Several Things the TV Advertising Industry Should be Worried About

GroupM’s ‘The State of Video 2017’ report released today doesn’t forecast the doom and gloom for linear TV that some are predicting. With TV making up 60 percent of the world’s traditional media spend, and still rising, GroupM says that TV is seen by many advertisers as essential for brand building and still represents “the peak of consumer engagement”. However, TV is still facing a number of serious challenges GroupM have set out some of its concerns about its future as an advertising medium.

Rising costs but declining audiences

The decline of TV audiences are often overstated, with much of the audience of linear having switched to digital platforms instead. But traditional TV viewing is falling as younger generations turn away from linear – GenY viewership has fallen by about 4.5 percent annually in the UK and US, and for GenZ the figure is close to 9 percent. GroupM finds that aging does not increase people’s viewing like it used to, and predicts that aging GenY and GenZ audiences will erode viewing at a pace of one percentage point a year over the next decade.

Meanwhile rights costs are rising fast, especially for sports, where high loyalty and engagement ratings have seen investments in rights and ad dollars spent on sports rise quickly. But even with sports, GroupM says younger generations aren’t as attracted as older groups, and sports in the future might not guarantee the same huge audiences they do today. Continued audience loss and fragmentation could make it impossible to sufficiently monetise content for linear broadcasters to cover its growing cost.

The threat of the digital giants

Traditional broadcasters will struggle to compete for audiences and programming with the likes of Netflix and Amazon, whose economic model is currently based solely on growth rather than profitability. Netflix and Amazon are estimated to spend around $10 billion per year on content acquisition and creation, and offer a tempting opposition to the emerging ‘skinny bundles’ of limited channels and networks, especially to viewers not interested in sports. “If you are a sports fan and impatient, it is complex and expensive to get everything you want,” says the report, “If you are neither, it is easy and cheap – go to Netflix or Amazon.”

GroupM say that no national media company has the resources to compete with these players on a global basis, and that it won’t be a surprise if Amazon Prime and Netflix come to form the anchor of the new entertainment landscape.

TV’s long tail under pressure

The long tail of TV, the lowly viewed niche channels that come with pay-TV packages, faces threats on two fronts. The cheap inventory on these channels has helped mitigate TV ad inflation in the past, but the emergence of on-demand video is making TV’s second rate ad inventory on these niche channels hard to sell. The report says these channels in the past held a sort of quasi-on-demand status, offering a certain type of content at any time of day, a status it’s losing in competition with actual on-demand.

Partly as a result of this, networks and broadcaster themselves are now offering stripped-back ‘skinny bundles’, free of these long tail channels, and as these bundles become more mainstream, the economics of long-tail channels and programmes will come under even more pressure.

TV measurement is still inadequate

Viewing measurement has not kept pace with changes in viewing habits, with a lot of content now watched on poorly measured or completely unmeasured screens. Even where there is measurement viewing standards vary, making total measurements of a show’s audience inaccurate and making it harder to monetise to its full value. GroupM says that the loss of linear audiences is largely an illusion, but until a holistic method of measurement with common standards across platforms and devices exists, TV shows will remain undervalued. What is necessary according to the report is “a universal, any-screen, respondent-level method with automatic content recognition.”

Long commercial breaks becoming unacceptable

With SVOD services like Netflix giving audiences ad-free viewing, and short-form online content being supported by short and often skippable ads, audiences are becoming intolerant of the long ad breaks featured on linear TV. Channels are now having to experiment with shorter, less intrusive breaks in the hopes that linear audiences will stabilise or grow, and that advertisers would be willing to pay a higher premium for this more effective inventory. The report advises that TV must make its advertising more relevant, making it more native to its environment and more audience-friendly.

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Facebook refunds for video ads played out of view

Facebook has informed advertisers that the company has discovered two new measurement errors. The latest errors mark the 11th and 12th mistakes the company has disclosed since September 2016 and the second and third that impacted how advertisers were billed by Facebook.

The two new errors involved mobile videos, including video ads, that played while out of view and resulted in Facebook incorrectly charging advertisers. The company has informed the affected advertisers that they will be issued credits as reimbursement for the incorrect charges. A Facebook spokesperson confirmed the errors and refunds on Monday.

Facebook discovered the errors within the past two months during a regular review of its metrics and informed advertisers of them and the resulting refunds last week, according to the spokesperson. A couple hundred of the affected advertisers are receiving credits that exceed $5,000, and the errors’ impact among advertisers is said to be significantly smaller than an issue related to carousel ads running on Facebook’s mobile site that was revealed in May 2017 and announced in a company blog post.

The first error affected videos loaded on Facebook’s mobile site. When a person uses Facebook’s mobile site, videos are supposed to stop playing when that person scrolls out of view or opens their device’s browser to another tab. But some videos, including ads, continued to play in the background after a person scrolled past them or switched to another tab in their device’s browser. As with the measurement error that Facebook revealed in May 2017, the fact that this error was limited to Facebook’s mobile site curbed its impact. A small minority of Facebook’s users are considered to access the social network through its mobile site rather than the mobile app. For example, 8 percent of Facebook’s users in the US who are over 17 years old accessed its mobile site within the past 30 days, according to the Audience Insights tool that Facebook provides advertisers.

The second error affected videos embedded within Instant Articles, Facebook’s proprietary, mobile-only article format. For people viewing Instant Articles through Facebook’s Android app while on a slow internet connection, editorial videos and video ads included in the article may take longer to load, leading a person to scroll past it before the video loads. When that happens, Facebook’s app is supposed to load the video in the background but not play it until a person scrolls it back in view. However, the error affected videos that took longer than one second to load, causing them to play once loaded even if they were no longer in view.

While both errors are said to have only affected a small number of users and advertisers, they contribute to a growing problem that has plagued Facebook for more than a year: trust. The more measurement errors that Facebook discloses, the more difficult advertisers find it is to trust Facebook to calculate those measurements. And Facebook’s errors combine with similar blunders by Google and Twitter over the past year to further sow distrust in digital advertising where the automated delivery of ads leaves them vulnerable to computer errors.

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Survey Suggests Video Audience Is at Tipping Point

New data from Hub Research suggests that TV watching habits may be at a tipping point, with the majority of US TV viewers saying they mainly watch their favorite show via a digital source.

Primary Way in Which US TV Viewers Watch Their Favorite TV Show, 2014-2017 (% of respondents)

According to the latest edition of the firm’s annual “Conquering Content” report, 52% of respondents said they primarily watch their favorite show through online sources such as Netflix.

That represents a sharp change from 2014, when just 31% opted for digital sources.

Not surprisingly, Netflix is a key source for viewers, although the Hub Research survey found it still trailed live TV as the preferred option for watching a favorite show. When asked, “How do you watch your favorite show?” some 31% said “on live TV,” while 29% said Netflix. Just four years ago, the split was nowhere near as close, with 45% picking live TV and just 14% picking Netflix.

The shift to online sources doesn’t necessarily mean a viewer is lost for traditional TV platforms. When the survey asked if viewers had ever discovered a show online and then later watched it on regular TV, 57% said they had done so, slightly more than a year prior.

Preferred Devices for Viewing TV Shows According to Internet Users Worldwide, 2016 & 2017 (% of respondents)

Hub Research’s latest findings echo the results of a worldwide survey from Accenture, which found a more dramatic shift. The April 2017 Accenture study, which surveyed 26,000 internet users across the globe, found just 23% of respondents would rather watch TV shows in a traditional fashion.

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OTT Content on YouTube Offers New Ad Opportunity

Over-the-top streaming services are big traditional TV advertisers gaining viewers, but when it comes to connecting with fans, they’re increasingly going online, according to Zefr, which helps marketers target viewers on YouTube and Facebook.

Zefr says that over-the-top shows are among the most popular content on YouTube, and while a lot of traffic is generated by official channels, fan content is also generating billions of views, making YouTube a potential place for advertisers to connect with fans of those shows.

In its recent TV 3.0 report, Zefr found that 77% of the views of Netflix related content was driven by fans. There are more than 81,000 fan channels on YouTube versus 10 official channels. Those fan channels had 4.7 billion fan views and 46.8 million fan engagements, compared to 1.2 billion views and 10.9 million engagements on the official sites.

“The study shows something we’ve known for a long time, which is fan communities that are watching OTT content are going to YouTube when they want to extend the conversation,” says Zefr co-CEO Rich Raddon.

The trailer for season 2 of Netflix’s Stranger Things quickly attracted about 9 million views on YouTube.

“You see a lot of advertising of Netflix shows on YouTube, It’s a really fertile ground because of all the activity that’s going on in these communities,” YouTube is a great place because we know the younger streaming audience is very tech savvy. It’s a great place to mine for new subscribers or new subscribers of content. “

Zefr wouldn’t say if Netflix is a client, but said it frequently works with OTT companies.

The top over-the-top show on YouTube is HBO’s Game of Thrones. It is followed by an older HBO show, ‘Sex and the City’.

The rest of the top ten are Stranger Things, Orange is the New Black, Last Week Tonight, Marvel’s Defenders, Curb Your Enthusiasm House of Cards, Narcos and 13 Reasons Why.

Advertisers can buy commercials in these shows on HBO or Netflix, but there are opportunities to be near that popular content on YouTube.

“If you’re a marketer at Netflix, if you’re a marketer at it Hulu or Amazon Prime and you’re releasing 80 feature films you know in a year, how do you target appropriately the audience that would be interested in that kind of content,” says Raddon.

Radon says movie studios and TV networks have been using entertainment-related content on YouTube to promote films and series.

But there are opportunities for marketers of other products as well.

“Advertisers that are used to buying specific content can capitalize on the scale of YouTube,” says Toby Byrne Zefr’s president.

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TV: Riding The Tide Of Emotions

VAB has often demonstrated the undeniable ability of TV to drive business growth, but in this report they explore the emotional impact of television. Television programming satisfies our human emotional need for connection; a connection not only to the characters and stories that resonate with us, but also the desire for a shared experience with our community.

download the report here

The emotional bond many of us feel with Television programming is made clear by…

• The amount of time & attention we give it – 5+ hrs a day, double what we spend eating, drinking,
shopping and viewing Facebook, combined

• Our insatiability for more content from the shows we love – 52 Million Facebook Followers of the top 5
shows alone

• The urgency we feel to rejoin the stories we loyally follow – 88% of primetime is viewed live
Emotionally compelling, character-driven premium programming fosters an ideal environment to showcase an advertisers
message. But why is this important for advertisers?

• 90% of human decision making is dictated by emotion

• 85% of consumer purchases are driven by emotional attachment

• And 58% of consumers believe TV is where they are most likely to find advertising that makes them feel
emotional (a figure 6x greater than that of Social media)

Why Advertisers Are Dragging Their Feet On Connected TV

by Lauren Wiener

Mary Meeker, have we got a new gap for you. Audiences are moving away from traditional television in droves. They are breaking up with their cable companies and starting new relationships with connected TV. But advertiser spending lags behind user behavior.

Connected TV has its challenges – chiefly targeting and segmenting issues, a fragmented buying space and a lack of standardized measurement in audience validation. This isn’t news to players in the space.

To unlock advertiser demand, it is going to take advancements in measurement and more granular targeting. Improvements are in the works, but we have a way to go. Hopefully, as advertiser demand increases, so too will the technology solutions, and we will begin to close the gap.

Connected TV Spending

With media consumption behaviors shifting to digital devices, viewers have been moving away from traditional ways of consuming TV content through their cable providers. The definition of “watching TV” has changed. Many cord-nevers don’t even call it TV – it is video. Already, more households have access to Netflix than a DVR.

Connected TV represented 20% of weekly time spent viewing digital video in the US in August 2016, according to a Frank N. Magid Associates study. In the US, adults spent an average of five hours and 13 minutes watching video (both linear and digital) every day, according to eMarketer.

Right now, 66.5% of US households have connected TVs – that is 82 million households. By 2021, eMarketer forecasts that number will rise to 93.8 million households.

This trend is driven partly by the emergence of linear OTT services, including Sling TV, DirecTV Now, PlayStation Vue, YouTube TV and Hulu with Live TV. Although these emerging digital services are subscription-based, they are not technically “pay TV,” which eMarketer defines as subscriptions to traditional multichannel video programming distributors (MVPDs), as opposed to services that require an internet connection.

While there aren’t any US connected-TV ad spend statistics available, we know anecdotally that it is low. Weekly time spent with connected devices represented 11% of total viewing across linear TV and digital video, according to Nielsen’s Q1 2017 Comparable Metrics Report.

When compared to the time spent for linear TV only, connected TV’s share rose to 13.6%. However, OTT ad spend is estimated to be only about 2-3% of total TV dollars. For OTT/CTV ad spend to be proportionate to the time viewers spend with it, it should be significantly higher than currently levels.

Connected TV is mainstream, but we are observing the same phenomenon as we saw with mobile: Ad spend is lagging behind consumption.

Connected TV Challenges And Solutions

Connected TV holds great promise for marketers, but right now, many can’t see past its limitations, particularly the lack of standardized measurement in audience validation for evaluating campaign reach, impressions and performance, along with data inconsistency across devices and apps.

Marketers are also put off by targeting and segmentation challenges, since connected TV is a cookieless environment with no device ID. There are some solutions in place here, like Neustar, but they don’t offer the level of granularity that other connected devices provide. It’s all done at the household level.

Connected TV’s ad effectiveness measurement is behind compared to other digital platforms. You can’t track and optimize campaigns in real time, metrics are limited and measuring attribution is difficult. Viewability should, in theory, be close to 100%, similar to linear TV, but connected TV campaigns are limited in the fraud, brand safety and viewability measurement capabilities available.

Furthermore, buying connected TV is mostly a manual, I/O-based process, and there is limited premium inventory and scale. Although ownership levels of connected and smart TVs are relatively high, the actual consumption is meager compared to traditional platforms. That is growing rapidly, though, especially among millennials and younger generations.

For example, just two years ago, OTT represented only 8% of digital video ad views. Now, it represents 32%, according to the FreeWheel Video Monetization Report: Q1 2017.

Another factor affecting marketing budgets is that OTT is disconnected from the rest of the TV industry. Buying is fragmented, which is a major obstacle to OTT and linear TV becoming one programmatic buy.

While the challenges connected TV currently face mirror those mobile faced in its nascent stages, so will the solutions. Just as mobile players worked, and continue to work, to address these problems, so, too, will the connected-TV industry.

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How publishers are fooled by ads.txt fraud

Publishers say that third-party sellers like Thrive+, Ludius Media and SelectMedia asked to be listed on their ads.txt files, even though the publishers did not have direct relationships with these companies. These vendors say they were merely trying to form direct relationships with the publishers whose inventory they were reselling. In response to reporting on this subject, the politics publisher Salon removed Thrive+’s name from its ads.txt file, SpotX and LKQD terminated their relationship with the reseller, and OpenX sent an email out to its publisher clients that called the whole thing a “scam.”

Launched by the Interactive Advertising Bureau Tech Lab in May, ads.txt is a text file that publishers put on their web servers to list their authorized inventory sellers. The point of ads.txt is to reduce unauthorized reselling and domain spoofing, which are persistent problems in programmatic advertising.

The hubbub began last week when a publisher source announced on Reddit that he was receiving unsolicited requests from vendors to get on the publisher’s ads.txt file, which prompted an AdExchanger article on the topic. One of the vendors, Thrive+, was listed on 65 ads.txt files as of last week, according to Pixalate. Salon and were the largest publishers on the list.

Salon declined an interview request for this story, but as seen in these archived links, it removed Thrive+’s name from its ads.txt file after Digiday asked the publisher about its connection to the vendor. said it uses Thrive+ to sell its inventory, but it didn’t answer other questions that Digiday posed. Thrive+ said it has relationships with both publishers.

What’s made this particularly confusing is that in a phone conversation, Thrive+ referred to itself as a programmatic agency and a buyer of inventory. But ads.txt is for listing sellers of inventory, not buyers, which is a point ad tech people are passionate about.

“It’s definitely a reseller trying to not just game but cheat the system,” said Dan de Sybel, CTO of programmatic agency Infectious Media. “They want to pass themselves off as a legitimate source for selling this inventory. Buyers do not need to be added to ads.txt, only sellers.”

Bob Regular, managing partner of Delivering Yield, which invests in Thrive+, vehemently disputed that Thrive+ is engaging in shady arbitrage.

He said the ad tech industry’s response to the Reddit thread is a “mass bullying campaign that is working to destroy the company.” At one point, he said accusations against Thrive+ were “defamation.”

Regular said there is a nomenclature misunderstanding and that Thrive+ is helping publishers by reselling their inventory. Essentially, Thrive+ works as a supply-side platform reseller. In order to resell inventory, it must first buy it.

Since Google’s demand-side platform is beginning to use ads.txt to filter unauthorized resellers, the point of Thrive+’s emails to publishers was to let them know that Thrive+ buys inventory from them and that Thrive+ would like to work directly with them, Regular said. The full email it sent to publishers appears below. The ID numbers for each company have been scrubbed.

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15.8 Million People Watched the First Episode of Stranger Things

Nielsen released its first batch of viewership data about Netflix.

The never-before-publicly-shared data shows that the first episode of Stranger Things 2 drew a bigger audience than the Season 8 premiere of The Walking Dead, cable TV’s most-watched show a week earlier.

According to Nielsen’s SVOD Content Ratings, 15.8 million U.S. viewers watched the first episode of Stranger Things 2 over the first three days, including a whopping 11 million people in the 18-49 demo.

That puts it just above the live-plus-3 numbers for The Walking Dead Season 8 premiere on Oct. 22, which drew 15 million total viewers and 8.8 million in the demo.

The Stranger Things 2 demo viewership is also ahead of all broadcast entertainment programs in live-plus-3 (This Is Us had 5.8 million). As for total viewers, Stranger Things 2 is behind only The Big Bang Theory (16.5 million) and The Good Doctor (16.1 million), and tied with NCIS (15.8 million).

Stranger Things 2— which showcases dozens of brands in all of their ’80s glory—debuted last Friday. Over those first three days, every episode averaged more than 4 million total viewers, and more than 3 million in the demo, according to Nielsen. On Friday, 361,000 people watched all nine episodes of Stranger Things 2.

The episode breakdown over the first three days was as follows:

Chapter One: 15.8 million total viewers, 11 million 18-49
Chapter Two: 13.7 million total viewers, 9.6 million 18-49
Chapter Three: 11.6 million total viewers, 8.1 million 18-49
Chapter Four: 9.3 million total viewers, 6.6 million 18-49
Chapter Five: 8 million total viewers, 5.6 million 18-49
Chapter Six: 6.4 million total viewers, 4.5 million 18-49
Chapter Seven: 5.3 million total viewers, 3.7 million 18-49
Chapter Eight: 4.9 million total viewers, 3.4 million 18-49
Chapter Nine: 4.6 million total viewers, 3.2 million 18-49

During those first three days, the average Stranger Things 2 viewer watched 2.9 episodes of the new season.

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Social Video: Its Hip to be Square

Video creation platform Wochit has published its Q3 social index providing insight from its analysis of over 10,000 Facebook videos, created by more than 200 publishers. These videos were published on 300+ Facebook pages between June 2017 and August 2017. One of the most notable trends found is that increasing the number of videos shared yields disproportionate gains in views and engagement, On average, publishers that increased their video production saw their video views triple.

The report includes comparisons with Q1 and Q2 findings of 2017, illustrating emerging trends in the industry. Some of the big findings of Q3 include:

Publishers already making video create nearly 50 per cent more in Q3

Pages with more video attract more followers
Engagement shifts to Reactions over Likes
Square videos prove massively more engaging than horizontal
Midroll, high engagement lift popularity of longer videos
The 1 per cent continues to get nearly half of all views, over half of all shares
Latin American audiences are by far the most engaged
Publishers Committed to Social Video Doubled Down in Q3
Publishers who created videos in both Q2 and Q3 had an average production increase of 48.5 per cent in Q3.

These publishers also saw significant increases in engagement, averaging a 52.3 per cent lift in views, 65 per cent growth in Likes and a 62.3 per cent rise in the number of Shares.

For publishers who increased production in Q3, Wochit found a disproportionate impact on view counts. These publishers doubled their video production, on average, yielding a 3x more video views.

More Videos Means More Followers

There is a strong connection between the number of videos posted to a publisher’s Facebook page and the number of followers for that page. In fact, eight out of the 10 most followed publisher’s Facebook pages in Q3 published at least five videos a day.

In Q3, publishers posted an average of 40.3 per cent more videos per page than during Q2. At the same time, the average number of followers increased by 33K to 870K (compared to 837K in Q2).

Reactions Rise while “Likes” Slide

In a previous study of viral videos, Wochit observed that 80.9 per cent of those reaching the one-million-view landmark elicit strong emotions. So, it’s not surprising to see that the number of Reactions on videos continue to increase, moving up 66.9 per cent in Q3. The traditional “Like”, however, is decreasing, down 21.2 per cent from Q2. Wochit sees this audience behaviour simply as an indication that the videos on which they are interacting are drawing out deeper feelings than a simple thumbs up reflects.

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Could 2018 Be The Year Of The OTT Breakthrough?

Consider, next year Netflix will spend as much as $8 billion on content, potentially more than any other media or technology company.

Amazon will continue its own investment in OTT, and will be given a signal boost thanks to its high-profile simulcasts of NFL “Thursday Night Football,” along with the Amazon Video app addition to Apple TV.

AT&T, in its latest earnings report, said streaming video subscribers jumped by 300,000 subscribers, while its traditional pay-TV customer base had a net loss of 90,000 subscribers.

Meanwhile, according to an FCC filing, AT&T is developing an Android-powered and DirecTV-branded OTT video hub that appears likely to be released in short order. Assuming AT&T’s acquisition of Time Warner is approved by regulators, the company will have a vast swath of content, including HBO, to entice new customers to start streaming.

If you’ve been watching the World Series over the last week, you’ve certainly noticed it was “presented by YouTube TV,” with a reminder that you could watch the games without a cable subscription through the service.

Hulu is also launching its bundled OTT video service.

CBS plans to significantly increase its content spend on original programming for its CBS All Access service, and will be rolling out a sports streaming service in the coming months. Disney will launch an ESPN streaming service sometime next year, though the details of what sports it will include remain under wraps for now.

2018 feels like a tipping point. Every major television company will have a dedicated streaming service by the end of next year, while the powerful technology trio of Google, Amazon and Netflix continue to invest and expand their subscription video offerings. And technology will make it easier than ever to watch OTT video on our TV sets, while mobile phones continue to feature screens well-suited to watching video.

For advertisers, these products present new opportunities: to advertise on sports events that may have a loyal following, but are not big enough to air on traditional TV. To advertise on new video bundles with a largely millennial consumer base. To use the scale of a company like Google or AT&T to reach key constituencies not served well by existing video products.

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