UK TV advertising slips back year-on-year

Even though it did not quite hit the highs set two years ago, nor indeed 12 months earlier, the UK’s advertising market generated £5.11 billion in revenue in 2017, according to survey data from Thinkbox.

The association of UK commercial broadcasters said the figures represent all money invested by advertisers in commercial TV across all formats and on any screen: linear spot and sponsorship, product placement, broadcaster VOD, addressable and interactive.

The data showed that the annual decrease compared with 2016 came after seven consecutive years of growth in the UK, caused mainly by ongoing economic and political uncertainty, with a weakened pound and inflationary pressure leading some advertisers to reduce TV investment, notably FMCG advertisers. Yet according to data from Nielsen, FMCG spend on TV advertising in Q4 2017 grew by 8% compared with the same period in 2016. And figures from the UK broadcasters suggest that Q4 2017 saw an approximate 2% overall increase in TV spend year-on-year. The Advertising Association/WARC predicts that TV advertising in the UK will return to annual growth again in 2018, forecasting a 1.5% increase in total investment.

Thinkbox also found that, according to Nielsen data the top five TV spending categories in 2017 were: online businesses: £682 million (0.3% down year-on-year); food, which generated £559 million (-11.4%); cosmetics and personal care with £431 million (-2.4%); entertainment and leisure generating £385 million (+1.6%); and finance, capturing £324 million (-3.1%).

Commenting on the results, Lindsey Clay, chief executive of Thinkbox, said: “Post-recession, TV advertising in the UK had seven consecutive years of growth. But TV hyper-reacts to the economy, good or bad, and recent uncertainty saw growth stall in 2017. That growth is now returning. The pendulum is swinging back to TV. We have more proof than ever that TV advertising drives business growth and outperforms all other forms of advertising. TV is a proven, trusted, high quality environment for brands. And TV’s strengths and unique assets have been thrown into even sharper relief recently following the much-publicised scandals and loss of trust in some areas of online advertising. Advertisers are re-assessing where they advertise and TV is well placed to capitalise.”

Amazon will soon distribute ad-supported streaming channels

Amazon’s Channels program has been a big hit for TV networks and digital publishers with subscription video streaming products. Soon, Amazon wants to open up advertising as another form of revenue for media partners that have ad-supported streaming apps.

Speaking at Digiday’s Future of TV Hot Topic last week, Rich Au, head of Amazon Channels in the U.S., said Amazon will start offering ad-supported streaming channels later this year. While he did not provide a specific timetable, Au pointed to how Amazon already supports ad-supported channels in Europe, including a partnership with Discovery that includes access to the company’s linear TV feeds in European markets. Amazon will open up similar possibilities in the U.S., he said. (Amazon stressed that this is a distinct offering from the existing Amazon Channels program, which focuses on subscription streaming channels.)

In the U.S., the Amazon Channels program offers subscriptions to top networks, including HBO, Showtime and CBS. Advertising could substantially benefit streaming networks such as CBS All Access that already offer ad-supported tiers on their own. Right now, anyone subscribing to CBS All Access through Amazon can only access the app’s $10 monthly ad-free tier. When Amazon opens up access to the app’s $6 ad-supported tier, CBS has a chance to create a second revenue stream from its Amazon partnership.

It’s hard to understate the impact the Amazon Channels program has had on the growth of subscription streaming services in the U.S. When NBCUniversal launched its now-defunct comedy streaming service Seeso in January 2016, Amazon accounted for upward of 60 to 70 percent of total subscribers, said Evan Shapiro, the former NBCU exec who launched Seeso. By the time Shapiro left NBCU in May 2017, Amazon Channels accounted for 40 percent of total subscribers, Shapiro said.

“That was because over time, we found organic [search] traffic migrating to the native platform,” Shapiro said. “But Amazon’s growth didn’t slow — and the best part of the Amazon Channels product was that the churn is substantially lower than others.”

Two other Amazon Channels partners at TV networks corroborated the program’s impact on their subscription apps, privately telling me that Amazon Channels contributes anywhere from 25 to 45 percent of total subscribers.

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Google says it will fix the online advertising crisis… but will it work?

by Enrique Dans

On Thursday, February 16, as part of its Coalition for Better Ads, Google launched an offensive it says will rid the internet of the worst of the many intrusive publicity formats the advertising industry has inflicted on users for years.

My impression is that Google is pretty much reprising its 2003 decision to introduce a function on its navigation bar to block pop-ups, thus protecting its main revenue stream, advertising, from short-sighted irresponsible companies. Advertising agencies, advertisers themselves, and many media, over time, have opted for anything goes strategies, utterly disregarding respect for a general public it assumes will put up with anything to get to the content we want. We can only count our blessings that some smart-assed developer didn’t come up with a way for ads to reach out of the screen and grab us by the throat, because some advertisers would undoubtedly have used it.

In 2003, the pop-up took us to a point of no return: by then, abuse of that format had made web browsing a misery. More recently, abuse of other intrusive formats and continuous tracking of users has prompted more and more people to install advertising blockers such as German Eye/o’s AdBlock Plus.

At the beginning of last year, the number of devices with advertising blockers installed already exceeded 236 million computers and 380 million smartphones worldwide, representing the largest boycott carried out by consumers in human history. Something had to be done, so Google went to work.

What’s changed since 2003? These were different times, and also a different Google.

In 2003, Google was a “nice” company, enjoying strong growth, with an incipient advertising model and a a positioning that allowed it to make its own decisions. Fifteen years later, Google is now the leading search engine, and along with Facebook, dominates display. Like a bull in the china shop of advertising, it tends to break things when it moves. Hence, its decision to take action has been carried out through the Coalition for Better Ads, the body it has set up bringing together ad agencies, advertisers and media to prevent an advertising apocalypse.

In 2003, Microsoft’s Internet Explorer was the main browser, one controlled by a company that, at that time, was anything but “nice”: it was engaged in a crusade to redefine web standards, to exclude competitors, and it noticed how some companies, Google among them, were dominating categories it wanted for itself. All Google could do was to develop a navigation bar that any user could install in their browser with certain blocking functions. Today, Google’s Chrome is the leading web browser, and so can pretty much do what it wants, and knowing that its actions will be felt immediately.

In 2003, Google was practically alone in trying to defend users from abusive advertising formats. Moreover, from what I know about the company, I firmly believe that the pop-up blockade was not entirely about protecting its revenue stream, but also by a genuine desire to improve the experience of its users. In 2018, the user landscape is completely different: those of us able to install an ad blocker consider Eye/o and other companies are allies in the fight against intrusive ad formats, vastly improving our browsing experience. Google’s relationship with Eye/o is bittersweet: on the one hand, it has financed it by paying for the inclusion of its advertising on the company’s white lists, while on the other, it has not asked it to join its Coalition for Better Ads and sometimes refers to its practices as “blackmail”.

Eye/o knows perfectly well that an advertising blocker is nothing without a good block list, and keeping that list updated requires costly supervision, charging whoever it can to meet those costs. Eye/o initiatives to define good practices in advertising have done much more for users than anything Google has done so far, and are much more tougher than the Coalition for Better Ads’ proposals. If you really appreciate your browsing experience, take my tip: keep your ad blocker installed both on your computer and your smartphone.

Google now finds itself in a position where, in 2018, it is being forced to negotiate with agencies, advertisers and media before making a move. It’s looking for a balance between these players and users, a balance that should have a much greater impact on practices that go beyond annoying formats. We will all appreciate being freed from formats such as the one above, aberrations such as pop-up, the interstitial, videos with preactivated sound or large and persistent advertisements, although some advertisements with animation or with distracting formats will remain, because many of the players in the coalition still believe in their heart of hearts that if an ad doesn’t annoy you, it’s because you haven’t noticed it”. And they will continue to install trackers for everything and at all times, because Google itself does. In short, for online advertising to really change, we need all parties to change their thinking.

Is Google going to be an honest broker here? Is it a good idea to have the largest advertising seller (whose global online ad business is bigger than the next five biggest combined), using its position as the owner of the largest web browser (four times the market share as the nearest competitor), to determine which ads are fit to be seen or not?

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What Does it Take to Make a Publisher Alliance Work?


The rise of the large tech platforms – mostly Google and Facebook – has transformed the sell-side landscape to the point where smaller publishers have been forced into often uneasy alliances with their competitors. By pooling their inventory, publishers hope the joint efforts will make their offering more efficient to buy and more attractive scale-hungry advertisers (e.g. if Advertiser X wants to find User Y, they have more chance of finding that user across a dozen publishers than they do on one).

The trend started in 2012 in France with Paris-based La Place Media, whose shareholders are TF1, Le Figaro, France Télévisions, Lagardère and Team Media, and since then we’ve seen the model attempted in various other markets. Whilst the French have been more successful than most with their cooperatives, in other markets many have struggled to get off the ground, or have collapsed completely as the participating members have failed to agree on terms.

Over the last year or so, we have also seen broadcasters joining forces to overcome shared challenges, mainly with a view to boosting efficiency and extending their pan-European reach. In Europe, the European Broadcaster Exchange (EBX) was founded by ProSiebenSat.1, TF1 and Mediaset, and Channel 4 also signed up too. Then Liberty Global – Europe’s largest pay TV operator – signed up to Sky’s AdSmart, and in the US OpenAP – a joint initiative by Turner, Fox, Viacom – was also launched.

But why is it that some cooperatives work and some don’t? VAN spoke to some of those who have worked with some of the leading alliances to find out.

Friends on the Other Side

To smooth the path for discussions to begin, it helps for potential partners to already have pre-existing friendly relationships at the top level. After all, regardless of how much is at stake, cooperation still requires people to come together and negotiate, and this is made easier if the person on the other side of the table is closer to a friend rather than just a competitor.

This is one area where publishers may struggle more than broadcasters. While broadcasters obviously come to blows at times, they often don’t to have the same sort of acrimonious relationships that some publishers have, who have in many cases spent decades at one another’s throats both commercially and editorially.

Erwan Le Page, Director General of French cooperative Audience Square, Le Page said that one of the secrets Audience Square’s success was the human relationships. “Many the people working with us have worked alongside one another at various points in their careers, or they had partnered with competitors on specific projects, on Christmas bundle offers for example.”

Ellie Edwards-Scott, a London-based digital consultant who has advised publisher alliances in UK in the past, says that the highly competitive nature of the UK print market has complicated moves to deepen cooperation. She said that the publishers have been “warring” for so long that it has been difficult to get them to work successfully with one another. Also, this animosity has been fuelled further still by the pressures that have accompanied the decline in print revenue.

However, if these social relationships don’t already exist between media companies, they can be built, albeit with smaller projects with fewer members. In the broadcast world, ProSiebenSat.1, TF1 and Mediaset all worked together to launch multi-channel network Studio71, which built a solid foundational relationship for the European Broadcaster Exchange (EBX) to be built on.

“Working with Mediaset and TF1 on Studio71 put in place structures and processes that built a common sense of trust and goodwill between all partners. As a result, we were able to draw upon these relationships in the creation of EBX,” said Christof Wahl, ProSiebenSat.1’s COO told VAN.

Wahl believes that EBX itself will provide a base for even more cooperation in the future. “We believe it will kick start a deeper, strategic collaboration between the broadcasters to drive forward technological development in online advertising and addressable TV, which has big potential for broadcasters,” he said.

A Clearly Defined Goal

The foundation of an alliance will usually be a shared goal of some sort, but the experts VAN spoke to emphasised the importance of those with power really understanding and believing in this common cause.

“I think it’s really important that at the offset all publishers are aligned with common goals and objectives of why they’re forming the alliance and what they want to get out of it,” said Edwards-Scott.

In Audience Square’s case, the digital teams saw the benefits to teaming up for a joint programmatic offering, since programmatic trading was still new at the time meaning there was lots to be gained from pooling resources and knowledge.

At the birth of Audience Square, Le Page explained that those at the head of the founding publishers were very receptive to any digital proposals, as they were looking to transform their businesses.

At the same time, at lower level positions in the digital teams there were younger individuals who believed in the benefits of a unified programmatic offering and were willing to evangelise and push the idea to their bosses. Many at the lower levels also knew each other in various ways, having worked together on deals or for the same companies previously.

Le Page believes that a similar urgency is pushing European broadcasters to work together, and making them happy to take risks and accept compromises for what they see as the greater good. “The example with the broadcaster in Europe is striking, because I’m not sure they’d have accepted that kind of deal ten years ago,” he said.

Without this belief in the shared objectives, publishers will be more prone to dropping out once they’re called on to compromise or give up anything of value for the sake of the cooperative.

A Blueprint the Works for Everyone

Having a clearly defined, shared objective is a good start, but things can still fall apart if there is no agreement on how to get there. The zeal with which publishers unite to overcome a problem can quickly dissipate when disagreements arise over the nature of the alliance.

Key to this is making sure that the cooperative will be for the benefit of all players involved, which is particularly important in an environment where there might be a lack of trust between members.

Fiona McKinnon, general manager of the UK’s Pangea Alliance, explained how in the early stages the participating publishers were concerned about giving up sensitive information and compromising their own sales, yielding competitive advantage to their competitors. But by ensuring the alliance was sensitive to the needs of each individual publisher, trust between members was built.

“I soon learned that that is about understanding each of the individual publisher businesses, and making sure that as an alliance, we know what success means to The Guardian versus Fast Company versus CNN,” said McKinnon.

Audience Square similarly set itself up for the benefit of all. “The brief was for a programmatic offering which would not damage in any way the businesses of the publishers involved,” said Le Page.

This is one area where broadcasters may have an easier time working together than publishers, as fiercer competition makes it harder for publishers to find solutions that work for everyone.

“The market for broadcasters is not as segmented as the publisher market,” said Wahl. “In Germany for example, we are facing mainly one other major competitor in the field of free TV. However, publishers have to deal with many competitors each with their own specific agenda, which reduces the amount of common initiatives.”

What can help overcome this problem is clearly defined leadership, preferably from an independent body whose only goal is to see the success of the alliance as a whole.

“If you’ve got an alliance of, say, ten publishers of different sizes and with different motivations, if you’ve got committee-style voting it can be difficult to get anything passed,” said Edwards-Scott. “Some of the alliances that have worked better have had independent bodies running them.”

Clearly defined leadership can prevent cooperatives from falling apart due to disputes over questions like which tech vendors to work with, and keeping the leadership independent can help prevent one publisher overpowering the others.

The Pangea Alliance has been led internally, first by The Guardian and now by CNN, but McKinnon explains how her team operates independently within CNN’s structure in, many ways like a third party, meaning CNN doesn’t get preferential treatment.

A Compelling Product

Finally, with so much focus on how publishers can help each other through cooperation, it’s important they don’t forget to create a compelling product for those they’re selling too.

Usually these alliances by nature will involve offering greater scale to brands and advertisers, but as Edwards-Scott says, “scale is important, but it’s also what’s behind that scale.” It will often take more than simply a larger reach to convince advertisers to buy a new united offering.

The Pangea Alliance overlays content and data from its members to create a more complete picture of a user. “We can find someone who reads a lot of travel articles on The Guardian, but consumes a lot of business and finance across our other titles; put those two together and you’ve got a business traveller,” explained McKinnon.

Audience Square meanwhile bundles up its inventory into thematic packages, allowing advertisers to buy categories like entertainment, B2B and sport from a URL that masks which publications are included (to protect the publishers from competing with each other).

Edwards-Scott says publishers could look to creating whole new formats for video or rich media, which offers a whole new product to the market, at a scale which will make it more tempting to buyers.

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Netflix Will Have Ads, – Predictions From Top TV Ad Chiefs

Netflix will inevitably need ads, predicted Jo Ann Ross, CBS’ president and chief advertising revenue officer, during a fireside chat at AdExchanger’s Industry Preview on Thursday.
“Maybe they’ll offer a lower-cost version of their service [or a different model],” she said, “but if they’re spending that much money [on content], they will look for ways to monetize it other than through subscription.”

That proclamation was one of the many that Ross made during the two-day digital marketing conference in New York.

Another prediction: More networks will reduce their ad loads, which echoed a promise NBC ad sales chief Linda Yaccarino made a few months ago.

CBS has already experimented with lighter ad loads in its streaming video-on-demand service, CBS All Access, which offers 20% fewer ads than in its linear programming.

Yet, more consumers opt for CBS’ ad-supported tier than pay more for the ad-free edition, Ross said, leading to the conclusion that consumers don’t mind ads – as long as they’re attached to quality content and a good user experience.

NBC’s Yaccarino also appeared at Industry Preview during a separate fireside chat. Following are three takeaways from CBS’ and NBC’s top ad sales execs.

Subscription video and linear TV can coexist.

With the rise of subscription video on demand (SVOD), more consumers are bingeing on time-shifted content than ever before.

Bingeing is both good and bad for broadcasters.

On the down side, it’s harder to capture viewers in a live, linear setting when they’re playing catch-up on their favorite series after its original air date. That said, many brand advertisers still view linear TV as the most effective reach play.

“Where do marketers go when they want scale and immediacy? They come back to broadcast,” Ross said. “So it’s a negative and positive for us.”

The upfront isn’t going away. It’s getting data-driven.

Ross noted that the annual broadcast upfronts are increasingly about the data.

“Clients are taking huge, multimillion-dollar budgets and might carve out a portion to transact on data,” Ross said. “Clients and marketers want to be more targeted. They want to understand the attribution points that do lead to return on investment.”

And the brand safety issues plaguing digital video portals make the upfront process more attractive.

“You can proactively pick and choose the content you want your messages to run across in advance,” Yaccarino said. “In television, time exists … it’s perishable, and you’re talking about specific spots in a pod at a certain day and time. That time goes away if you don’t schedule ahead. It’s why upfronts are important.”

The broadcast community was a natural beneficiary of the tension last year between advertisers and online video portals, as big spenders like P&G and Unilever scaled back or reconsidered their online ad investments due to brand safety issues.
Since TV is transacted in a futures market and supply is finite, the chances of an ad showing up next to unsavory content are slim to none.

Measurement needs a makeover.

The lack of comprehensive industry standards across the fragmented worlds of linear TV and digital makes it difficult for TV networks to give marketers “the best possible opportunities,” said NBC’s Yaccarino.

Yaccarino has been bullish on finding alternative currencies to Nielsen as her network doubles down on outcomes-based selling and audience guarantees based on new data sets.

CBS’ Ross also called out the need for clearer visibility in measurement and a common metric that accounts for linear, live viewing, as well as over-the-top and on-demand viewing.

“Nielsen promised us a total audience rating,” Ross said. “They’re working on it, but we are not there yet. There’s so many different devices that you can’t measure accurately across them yet, which has been the challenge for Nielsen.”

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OTT video ad spend up 18-fold

Findings from video ad serving platform SpotX, reveal explosive growth in global OTT video advertising spend across its platform. The OTT video category includes broadcast-quality inventory from TV networks, Multichannel Video Programming Distributors (MVPDs) and other live, linear and VoD streaming services delivered via connected TV devices as well as desktop and mobile screens.

SpotX’s data revealed that the portion of overall ad budgets spent with OTT inventory owners increased from 8 per cent in October 2016 to over 26 per cent of total spend for October 2017. This equates to nearly 18x growth in advertiser dollars spent on OTT inventory owners year over year in October. As the holiday ad spend push continues, OTT is expected to account for around 30 per cent of video ad spend by the end of 2017, pointing to a macro-level growth trend that shows budgets adjusting in favour of OTT streams as consumers increasingly view content across devices.

“We’ve seen DSP partners increasing their focus on OTT in response to a shift in consumption habits,” said Kelly McMahon, VP of Global Demand Operations at SpotX. “By making addressable OTT inventory available to buyers through their platforms, they’re placing themselves ahead of the curve in terms of innovation and enabling advertisers to reach audiences across multiple screens at scale.”

Of the 65+ DSPs buying through SpotX’s platform, Adobe Advertising Cloud, dataxu, The Trade Desk, VideoAmp and ZypMedia are leading growth as the top platforms transacting on OTT inventory. Since January of this year, their collective daily spend on the category has grown by more than 675 per cent.

“The key to buying across video channels, including OTT audiences, is taking a holistic view of the data that can be made available; specifically: linking consumption behaviour, or what people watch, to digital activities, or what they do online, along with ad exposure data,” said Jay Prasad, Chief Strategy Officer, VideoAmp. “As a purpose-built platform for the converging linear and digital worlds, we are enabling these data assets to work in concert to deliver better scale and efficiency for advertisers.”

“Streaming live TV is now mainstream behaviour, opening the door for advertisers to capture today’s young, affluent, hard-to-reach consumers who aren’t subscribing to traditional cable TV,” said Adam Lowy, Head of Advertising Sales for Sling TV.

The Holy Grail of TV Advertising – Are You Missing Out?

Digital advertising is exploding across screens. The associated growth of digital attribution models used to measure performance has led to the idea that linear TV advertising is not as effective as it once was. However, TV IS still driving sales. I see it every day and I experience it myself in my own purchase decisions. Linear TV advertising is still the most effective way to reach consumers at scale, is proven to be a major sales driver and is the fuel for lower funnel conversion activity.

A recent study published by Neustar found that for a $1 million investment, TV’s lift is consistently seven times better than paid search and five times better than online display advertising. That’s pretty significant, and as such, it’s top of mind for advertisers to make sure they are leveraging TV advertising to increase their sales.

Direct attribution – especially for linear TV – has always been tough to achieve, but it’s not impossible. In fact, I posit that the “Holy Grail” of TV advertising is finally upon us, and advertisers can (and should) plan, manage and measure TV with the precision traditionally expected of digital screens.

Here I outline the top three things you should incorporate into your advertising strategies if you want to achieve the “Holy Grail” in TV advertising.

1. Greater TV Advertising Automation

Automation in TV is fairly new. Many in the business aren’t even aware it’s being done. It definitely can and is being achieved by leading players in our space, but very few have true clarity on what can be done and how best to apply it. As companies continue to innovate and advance, we’re going to start seeing automation in TV advertising being implemented more and more.

So, why is it important? Automation is especially important in that it brings additional data to TV. With the amount of data that is being applied to TV advertising, it would take ages to process it without using technology. Automation speeds up the entire TV advertising process, allows for the creation of custom strategic targeting – leading to more accurate targeting, provides in-depth reporting and also allows for increased transparency and control.

2. Linking Your Digital Investments to Your TV Investments

Once you’ve applied the data to your investments, you can link it across screens. As an advertiser looking to target specifically on TV, you know how important it is to invest in both TV and digital advertising, but do you realize the importance of linking both investments together?

Just last year, the Advertising Research Foundation (ARF) released an in-depth research study analyzing the state of advertising, based on over 5,000 campaigns, 12 years of data, $375B in advertising spend in 41 countries, across over 100 categories. The study revealed that spending across multiple platforms delivers greater ROI than any single platform. And in turn, the study found that “silo-investing” – too much frequency via a single platform—can lead to diminishing returns.

It’s important to link your digital investments to your TV investments; doing so will allow you to measure how your digital investment is performing, and then use that data to better inform your TV strategy – ultimately, having both investments working more closely together. As an advertiser, you should start tagging your campaigns on digital to see who is converting online, then utilize that data to focus your TV buying strategy. Linking both investments together yields the best results time and time again.

3. Closed-loop Attribution Across TV and Digital

Now this is arguably the biggest piece of the pie in achieving the “Holy Grail” in TV advertising. The ability to identify which TV ads drove conversions, is a concept many advertisers don’t even realize exists, but it’s here. For example, pixeling your website to understand conversions and activities can be directly tied back to TV’s exposure, showing us what’s most effective in driving consumer engagement.

To determine the true ROI of your advertising, it’s critical to measure your investments holistically across devices. In other words, closing the loop on attribution across your TV and digital investments to ensure that they are truly measuring how TV is contributing to overall performance; then, combine the results for true measurement, using a common metric. This is the only way to see what your advertising campaigns are really achieving, and in turn, improve your marketing strategy in future campaigns.

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What advertisers expect from online video in 2018

Despite placing great faith in online video as a means of connecting with audiences in the near to mid-term future, marketers are largely unsatisfied with their advertising strategies in the space thus far.

A survey released today (November 28) indicates that only 6% of marketers would currently characterize themselves as “innovators” when it comes to their use of online video. Albeit the vast majority want to improve their efforts in the space, with 80% of correspondents reporting that they will increase their video advertising efforts in 2018.

The report, entitled “Where are Brand Marketers Taking Their Video Strategy in 2018?”, was conducted by video adtech outfit Innovid along with Brand Innovators and queried 140 marketers on their attitudes around their own brand’s video advertising strategy. This included: their attitudes around data integration; how they assess their success; as well as their video advertising plans for 2018.

Participants in the survey cited three principal reasons for their comparative company’s lack of leadership in the video advertising space, primarily a lack of: budget; in-house expertise and prioritization across the wider organization.

Marketers cite funding as the gating factor in video advertising volume for the vast majority of marketers, although 79% of participating companies will increase their video advertising efforts in 2018.

Facebook and YouTube currently dominate when it comes to advertisers’ video ad spend, while OTT video platforms – such as Hulu and Roku – currently account for 9% of video ad spend. Ad spend on such formats is expected to increase “significantly” in the 12 months to come.

The survey also found that interactive TV ads are currently underutilized because there is a general lack of knowledge about the capabilities that current video advertising technologies provide, according to the findings.

It also found that 90% of marketers understand the value of using digital key performance indicators (KPIs) when it comes to measuring the effectiveness of an online ad campaign, as opposed to using more traditional KPIs.

However, 35% of marketers rely completely on their media agencies when it comes to online video advertising expertise, according to the study. It also suggested that marketers are largely are uninformed about the costs associated with deploying customized video ads, with 45% reporting that they don’t believe that creative can be customized into hundreds of variants for less than $20,000.

Beth-Ann Eason, Innovid, said that brands need to select partners with expertise in video marketing strategies in order for them to solve real business problems through data-driven creative campaigns with concrete measurement and results.

Eason stated: “Many marketers seem to be coming down hard on their own video marketing efforts, but it is also clear that there is so much untapped potential and optimism about video marketing and its impact on consumers to be harnessed in the year to come.”

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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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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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