The Media Agencies are Dying

The AdExchanger team tries to reconcile that strong language and interrogates the suspects: the encroachment of consultancies into agency territory and brands taking their programmatic media buying in-house.

Here’s the Podcast:

Have a Great Weekend (unless you work at a Media Agency)

VAB Study: Millennial Viewers Attached To TV Programming. Sure.

In another (desperate) attempt to counter the perception that young people are flocking away from TV, the Video Advertising Bureau released a new study showing that millennials are emotionally connected to TV programming and buy the products that are advertised there.

TV advertising revenue has been largely flat as media buyers watch eyeballs, particularly of young viewers, move to digital platforms and streaming services.

But the VAB found that millennials–those in the 18 to 34 age bracket–say they are connected to TV shows and their characters. And that emotional attachment is important because “someone who is highly attached is three times more likely to engage with the brand,” the report said. “They are less price sensitive, go deeper into the product line and have a higher lifetime value to an advertiser.”

The VAB commissioned Research Now to conduct the Program Engagement Survey fielded online in April 2018 with 1,000 adults surveyed. The respondents skewed slightly younger than the overall population but their TV consumption was line with the population.

The survey found that millennials feel a strong bond with TV programming. They regularly set aside time to watch their favorite programs and prioritize it as their “me time.”

Emotional connection inspires deeper program engagement among millennials, the report said. Young adult viewers are actively engaged beyond the TV airing – they share and post video clips, follow actors on social media, read recaps, and scour the web for behind-the-scenes scoop.

The survey found that the emotional connection viewers have with TV shows results in pop-culture-inspired activities, with 55% of millennial respondents using phrases from shows–like “Make It Work”– in everyday conversations, or 45% following a recipe they saw on TV to make a dish or even 43% dressing up as a TV character on Halloween.

Importantly, engagement motivates purchase.

The survey found that 43% of millennials said they purchase a product they saw on a TV show. That’s higher than the 40% of all adults that said that. Similarly, 43% of millennials said the purchases a product they saw while watching a TV–either in the program or during an ad, compared to 25% of all adults.

Another 43% of millennials said they’ve eaten at a restaurant because it or its chef was featured in a TV show.

The relationship between millennials and ad-supported TV is stronger when it comes to their favorite programs. The survey found 44% of millennials say they watch their favorite shows on broadcast or cable, topping Netflix (25%), Hulu, 12%, Amazon Prime (10%) or other streaming (8%).

Millennials don’t feel the same immediacy or sense of community around original YouTube videos as they do for TV, the survey found.

“Millennials are drawn into TV’s complex storylines, rich character development and well – known talent resulting in an unmatched emotional response,” the report said adding that millennials feel a stronger connection with TV characters and actors than to YouTube.

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Connected TV Increases Digital Video Impressions

Based on a recent global video report, video marketing platform Innovid says connected TV in 2018 is now at a 27% share of all digital video impressions to date, up from 20% in 2017 and 13% in 2016.

Mobile platforms are at a 45% share — up from 42% in 2017 and 2016. Desk digital video consumption is at 28% — down from 32% (2017) and 45% (2016).

Innovid found a 30% increase in the number of advertisers running messaging on connected TV platforms in 2016 versus 2017.

In working with 21st Century Fox’ true[X] unit on “choice-based” advertising — letting viewers choose between one interactive ad or watching multiple ads in the manner of a traditional commercial break — Innovid says the results showed strong results for marketers.

Looking at over 100 marketers that used choice-based ad units nearly 60% of viewers opted to complete “the engagement” of the ad. In addition, viewers spent more time with the ad — beyond the required time limit.

On Roku connected TV devices, the percentage was 151% higher; with Apple TV, 93%, and smart TV, 37%.

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Snapchat Gives Publishers A New Way To Make Stories – AND MONEY

Snapchat is trying something new: It’s giving publishers a way to create videos without too much heavy lifting.

On Thursday, Snapchat announced that its dozens of media partners, including Hearst, NBCUniversal, Refinery 29 and Daily Mail, will have the ability to build stories from the videos created by the app’s 188 million daily users. Snapchat will split ad revenue with the media companies from commercials that run inside the videos.

CNN is among the media companies that will use the new feature. The network had pulled out of Snapchat’s premium publisher programs last year, cancelling a show called the “Update,” which had been on Snapchat just four months before being abandoned.

Snapchat has a whole section devoted to media partners called Discover, where publishers produce shows or daily channels with articles and videos. The shows and channels, however, require big investments from the media companies and dedicated staff.

The new video creation tool requires less of a lift. Here’s how it works:

Publishers will now have access to Snapchat’s content management system, which allows them to search through the public videos uploaded daily to the app by its users. The publishers can search for certain themes or locations to build a story using the footage. For instance, there could be stories about weddings, nightlife, restaurants, all drawing from the videos people post to Snapchat. News organizations could also develop stories around breaking events.

Snapchat calls these types of videos “Our Stories” (because, well, they’re crowdsourced). Snapchat has been making “Our Stories” internally for years around special events and topics.

Snapchat wants to give more publishers and creators reasons to use the service, and a revenue-generating program always helps. Snapchat has signed up seven new media partners through “Our Stories”—Brut (France), The Infatuation, Jukin, Love Stories TV, The Tab, Wave.TV and Whalar. That’s on top of CNN and dozens of other longtime partners from its Discover section.

Earlier this year, Snapchat built a feature for publishers called “Stories Everywhere,” which opened the platform up. The media companies were able to share videos from their Snapchat accounts to their websites—a departure for the app, which didn’t generally share well with the rest of the web. Publishers will also be able to post “Our Stories” to their websites.

Snapchat declined to comment on the new program beyond the announcement it issued on Thursday. Also, CNN did not return a request for comment on its return to Snapchat.

Snapchat has been faced with adversity for much of the year, which started on the wrong foot with a poorly received redesign. It even had to redesign the redesign after public criticism, including from famous users like Kylie Jenner.

At the same time, publishers found the redesign made it tougher to stand out. More media partners were competing for the same space in the revamped Discover section.

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Google’s Android TV and YouTube loom large at IBC 2018

YouTube invading European TV screens

Google Senior Vice President Neal Mohan gave a keynote at the IBC conference on Friday. During the speech he discussed the company’s success in getting YouTube on connected TV devices:

“Thanks to our partnerships with manufacturers, broadcasters and operators like Sky and Virgin Media, YouTube is available on over half a billion certified devices globally – from smart TVs to set-top boxes and to gaming consoles.”

The investment seems to be paying off. Mr. Mohan says the television is now the fastest growing screen for YouTube. In the European Union, the time viewers spend watching YouTube on TV screens increased 45% year-over-year.

Mr. Mohan also stressed the importance of YouTube to European broadcasters:

“In 2017 alone, consumers watched the equivalent of 268,000 years of content from European Broadcasting Union (EBU) members. Broadcasters are some of the longest and most important partners for YouTube, and we’ve been helping the best broadcast moments find new life online.”

The YouTube team is leaning into the TV opportunity by making a more lean-back experience. Engineers are busy improving machine learning and recommendations to relieve viewers of the need to hunt through all the videos on the site. Instead, viewers will be able to sit back and let the app automatically play their favorite clips and shows.

However, Google isn’t only focused on having YouTube appear on the television. The company is making huge strides in running the complete pay TV experience with Android TV.

Operators are ready for Android TV

On the show floor, Google’s TV operating system is showing up all over the place. Google’s booth is right at the entrance to Hall 14, where all the new media companies show their wares. The operator tier of Android TV is, of course, a feature attraction. As well, Google ran an Android TV summit on Saturday which was one of the hottest tickets at the show. Many vendor booths throughout the RAI Convention halls also are showing Google’s pay TV operating system. Vendors like Massive, 3SS, Amino, and Accedoare showing operator solutions featuring it.

Pay TV operators have begun deploying it to their set-top boxes. For example, Com-Hem in Sweden has Android TV operator tier running on its hybrid cable/IP set-top boxes courtesy of 3SS’s solution. Amino is demonstrating the end-to-end Android TV integration it provided to Finish operator DNA Oyj on its booth.

Google has been trying to get pay TV operators to use Android TV on their set-top boxes for three years. Why do operators finally appear ready to do it? There are four main reasons:

Reason 1: The rapid growth of SVOD services

Many Europeans have embraced SVOD services as a regular part of their television diet but still, have pay TV. Operators see an opportunity to help and retain their customers by integrating SVOD into the pay TV experience. However, it’s hard to predict precisely which SVOD services their customers will use. The simplest solution is to deploy a set-top box platform with an open app store populated with many of the most popular services. Android TV operator tier delivers on this need.

Reason 2: The latest Android TV is a better platform for operators

The Android TV team has included many features operators have requested in the latest ‘P’ edition of the operator tier. For example, CEO of 3SS, Kai-Christen Borchers, described to nScreenMedia how operators could customize the search results. When a customer searches for a movie, the first viewing option shown to the user is from the operator. To see other viewing options, the subscriber must press the up-arrow on the remote.

Reason 3: Vendors are supporting it

It feels like every vendor showing operator solutions at IBC has a version that supports Android TV. For example, Accedo is showing the Android TV 1 Launcher product. Company CEO Michael Lantz showed nScreenMedia how an operator using the product could provide an entirely custom Android TV experience. The operator app starts up when the box starts, and the subscriber remains in that experience throughout.

Reason 4: It’s free

Google doesn’t charge a license fee for Android TV operator tier. It does come with conditions, like providing access to the play store and inclusion of the Google assistant. However, these are small prices to pay for such a capable operating system.

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Study: Rising global demand for premium OTT

A report from business-to-consumer subscription management solutions specialist Vindicia has found that premium OTT subscription revenue is quickly rising across four regions: Western Europe, USA, Latin America and Asia Pacific, and that consumer demand for premium OTT services will be driven by local, live and linear content, as well as by easier payment solutions.

The report, The Prospects for Premium OTT, carried out by international research and strategy consulting firm MTM, revealed that premium OTT in Western Europe will grow strongly in the next three years, as connected consumers embrace not only services from global OTT players, but also new subscription services from local and regional broadcasters, and direct-to-consumer services from content brands. The UK will remain the largest market for premium OTT in Western Europe, with revenues forecast to rise from $1.18 billion (€1.32bn) in 2017 to $1.63 billion by 2020.

Meanwhile, in the US, premium OTT subscription revenue will surge past $21.2 billion by 2020, up from $16.4 billion in 2017. While Netflix, Amazon and Hulu will dominate revenues, new competition will come from direct-to-consumer offerings from the likes of Disney, specialist services such as Crunchyroll and WWE, and live sports delivered via OTT, according to the report.

Revenues from premium OTT services will also grow rapidly in Asia Pacific, albeit from a low base in some cases. Thailand, for instance, will see revenues rise from $66 million in 2017 to $108 million in 2020, while Indonesia will expand from $26 million to $ 72 million in the same period, the report found. The market for premium OTT services in Asia Pacific will be driven by pan-regional players, such as HOOQ, Viu and iflix, that focus on local content and are priced for local audiences.

The premium OTT market in Australian is one of the largest in Asia-Pac and will continue to see considerable growth, with revenues reaching $420 million by 2020, up from $280 million in 2017, the study found. Netflix will be the dominant subscription service in Australia for the foreseeable future.

In Latin America, improved broadband connectivity is driving growth in premium OTT subscriptions, where local content offerings are bundled with Internet access. However, greater connectivity is also encouraging content piracy. Mexico will become the largest market in Latin America for premium OTT services by 2020, with revenues forecast to reach $678 million, up from $410 million in 2017, according to the report.

“As revenues for premium OTT services increase in all regions around the world, consumer demand will be driven by local, live and linear content,” said Kris Nagel, Head of Vindicia. “Consumers will become subscribers for the right price, the right content and the right experience. As part of that experience, consumers will also demand frictionless payment solutions. Premium OTT services that can seamlessly integrate and manage payment platforms—and make payments almost invisible to the user—will see the greatest subscription growth going forward.”

download the full report here.

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Netflix faces subs losses if it includes ads between shows

Just as the SVOD leader confirmed that it has begun testing the idea of inserting promos for its shows and movies between episodes of current programme, Hub Entertainment Research warns that Netflix could face steep subscriber losses for such actions.

In its study, The Future of Monetisation, the analyst gauged consumer reaction to alternatives to the Netflix pay model status quo, including possible price increases and an ad-supported plan. It conducted its survey among 1,612 US consumers with broadband, who watch at least an hour of TV per week.

The overwhelming conclusion was that the subscription video-on-demand faced alienating its customers substantially, especially if ads were included without a reduction in monthly fees.

Hub found that if Netflix raised the fee for its current, ad-free service by $5 or more per month, about a quarter would consider dropping their subscription. A $2 increase would have just a marginal impact with only 8% saying they’d cancel, while at a $5 boost, 23% say they’d drop their subscription and this figure would rise to 28% at a increase of $10 or more.

Looking at scenarios of what would happened if Netflix began including ads during shows, about a quarter of current subscribers said they’d definitely or probably drop the service. Just 41% said they’d definitely or probably keep their subscription, with 37% undecided.

Hub also investigated what would happen if Netflix content included ads, but the subscription fee were $3 less per month. It found that subscribers would be more likely to keep the service, but that losses could still be significant. In this scenario, 16% said they’d cancel their Netflix subscription if ads were included while half of the sample said they’d keep their service under this scenario, but just 25% say they’d definitely keep it.

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The Struggle with ‘One Size Fits All’ Viewability Standards

Measurement and analytics company Integral Ad Science (IAS) last week launched a new blocking capability that it says enables advertisers to protect their ads from risky content and ad fraud regardless of the ad server they are using. In this Q&A, EMEA MD, Nick Morley discusses how advertisers can best protect their video advertising, whether current viewability standards go far enough, and what the industry must focus on in order to increase digital video investment.

IAS has released a new video blocking feature. What does video blocking mean in this context and how can it protect advertisers’ investment?

Video inventory is extremely valuable as it provides an opportunity for advertisers to capitalise on not only sight, but sound and motion to capture consumer attention – and therefore tends to come at a premium. At IAS, video blocking prevents video ads from appearing next to inappropriate content, or being served in environments known to be fraudulent.

Our new solution builds upon IAS’ current blocking technology across desktop and mobile web. Our enhanced video wrapper tag allows advertisers to further protect their ads from fraud and brand risk in real-time, regardless of the ad server they are using. This gives advertisers increased insight into how best to carry out their video campaigns, protect their investment across all devices, and optimise to objectives.

There’s a lot of talk at the moment of changing viewability standards, do you think current standards, such as the MRC, need updating?

Our UK Media Quality Report data from H2 2017 suggests that just over half (53.3 percent) of display ads meet the MRC standard, jumping to two-thirds (66.2 percent) for desktop video impressions. While the MRC standard provides the industry with a good baseline, we now need to strive to understand the best metrics possible to drive efficiencies for each campaign.

Increasingly, we are seeing major holding groups and brands setting their own custom metrics. For example, GroupM now only considers a video ad as viewable when 100 percent of the video is in view for 50 percent of its duration. We support many of these custom standards as we have seen agencies and advertisers alike struggle with a one-size-fits-all approach to viewability.

Whether standards are based on MRC guidelines or custom metrics, the industry should shift focus to understanding whether the ad has been effective. Step one is ensuring the media quality factors of viewability, brand risk, and ad fraud are addressed, before advertisers can move to step two, to determine metrics such as ad exposure duration across a campaign, as well as any correlation with increased brand awareness and sales.

The IAB released an interesting report recently showing that advertisers don’t actually use the KPIs they claim to value most. Why do you think this is, and what would encourage advertisers to break out of these habits?

The report highlights that there are demands within our industry that are not being met or addressed. It is not uncommon to see a gap between what KPIs the industry would like to utilise and those actually being implemented. For example, in the report, interaction with an ad is ranked as important by 82 percent vs 19 percent in practice, while 59 percent cite brand safe, non-fraudulent impressions as important vs only 19 percent who measure against these media quality factors in reality. Even viewability is ranked as important by 85 percent but presently considered by only 30 percent of advertisers as a KPI.

There can at times be technical limitations as to why these KPIs are not measured but mostly, this is down to how quickly digital has grown, and as the industry scales its technology across devices it’s challenging to keep up with consumer behaviours. It is why at IAS we have worked tirelessly to provide greater insight into how, when, and where people are engaging with ads, including video, so both the buy and sell side are well positioned to optimise against KPI targets.

Why have various studies found that video ad fraud levels are still disproportionately high?

Video is an engaging and fast-growing format, with global digital video ad spend predicted to reach $32 billion in 2018 – so it’s no surprise the format is attractive to fraudsters who simply follow the money trail.

Our Media Quality Report data from H2 2017 found that – when no ad fraud prevention strategy or technology is used – global desktop video attracts a fraud rate of 7.2 percent, while global mobile web video attracts a fraud rate of 5.4 percent. Interestingly, when ad fraud prevention technology is in place, these decrease significantly to 1.4 percent and 0.4 percent respectively. Clearly, with the right technology in place to block fraud, advertisers can minimise the risk and wastage to their video spend.

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W Europe OTT revenues $23bn+ in 2023

Western European OTT TV episode and movie revenues will reach $23.02 billion (€19.93bn) in 2023; more than double the $9.84 billion recorded in 2017, according to the Western Europe OTT TV & Video Forecasts report from Digital TV Research. Revenues for 18 countries covered by the report are expected to climb by $2.63 billion in 2018 alone.

“The UK is the largest OTT revenue earner in the region by some distance,” advised Simon Murray, Principal Analyst at Digital TV Research. “Its $2.98 billion generated 30 per cent of the 2017 total. The UK’s $6.80 billion in 2023 will represent a similar proportion.”

SVoD became the region’s largest OTT revenue source in 2016 by overtaking AVoD. SVoD’s share of the total will reach 54 per cent by 2023, up from 45 per cent in 2017.

SVoD revenues will almost triple by reaching $12.47 billion in 2023 – up from $4.44 billion in 2017. The UK will remain the SVoD revenue leader by some distance – generating as much as second-placed Germany and third-placed France combined by 2023.

The Western Europe OTT TV & Video Forecasts report estimates 98.85 million SVoD subscribers by 2023, up from 50.34 million at end-2017. Nearly 15 million subscribers will be added in 2018 alone, with 11 million more expected in 2019.

By 2023, 69.3 per cent of Western European TV households will subscribe to an SVoD platform; up from 38.4 per cent at end-2017. [Gross subscriptions. If a household takes two subscriptions then it is counted as two subscribers]. Norway will have the highest proportion at 104.8 per cent by 2023. Germany, Italy, France and Spain will all fall below the regional average by 2023.

Netflix will remain the largest SVoD platform by some distance, with 49.75 million paying subscribers in 2023 – or half of the region’s total. This is the same as the 2017 proportion. The 2023 total includes 22 million Amazon Prime Video subscribers.

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US OTT service cancellation steady at 18%

Parks Associates research finds the rate of cancellations for OTT video services among US broadband households has held steady over the past three years at approximately 18 per cent.

The average subscription length for OTT video services is 30 months overall, although the three top services in the market—Netflix, Amazon, and Hulu—have the most stability, while churn rates for other services tend to be more volatile.

“With OTT service penetration starting to plateau at around 65 per cent adoption among US broadband households, the OTT video market is reaching a level of saturation for the services currently available to consumers,” Sappington said. “In an increasingly crowded and competitive marketplace where subscriber acquisition costs are high, this plateau highlights the need for services to focus on retention rather than solely acquisition. Successful services can encourage retention in several ways, such as community building, continuously offering new and fresh content, and improving their user experience.”

Additional highlights from the research:

– More than 85 per cent of US millennials subscribe to at least one OTT video service.
– By 2022, more than 265 million households worldwide will have more than 400 million OTT video service subscriptions.

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