wojcicki Has Transformed YouTube — But She Isn’t Done Yet

Ad revenue on YouTube is estimated to have grown 30% year-over-year to just under $6B.

Key passage:
Part of YouTube’s appeal to mainstream creators is its adoption by a generation of viewers for whom YouTube, Amazon, and Netflix are the new ABC, CBS, and NBC. As James Corden explained at the Brandcast, what makes The Late Late Show work was his epiphany that the program could be divided into highly shareable, fun-size entertainment. “I realized that I didn’t have to make a show for any time slot, because we had the internet,” he told the audience. “And more than that, we had YouTube.”

4. Exclusive — Amazon to charge $2.8 million for NFL ad packages

Amazon can sell 10 30-second spots during Thursday Night Football as a part of its recent $50m deal with the NFL.

100 spots total for the season.

Ad package cost comparison:
1) Amazon (2017 streaming) — $2.8m
2) Twitter (2016 streaming) — $2-$8m
3) CBS/NBC (2016 network) — $550-$590k

It is unclear as to what constitutes an “ad package” in terms of numberof spots.

5. Netflix tests pre-roll video ‘previews’ that are personalized to your interests

Netflix is currently running 30-second pre-roll ads promoting it’s own content.

This is the 2nd time that they have tested this feature and is similar to how HBO/Showtime both promote their own content prior to a show starting.

Could this be the groundwork for an advertising offering?

The average Netflix user watches 1h, 33m of content per day.

If we assumed a 16-minute ad load per hour (similar to TV), then each Netflix customer could potentially receive 48 30-second spots per day or336 per week.

At a $25/CPM that would generate $1.20 in ad revenue per day or$37.20 per month.

The most expensive Netflix plan is currently $11.99 per month.

6. TV’s Next Act: Targeting Ads at Yogurt Lovers and Home Buyers

Who is Zicam? Zicam is a cold and allergy relief brand.

What did they do differently? Zicam moved 60% of it’s television budget away from age/gender targeting and towards consumers most receptive to cold-medicine pitches.

What were the results? Zicam estimates an 8% lift in sales.

7. Snapchat is adding more big-name TV channels, including HBO

Time Warner (HBO, Turner, Warner Brothers, etc.) has agreed to createaround 10 original shows for Snapchat.

The deal is worth $100m.

Coming soon to Mrs. Screen’s iPhone Plus!

8. Apple Poaches Sony TV Executives to Lead Push Into Original Content

Apple recently hired away two key executives from Sony.

Big moves for Apple’s original content ambitions.

The two were responsible for such shows as:
1)
Breaking Bad
2) The Crown

9. With Yahoo Deal Done, Verizon Digital Network Steps Into Spotlight

Verizon recently finalized the acquisition of Yahoo.

Recent Verizon deals include:
1) Oath (Yahoo + AOL)
2) Comlex (joint venture w/ Hearst)
3) Awesomeness TV (joint venture w/ Hearst and Comcast)
4) NFL and NBA (streaming live games)
5) go90 (streaming service)

10. Vice Media Grips $450M Investment That CEO Says Raises Valuation to $5.7B

Vice announced a $450m funding round valuing the company at $5.7b.

Vice valuation compared to other media companies:
1) AMC Networks (53% more)
2) Sinclair Broadcast Group (65% more)
3) AMC Entertainment (73% more)

11. Follow-ups from previous editions

1) Brand safety — Facebook’s new ad tools will give a greater level of transparency
2) Streaming — Behind Cheddar’s wager on the future of TV news

State of the Screens #8


Welcome to the eighth edition of State of the Screens. Keep the feedback and ideas coming as we continue the dialogue on the convergence of television and digital advertising.

1. Inside The Weeknd’s $92 Million Year — And The New Streaming Economy Behind It

Streaming is now the dominant platform for music consumption.

Usage up 76% year over year per Nielsen.

Streaming revenue for Forbes Celebrity 100 up 119%:
1) 2015 — $177m
2) 2016 — $387m

Musicians make just under $0.01 per stream.

14 artists from the Celebrity 100 generated 1b+ streams in 2016.

Awareness from streams leads to more $ from touring. The Weekend parlayed 5.5b streams into a $75m tour advance.

Streaming subscribers by platform:
1) Spotify — 140m (+40m YoY)
2) Apple — 27m (+7m YoY)

More Spotify numbers:
1) 50m paying subscribers (36% conversion rate)
2) $3.3b in revenue
3) $500m in profit

2. Cable News Wars: Inside the Unprecedented Battle for Viewers in Trump Era

Fantastic cover!


Viewership growth for CNN/FNC/MSNBC in 2016:
1) Primetime — ↑ 55%
2) Daytime — ↑ 36%

Fox News gets 2X the affiliate fees compared to CNN/MSNBC. Will this change as viewership changes?

3. Fox Tries to Gain Leverage Over Affiliates on Live Streaming

Fox recently started a national 24-hour feed for Hulu Live TV subscribers that live in 70+ markets where Fox does not have an agreement in place with the local broadcast station.

Local broadcasters argue that Fox is offering 50% less than ABC/NBC/CBS for similar licensing agreements.

Negotiating leverage — The viewer is not missing out on Fox broadcast content (primetime shows, etc.).

NBC Chairman Bob Wright floated a similar idea in early 2000’s.

4. Time Spent Viewing Long-Form Video Has Strong Uptick In Q1

63% of time spent with digital video is long-form (20+ minutes).

Breakdown by platform (Q1–2016):
1)
Connected TV — 98% (83%)
2) Tablet — 81% (51%)
3) Smartphone — 55% (26%)
4) Desktop — 65% (35%)

Video is projected to make up 82% of all internet traffic by 2021.

5. TV Ratings: NBA Finals Is Most Watched Since 1998

Most watched NBA finals in 19 years.

Average for series (2016):
1)
Total viewers — 20.4m (20.2m)
2) Digital viewers — 434k

6. Hallmark Channel to Cut Commercials by More Than Half

Hallmark plans to run 5–7 minutes of ads per hour for “Chesapeake Shores” and “Good Witch” versus an average of 15 minutes for other shows.

This will make Granny Screens very happy!

The goal:
1) Improve customer experience
2) Increase ad rates

Turner recently cut ad load for “Good Behavior” to 5 minutes from 13.

7. What Behavioral Data Tells Us About the OTT Viewing Habits of Cord-Cutters

Interesting study from comScore based on 870 cord-cutting homes from their 12.5k household panel (7% of total).

Key insights for cord-cutters:
1) They watch 60% more streaming content than non-cord cutters.
2) They appear to have less of an appetite for traditional TV content.
3) They are likely to have a HH income of less than $75k.

8. Streaming TV quality sucks compared to broadcast. Here’s how the industry intends to make it better

Much of the conversation on cord-cutting is focused on consumers trying to save money.

Here are some drawbacks for high-end consumers:
1) Delay — Live content can be delayed by 30+ seconds
2) Choppy video — Digital cable is 60 frames per second vs. 30 for most streaming services.
3) No surround sound — Dolby Digital is not supported with most streaming services.

These are probably reasons why high-income consumers are adding streaming to their pay-TV service (see comScore study above).

9. Purina will finally be able to stop wasting cat money on dog people

Purina is testing an addressable TV (connected TV) solution made possible from a partnership between Nielsen Catalina and Innovid.

This combines purchase history from 90m+ households (Nielsen Catalina) with ad tech infrastructure from Innovid.

10. Riding In Cars With Alexa

Very cool! @AlanWolk placed an Amazon Echo Dot in his car to bring the latest in connected home tech to his 13-year-old Subaru Forrester.

Sneak peek. Coming soon to a certain 2005 Nissan Frontier 🙂

11. Follow-ups from previous editions

1) Measurement — Analysis Finds Nielsen Data Used By ModelersUndercounts TV’s ROI By As Much As 20%.
2) Streaming — Why Disney made a huge mistake by selling its content to Netflix
3) Digital — Snap’s Challenge: How to Grow Without Getting Awkward
4) Brand safety — Facebook Lets Brands Blacklist Publishers
5) Broadcast consolidation — Holy Moses! Ancient FCC Regs Aren’t Sacred
6) Cord cutting — The Winners and Losers of the Rise of TV’s “Skinny Bundle

State of the Screens #6


Welcome to the sixth edition of State of the Screens. Keep the feedback and ideas coming as we continue the dialogue on the convergence of television and digital advertising.​​

1. Television’s Last Stand

1,400+ words of must-read analysis from @AWolk on how a few decisions by networks and pay TV providers back in 2011 continues to limit their ability to compete in a cross-screen world. The goods news is that 95m people are paying for television and there is still time for a course correction.

First, what is TV Anywhere? Content that requires the user to login with their pay TV subscription. Think logging into your Comcast account to watch ESPN on your phone.

The problem started in 2011:
1)
Several pay TV providers launched TV Anywhere apps.
2) The networks responded by suing the pay TV providers claiming that their carriage agreements did not extend past the set top box.

The networks feared that none of the viewing on the TV Anywhere apps counted towards their ratings which were costing them money in the form of lower ad rates.

An easy way to think of this is that a viewer that switched from linear to mobile would generate $0 in ad revenue for the network.

Quick math. One hour of network TV generates roughly $0.70 per hour (network share) in ad revenue per viewer. If 1m viewers switch from linear to mobile, then that would drop ad revenue $700k per hour long episode.

What happened next:
1) In 2016, Nielsen released Total Audience Measurement (TAM) followed by Total Content Ratings (TCR).
2) Networks announced that they would not be using TAM/TCR out of a fear that it would lead to bad results going into the upfronts.

Old world — Viewers who wanted to watch Friends had to tune into NBC on Thursday nights at 8PM. Easy to sell ads against.

New world — Vewers might not start watching Friends until Saturdaynight, and then only watch half the show, finishing up on their iPad on Monday morning. Much harder to sell ads against.

Quote from Alan Wolk — Editor @ TVREV.
“Nielsen’s TAM and TCR may not be perfect, but the industry needs to stop waiting for perfect and start making changes immediately, before consumers walk away for good. It’s been six years, and we’re at a point where any money the networks stand to make by waiting for super accurate non-linear ratings is more than offset by the money they’ll lose as viewers abandon the system.”

What do networks/pay TV providers do next:
1) Adopt currency (Nielsen’s TAM/TCR) for non-linear viewing
2) Launch robust TV Anywhere apps
3) Replace set top boxes with well-designed apps
4) Kill the grid-based guide
5) Make every show available in video on demand (VOD)
6) Include streaming services (Netflix, YouTube, etc.)

2. LUMA’s State of Digital Media 2017

Presentation from @LUMA_partners annual Digital Media Summit.

Data is the new oil.

$2b in funding for ad tech and martech companies in 2016.

8+ acquisitions over $1b in 2016.

New media > Old Media. Revenue valuations for companies like Vox/Buzzfeed are 6X companies like Time/Newscorp.

3. Internet Trends 2017 Report

Presentation from Mary Meeker w/ @kpcb.

Time spent with mobile has grown 288% since 2011.

Mobile accounts for 28% of time spent but only 21% of media spend.

4. Roku’s CEO on Netflix, Amazon, Google, and the Future of TV

Key stats for Roku:
1) 48%
of streaming players in the U.S. 
2) 14m active accounts. 40% growth since last year.
3) 9b hours of content delivered. 70% growth since last year.
4) Advertising accounted for 75% of gross profit. 50% growth since last year.
5) 20% of smart TVs sold in 2017 will be powered by Roku operating system.

No original programming. This allows them to stay neutral when it comes to carrying streaming apps and marketing content.

5. Cheddar, The “Post-Cable Network,” Is Coming To Cable TV

Cheddar is a streaming based financial news network recently valued at $83m.

You can watch it on platforms such as Facebook, Twitter and Cheddar.com.

Fusion is a cable network (pay TV) carried by such carriers as Dish, DirecTV and Verizon FIOS.

Fusion will start airing content from Cheddar from 11 a.m. to 1 p.m.daily.

Smart — This opens up 60m homes that carry Fusion to Cheddars content.

6. How Much Should Live Viewing Really Matter To Advertisers?

Time shifting % for original scripted shows:
1) 40%
for cable
2) 20% for broadcast

Several studies have shown that 75% of commercials from DVR are skipped.

Viewership for The Big Bang Theory gained 28% (3.9m) when DVR/VOD viewership for the following 3 days was factored in.

7. Netflix to Hit 128M Subs by 2022: Forecast

Growth in 2016:
1) Netflix — ↑ 44%
2)
Pay TV — ↓ 2%

Total subscribers in U.S.:
1) Netflix — 51m
2)
Pay TV — 95m

8. Amazon-Apple TV deal shows tough road to cooperation for tech rivals

Apple will now carry Amazon video app on Apple TV.

The two companies have been negotiating since 2015 when Amazon stopped selling Apple TVs on Amazon.com.

Amazon is developing original content for kids.

9. The future (and present) of programmatic TV

Less than 2% of TV advertising is purchased programmatically.

This number is expected to double in 2017.

Projected advertising growth:
1)
TV — ↓ 0.5%
2)
Digital — ↑ 8.5%

10. Follow-ups from previous editions

1) Pay TV — AT&T offers DirecTV Now to Unlimited Choice customers for an extra $10 a month Link

State of the Screens #5


Welcome to the fifth edition of State of the Screens. Keep the feedback and ideas coming as we continue the dialogue on the convergence of television and digital advertising.

1. With Snapchat’s new 5-minute shows, it’s starting to look a lot like a TV network

Snapchat is working with networks like NBC, ESPN, Turner and A&E on “Snapchat Shows,” which are 3–5 minutes in length.

Revenue will be generated through advertising and split 50–50 with the content creator.

Each episode will contain three 10-second ads.

How does this ad load compare to TV?
1) Snapchat — 3 minutes of content + 30 seconds of ads → 14% of time w/ ads
2) Television — 44 minutes of content + 16 minutes of ads → 26% of time w/ ads

Every hour of video viewing on Snapchat will deliver less than 9 minutes of ads or 53% of the ad load of television.

Content from premium partners combined with original shows (Good Luck America, etc.) could provide Snapchat with a competitive enough offering to claim more screen time.
1) Good Luck America — 5.2m viewers per episode
2) E! News: The Rundown — 7m viewers per episode

NBC News has also signed up to produce the first daily news show for Snapchat.

2. Time To ‘Do More Digital’ — But Rationally, Not Blindly

Quote from Dave Morgan — CEO @ Simulmedia.
“Problems with viewability, fraud and bots have been just a few of the unintended consequences of doing more digital without really understanding what might happen if budgets for “programmatic” were increased tenfold without understanding where the inventory could come from — particularly CPMs that seemed too cheap to believe (and were).”

75% of viewing on Hulu is done through a connected television.

Recurring questions in this week’s edition:
1) How do we define “TV”? Is it about content or delivery?
2) How do we measure TV and digital together?

Nielsen Digital Ad Ratings (DAR) will be used to count every viewer of every ad on every device for Hulu campaigns moving forward.

Our thought. Look for Nielsen DAR to gain steam as more agencies and networks adopt it as a currency for linking television and digital advertising.

The major shift in advertising over the next five years will be the use of data to compare and optimize a brand’s investment between television and digital advertising.

3. Amazon TV Service Helps Starz, HBO Stand Out in Netflix Era

Amazon Channels is the closest thing to à la carte TV in the market.

80m+ Prime subscribers in U.S. ↑ 36% in one year!

Amazon considered launching a live TV service (Hulu Live, Sling TV, etc.) but chose to focus its engineers on building out the Channels product.

Smart. Live TV is crowded and this is white space where Amazon can carve out market share. Skate to where the puck is going…

Scale. The below example compares Up TV on cable versus streaming:
1) Cable — 70m+ homes through bundle — Primetime average is 200k+ HH
2) Streaming — 12m subscribers pay $4.99/month

4. Golden Age of TV Shows Signs of Cracks as Some Channels Give Up

MTV, A&E and WGN are all cutting back on high-end productions after failing to attract big enough audiences in an increasingly crowded landscape.

Peak TV. Last year a record number of original scripted programs were produced — a total of 455.

$11B — Amount Amazon and Netflix will combine to spend on content this year.

Ratings shift. Below are ratings growth/decline in Q1:
1) Dramas — ↓ 15%
2)
News — ↑ 22%
3) Sports — ↑ 6%

5. Dear Researchers: “TV” Refers To Content, Not Delivery Mechanism

What is TV? — Is content that was originally developed for TV, but delivered to the viewer via streaming “digital”?

Proper measurement is made even more difficult when we can’t agree on what is being measured!

Are original shows developed by Amazon/Netflix (The Crown, etc.) more like HBO shows (Game of Thrones, etc.) or 2-minute videos on Buzzfeed/YouTube?

Quote from Alan Wolk — Editor @ TVREV.
“More confusing still, is that many researchers insist that Netflix, Amazonand Hulu are “digital video.” This makes no sense either, as what those platforms are showing is still television — most of their content consists of network TV reruns. The original series they’re producing are also TV — professionally produced long-form programming. There’s no logical reason to lump them together with two minute Buzzfeed videos or YouTube UGC.

The fact that more and more television will be delivered in a time-shifted manner via digital devices also speaks to the need to make sure that we’re calling TV “TV”. It’s easy to show the decline of television by focusing on the falling number of viewers watching linear television, but as our friend Innovid’s Tal Chalozin pointed out earlier this week, it’s not that TV is failing, it’s just changing and adapting.”

6. Facebook’s New Tool Lets Publishers Use Its Data to Sell Video Ads

The program is called Audience Direct. It gives publishers the power to sell their own ad inventory directly to advertisers, keeping their own ad tech infrastructure in place.

Audience Direct vs. Facebook Audience Network. Audience Network leaves most of the publisher infrastructure (relationship, ad stack, etc.) in place while Facebook Audience Network makes publisher inventory available to Facebook customers through Facebook infrastructure.

Quick math. Publisher inventory augmented with Facebook data for targeting should lead to higher CPMs.

Big picture. Facebook’s ad business is a monster that needs additional content in order to grow.

Additional content for Facebook #1: Facebook plans to spend up to $250k per episode of original content.

Additional content for Facebook #2: Facebook will stream at least 20Friday Major League Baseball games during the 2017 regular season.

7. Verizon CEO confirms company’s plan to launch a streaming TV service

The streaming wars have drawn another army to the battlefield!
1) Hulu Live — $40
2) DirecTV Now — $35
3) Sling TV — $20
4) PlayStation Vue — $40
5) YouTube TV — $35
6)
Verizon — TBD

go90 will be a separate service.

Could Verizon roll the go90 content (AwesomenessTV, etc.) into the live TV service?

If yes, then this would put them on more equal footing with Hulu who is combining original content (The Handmaid’s Tale, etc.) with a robust live TV lineup.

Verizon also has the rights for mobile streaming of NFL games.

8. Viacom’s Bob Bakish: Entertainment-Only Pay TV Option Coming This Year

Entertainment pack. No sports. Priced between $10-$20.

Quote from Bob Bakish — CEO @ Viacom.
“The transformational opportunity is to bring in a new entry segment at a much lower price point,” Bakish said. The industry needs “a path to bring in someone who wants high-quality entertainment” but doesn’t want to pay for sports channels. With a truly low-cost entertainment option, MVPDs can also offer more flexibility to consumers to “trade up from and trade down as the household needs change.”

9. AT&T’s Vision of TV: ‘Game of Thrones’ in Mobile-Size Bites?

Targeted advertising could lead to higher revenue and fewer commercials.

AT&T already uses data from 150–200 billion ad spots to sell more targeted/expensive ads.

AT&T and Time Warner combined could reach 1 trillion impressions per year.

Quote from Randall Stephenson — CEO @ AT&T.
“I’ll cause Plepler at HBO to panic when I say this,” Mr. Stephenson said, referring to HBO Chief Executive Richard Plepler, “but can you begin to think about things like ‘Game of Thrones’ as an example, where in a mobile environment, a 60-minute episode may not be the best experience. Should you think about 20-minute episodes?”

10. MSNBC scores a primetime cable news ratings sweep for the first time ever

News viewership continues to explode.

Primetime viewership for May 15–19
1)
MSNBC — 2.44m viewers
2) Fox News — 2.41m viewers
3) CNN — 1.65m viewers

11. Follow-ups from previous editions

1) Cord cutting — Cord-cutting explodes
2) Upfronts — There was something missing from the TV industry’s sales extravaganza

State of the Screens #3


Welcome to the third edition of State of the Screens. Keep the feedback and ideas coming as we continue the dialogue on the convergence of television and digital advertising.

1. Netflix and Facebook seem to share a crucial thesis about the future of TV shows

Both Facebook and Netflix are currently funding their video ambitions with a single revenue model (subscriptions or advertising) as opposed to the dual revenue model followed by broadcast/cable networks and other streaming competitors such as Hulu and YouTube.

Facebook believes that it can offer a revenue split with content creators that will incentivize them to produce quality video without a large upfront guarantee.

This is where the market dynamics of addressable advertising kick in. Let’s assume the following:
1) Addressable Video CPM $ (cost for 1,000 impressions) — $100
2) Non-Addressable Video CPM $ — $25
3) Revenue Share — 70% for publisher and 30% for Facebook

The Facebook portion of the CPM $ ($30) could be greater than what the publisher currently charges without targeting. This is solely due to advertisers willingness to pay more to reach the intended target.


2. Fed-Up Advertisers Stop Paying More for Smaller TV Audiences

In order to grow revenue with a shrinking audience, networks continue to raise CPM $. This is irritating advertisers, but not quite driving them to change behavior yet.

Over the last 4 years:
– TV Ratings ↓ 33%
– TV Ad Prices ↑ 20%

$1.00 of impact 4 years ago now costs $1.79.

Quote from Dave Campanelli — Director of National Television @ Horizon Media.

“How many years can advertisers pay 10 percent over 10 percent over 10 percent — and just keep buying TV?” Campanelli asked — rhetorically, of course, because he had the answer. “You’re going to scare people away from the medium altogether, and it’s not like there aren’t big places to go spend your money in the digital world.”

3. What The ESPN Critics Are Missing

An excellent counter argument to the ESPN is dead theme w/ quartlery profit estimates @ various subscriber levels and monthly pricing ($7.21 + 25% price increase):
1) 80m subs — $1.4b — $2.0b 
2) 70m subs — $800m — $1.5b
3) 60m subs — $500m — $1.1b
4) 50 subs — $200m — $750m

The following 2 things can be true at the same time:
1) ESPN is a magical business and one of the greatest (legal) cash machines in existence.
2) The cash machine has driven up monthly cable bills to the point where consumers are exploring alternatives.​

Smart idea. ESPN keeps current subscriber model (in the short term), but launches direct to consumer product focused on super fans and specific sports/teams.

4. The Peak TV Bubble Hasn’t Burst, But It’s Leaking

Too many networks are producing too many original shows.

Interesting point of view. The glut of content from recent original shows is creating a significant enough library on Netflix/Amazon that consumers may go there first and become conditioned to waiting for shows.

5. Wall Street Fearing Fall of Pay TV as Internet Offers New Bundles

Netflix is streaming 250m hours of video daily, and YouTube is past 1b.

762k cable subscribers cut the cord last quarter. This is the worst decline to date.

Are price increases finally having an effect on cancellations?

I believe that cord shavers (lower cost plan) are a bigger short term problem than cord cutters (leaving pay tv).

Quote from David Zaslav — CEO @ Discovery Communications.

“Ultimately, there should be a bundle, like everywhere else in the world, that’s $8, $10, $12 and I believe that will happen. I think these overstuffed turkeys are going to end up being a challenge from a consumer perspective. And the consumer is going to say I would like to have an opportunity here.”

6. Facebook closes the gap on TV advertising

Facebook has grown revenue per user by 500% since 2012. Television (advertising only) has grown 4%.


A single digital network now generates 40% of the revenue/user that the entire television industry does from advertising. This is why some people think that Facebook could eventually be worth $1t.


Why is this important? Networks like Facebook and Google are growing both their user base and revenue/user which should lead to a further explosion of total revenue. The user base for traditional media has matured which leaves revenue/user as the primary path for growing total revenue. Think higher advertising CPM $ and higher prices for cable tv.

7. Fox Picks New Head of Ad Sales, Just as Selling Season Starts

Quote from Joe Marchese — President, Advertising Revenue @ Fox Networks.

“We’re having consumers sit through almost 20 times the ads in some cases as a YouTube or Facebook might over the same period — we’re not making 20 times the money,” he said. “There’s a misconception about where people are spending time with marketing messages, and I want to get that focused.”

8. Follow-ups from previous editions
1) $100B+ opportunity for advanced TV — Unpacking Omar Sheikh’s $100B Call On Future Of Data-Targeted TV Ads
2) Connected TV — Study: 69% of U.S. Homes Connect a TV to Internet
3) Streaming deals for local broadcast — CBS Sets Digital MVPD Distribution Pact With Affiliates

1. Netflix and Facebook seem to share a crucial thesis about the future of TV shows

Both Facebook and Netflix are currently funding their video ambitions with a single revenue model (subscriptions or advertising) as opposed to the dual revenue model followed by broadcast/cable networks and other streaming competitors such as Hulu and YouTube.

Facebook believes that it can offer a revenue split with content creators that will incentivize them to produce quality video without a large upfront guarantee.

This is where the market dynamics of addressable advertising kick in. Let’s assume the following:
1) Addressable Video CPM $ (cost for 1,000 impressions) — $100
2) Non-Addressable Video CPM $ — $25
3) Revenue Share — 70% for publisher and 30% for Facebook

The Facebook portion of the CPM $ ($30) could be greater than what the publisher currently charges without targeting. This is solely due to advertisers willingness to pay more to reach the intended target.


2. Fed-Up Advertisers Stop Paying More for Smaller TV Audiences

To grow revenue with a shrinking audience, networks continue to raise CPM $. This is irritating advertisers, but not quite driving them to change behavior yet.

Over the last 4 years:
– TV Ratings ↓ 33%
– TV Ad Prices ↑ 20%

$1.00 of impact 4 years ago now costs $1.79.

Quote from Dave Campanelli — Director of National Television @ Horizon Media.

“How many years can advertisers pay 10 percent over 10 percent over 10 percent — and just keep buying TV?” Campanelli asked — rhetorically, of course, because he had the answer. “You’re going to scare people away from the medium altogether, and it’s not like there aren’t big places to go spend your money in the digital world.”

3. What The ESPN Critics Are Missing

An excellent counter argument to the ESPN is dead theme w/ quartlery profit estimates @ various subscriber levels and monthly pricing ($7.21 + 25% price increase):
1) 80m subs — $1.4b — $2.0b 
2) 70m subs — $800m — $1.5b
3) 60m subs — $500m — $1.1b
4) 50 subs — $200m — $750m

The following 2 things can be true at the same time:
1) ESPN is a magical business and one of the greatest (legal) cash machines in existence.
2) The cash machine has driven up monthly cable bills to the point where consumers are exploring alternatives.

Smart idea. ESPN keeps current subscriber model (in the short term), but launches direct to consumer product focused on super fans and specific sports/teams.

4. The Peak TV Bubble Hasn’t Burst, But It’s Leaking

Too many networks are producing too many original shows.

Interesting point of view. The glut of content from recent original shows is creating a significant enough library on Netflix/Amazon that consumers may go there first and become conditioned to waiting for shows.

5. Wall Street Fearing Fall of Pay TV as Internet Offers New Bundles

Netflix is streaming 250m hours of video daily, and YouTube is past 1b.

762k cable subscribers cut the cord last quarter. This is the worst-decline to date.

Are price increases finally having an effect on cancellations?

I believe that cord shavers (lower cost plan) are a bigger short term problem than cord cutters (leaving pay tv).

Quote from David Zaslav — CEO @ Discovery Communications.

“Ultimately, there should be a bundle, like everywhere else in the world, that’s $8, $10, $12 and I believe that will happen. I think these overstuffed turkeys are going to end up being a challenge from a consumer perspective. And the consumer is going to say I would like to have an opportunity here.”

6. Facebook closes the gap on TV advertising

Facebook has grown revenue per user by 500% since 2012. Television (advertising only) has grown 4%.


A single digital network now generates 40% of the revenue/user that the entire television industry does from advertising. This is why some people think that Facebook could eventually be worth $1t.


Why is this important? Networks like Facebook and Google are growing both their user base and revenue/user which should lead to a further explosion of total revenue. The user base for traditional media has matured which leaves revenue/user as the primary path for growing total revenue. Think higher advertising CPM $ and higher prices for cable tv.

7. Fox Picks New Head of Ad Sales, Just as Selling Season Starts

Quote from Joe Marchese — President, Advertising Revenue @ Fox Networks.

“We’re having consumers sit through almost 20 times the ads in some cases as a YouTube or Facebook might over the same period — we’re not making 20 times the money,” he said. “There’s a misconception about where people are spending time with marketing messages, and I want to get that focused.”

8. Follow-ups from previous editions

1) $100B+ opportunity for advanced TV — Unpacking Omar Sheikh’s $100B Call On Future Of Data-Targeted TV Ads
2) Connected TV — Study: 69% of U.S. Homes Connect a TV to Internet
3) Streaming deals for local broadcast — CBS Sets Digital MVPD Distribution Pact Wit