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Key Takeaways from TVOT San Francisco 2019

June 26th, 2019   ||    by Gary Milner

Key Takeaways from TVOT San Francisco 2019

I attended the TV of Tomorrow (TVOT) show in San Francisco a few weeks back. It’s an informative event attended by media and tech titans who work across the whole TV industry. Here are some of the most prominent takeaways from the show.

Let’s start by taking a look at a view of commercial TV from Michael Kubin, executive vice president of media, at Invidi, adding in comments from other panels, including Archie Gianunzio, vice president of sales and marketing at Videa.

Commercial TV: One Outlook Looks Grim

Michael Kubin from Invidi presented about commercial TV. Below are just a few of the points he mentioned during his session as well as some other comments from related sessions.

  1. Reach is fragmenting even further as the big national networks, first joined by cable networks now have OTT-based free ad supported TV and subscription-based TV to contend with.
  2. Product brands, long the feed for commercial TV advertising, have been devalued by direct-to-consumer brands and Amazon entering the fray with private label brands. This has resulted in economic investment pressure. Brand advertisers are starting to ask for outcomes, asking themselves things like ‘are my ads selling anything?’ CMOs are under more pressure than ever and need to get to a full funnel approach to measurement, awareness and intent to store visit to sale. Data, and in particular first party data, is the oxygen of a marketing buy.
  3. Viewers are being lost to digital properties and new TV competitors like Netflix and Hulu, some of which are developing vertical integrated models (Disney has production to distribution and real-life engagement parks). Falling ratings are combined with longer ad loads, increased pricing and more ad frequency. Long term, this is a failing business model (pay more, get less).
  4. The upfronts are more of a model to serve the broadcasters to fund the programming rather than for the benefit of the advertiser. A model that will stay in place until large scale ad inventory is available from FAST (free ad supported TV) or subscription on demand based providers such as Hulu, Amazon or Netflix who also fund production from stock capital models.
  5. TV share of ad spending has declined from 39% of ad spend to 32%, 2014 to 2019 (eMarketer) as digital marketing has grown from 28% to 44%. The latter leveraging outcome based marketing and more precise targeting.
  6. Linear, addressable, targeted TV advertising is a small share of the total ad spends (5%), unlike in digital which has seen massive growth.

So, What Needs to Happen?

Commercial Inventory needs to be reaggregated, to drive addressable advertising. A total of 92.6m subscribers could be achieved across Dish, DirecTV, Verizon FiOS, Altice, Frontier, Comcast and Charter. This initiative needs to span cable, national and local broadcast inventory.  Only 35 million homes are available today with local minutes only.

More scale and more readily available tech with data will give more comfort to brands and maintain against the competitive threat from connected TV.

Automation of processes needs to happen to integrate planning and buying of TV including the local TV market ($20bn revenue) that has largely been manually operated. Companies like Videa are automating the planning, buying and measuring of local broadcast inventory.

Archie Gianunzio, vice president of sales and marketing at Videa said, “We need to be in a world where we have an end to end solution. At Videa, we put a lot of emphasis around standards and have driven that to allow systems to be built, but we can’t continue to see a walled garden approach in the market.”

But, What if it Doesn’t Happen?

As OTT scales, targeted inventory that brands want will be available elsewhere using tech, data and KPI’s that brands are requesting. Remember Hulu alone has 58 million viewers and 20 million households on an ad supported plan versus the 35 million linear households available on commercial TV. It’s catching up, even before other services scale and add to the total.

It only needs Amazon, Netflix to enter the ad market and a few of the FAST (free ad supported TV) providers to continue growth. Then the scales will flip away from the traditional incumbents.

All of this transformation around TV campaigns needs good data, better messaging and a true KPI-based on actual audience reach per dollar, or other advertiser metric in order to be relevant in the digital age.

Additional Takeaways and Food for Thought

  1. When I worked in e-commerce in the late 2000’s, I had one guy at a computer buying TV spots in Google TV ads. We bought everything from new programming to sports. We had 50 spots that could be rotated in at any time. We ran this on a tiny budget and measured search lift. There are 28 million small businesses that could return to TV and away from social marketing with the right automation in place.
  2. Marketers should be the decision maker of what tech platform they go through to access inventory, like it is in digital. Right now, there is a formation of silos that may prevent this and multiple platforms may be needed to access inventory.
  3. We come from a digital world of maximum performance from as few impressions as possible, so data has become very granular with audiences bought one at a time. This isn’t the mode TV has been on where audiences are bought in bulk against impressions., and ads are served to people too often who aren’t relevant.
  4. Stop buying CPM and move to ECPM, as defined by audience reached. Why sell your message to people that will never buy your product?
  5. There are close to 20 million over the air (OTA) antennas in place (and growing, alongside OTT growth) to watch broadcast TV. This needs to be monetized by accelerating ATSC 3.0 to allow targeted and tracked advertising to be possible at a local level over this distribution point. There doesn’t seem to be any new content to drive this so consumer promotion will be key. Local broadcasting is a 20 billion dollar ad business—lack of targeting and easy aggregation could force advertisers back to the growth OTT market to advertise local.
  6. Be sure to watch out for the emergence of new local content providers with delivery through OTT providing hyper-local content in a new era of TV.

What is certain is that the TV business, after decades of stability, will see dramatic change, globally.

The wild west of digital becomes the wild west of TV.

 

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