Consumers Are Now More Likely to View Ads Online Than on TV

GroupM unveiled its 2018 “State of the Digital” report, which predicts where people worldwide are expected to consume content in the coming year. And for the first time, the WPP network sees online surpassing every other vertical—linear TV, print and radio—in terms of where people will choose to spend their time with media.

The study, when weighted by expenditure, estimates that consumers will spend an average of 9.73 hours per day with personal media in 2018, up from 9.68 hours in 2017. GroupM predicts online to take a 38 percent share of total time spent with media; for the first time, linear TV trails behind and is expected to end the year with a 37 percent share. The group predicts radio and print to then take 18 percent and 7 percent shares, respectively.

Last year, linear TV held a 38 percent share over online’s 36 percent.

GroupM noted in the report that it wasn’t able to accurately measure TV’s online distribution, so those numbers were “lost in that online aggregate.”

The report likened the rise of digital ad expenditures to that of global e-commerce spend, which it also sees jumping considerably in 2018. Based off the 35 countries that supplied e-commerce totals for this study, GroupM predicts the dollars spent online to climb 15 percent to $2.4 billion in 2018 from $2.1 billion last year.

This is also the first time GroupM predicts e-commerce shopping to “grow notably faster” than Internet usership, which is estimated to climb 4 percent in 2018, compared to 6 percent in 2017.

Across the 35 reporting countries, the network estimates 47 percent of all online display investment to be transacted programmatically in 2018, from 44 percent in 2017 and just 31 percent in 2016.

GroupM’s research also touched on which of the hot-button issues around emerging tech are really top of mind for marketers, according to employees surveyed within its WPP network. For example, respondents described blockchain as a “slow, clunky and expensive” tool they don’t see as practical just yet.

“Blockchain’s main attraction is its distributed ledger, which tells everyone everything and thus presents the opportunity to reduce inefficiency or cheating,” Adam Smith, GroupM Futures director, said in a statement. “However, its Achilles’ heel is the need to keep every participating computer updated with everything all the time, and that’s too slow for a real-time world.”

The study’s respondents within GroupM reported improved development around AI and data use, although they admitted the need for further improvement on the latter. Those respondents brushed off the threat of clients in-housing their work, saying that it’s “more often talked about than done.” GroupM employees surveyed “reported [more] hybrid arrangements” than full in-house operations, “with clients often happy to take on strategy but leave risky and expensive execution to agencies.”

Clients are hiring more digital staff in-house and leaning more on specialist agencies than generalists, according to the study.

In a statement, GroupM global CEO Kelly Clark listed automation and talent as the “big themes in advertising’s current revolution.”

“One of the downsides of specialization is the increase in specialists who know more and more about less and less,” Clark said in the statement. “We have to use automation to liberate brand power so talented people can look across the entire media ecosystem to help clients optimize short-term results and create long-term value.”

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YouTube Ads Aim at Cord Cutters

YouTube wants to siphon off more advertising dollars out of the traditional TV ecosystem.

Google’s video platform is promising Madison Avenue new ways to reach people watching YouTube on TV screens — as well as target YouTube ads to cord-cutters and consumers who don’t watch a lot of traditional TV.

YouTube says connected TVs represent its fastest-growing device category, thanks in part to the growth of YouTube TV, its over-the-top “skinny bundle” pay-TV service launched last year.

While overall mobile accounts for over half of all YouTube videos viewed, users now watch more than 150 million hours daily of YouTube on television screens worldwide. That’s up 50% from 100 million hours per day in the past six months. (One year ago, total viewing on YouTube was around 1 billion hours per day; Google declined to provide an updated figure.)

“We are seeing more YouTube being watched on TV screens, and more TV content being watched on YouTube — it’s the ultimate convergence of video,” said Debbie Weinstein, managing director, YouTube/video global solutions at Google. “Advertisers are saying, ‘What are you building for me to reach YouTube viewers on TV?’”

Here are the three ad programs YouTube is rolling out:

“Light TV viewers” targeting:

In the next few months, YouTube will introduce a new audience segment in AdWords called “light TV viewers.” These are consumers who, based on Google and YouTube’s metrics, watch most of their TV and video content online — and are much less likely to subscribe to pay TV.

YouTube on TV screens:

For the first time, advertisers will be able to reach audiences specifically on television screens through AdWords and DoubleClick Bid Manager. That option will join the existing ability to target YouTube viewers on smartphones, tablets, and desktops.

YouTube TV ad inventory will be available through Google Preferred: So far, Google hasn’t sold ads for its OTT “virtual pay-TV” service. Starting in the fourth quarter of 2018, inventory on some U.S. cable networks on YouTube TV will be available as an extension to Google Preferred, the premium ad program for the top 5% most popular YouTube channels.

The “light TV viewers” targeting — which will span ads across all device platforms — is particularly interesting to advertisers who are trying to reach audiences that have become very hard to find on conventional TV, Weinstein said. More than 50% of U.S. consumers aged 18-49 in U.S. are “light” TV viewers (in the bottom one-third of the total TV audience based on minutes viewed), according to Nielsen. However, 90% of that group watches YouTube videos, according to Weinstein.

Meanwhile, Google is looking to dial up the ad monetization on YouTube TV. First launched in April 2017, YouTube TV is now available in 99 of 100 top U.S. designated market areas, reaching some 85% of the nation’s TV households. As you’d expect, most viewing of YouTube TV is on TV, with television screens accounting for more than 70% of the total watch-time.

Starting later this year, YouTube TV ad inventory will be added to Google Preferred. Weinstein noted that YouTube TV ads bought through Google Preferred will be dynamically inserted, letting advertisers target ads based on demographic profiles rather than just showing everyone the same ad as with the majority of traditional TV buys.

This January, YouTube said all videos in Google Preferred will be reviewed by human moderators before they’re eligible for monetization. That came after a series of “brand safety” blowups in the past year, when advertisers discovered spots unexpectedly running against hate speech and other content they didn’t want to be associated with.

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Video Accounts For 50% of Twitter’s Ad Revenue

Twitter has been pushing hard into video and its paying off. The company announced today that it has beat forecasts for Q1 2018, helped by a 53% jump in international revenue, which was led by strength in the Asia-Pacific region. Twitter attributes revenue growth in the region being primarily driven by growth in video in Japan and performance ad products in its China export market.

The company says that video, which was its fastest-growing ad format in Q1 (again), accounted for more than half of its $575 million in ad revenue for the quarter.

Total ad engagements for the company increased 69% year-over-year, resulting from increased aggregate demand, continuing mix shift toward video ad impressions, and improved CTR, which grew on a year-over-year basis across the majority of ad types as ad relevance continues to improve. CTR also benefited from the ongoing growth of more engaging video product features in Q1 — such as the Video Website Card and Video App Card — says the company.

Going forward, the company plans to remain focused on online video to drive revenue, it also says it will introduce new ways to buy ads on the platform. Other revenue priorities for Twitter include improving its core ad offerings through better performance and measurement, including ad platform improvements, self-serve measurement studies, and third-party accreditation; and continuing to grow DES revenue through its product and channel segmented go-to-market approach.

Other key numbers from the earnings report:

– Increase of 6 million monthly active users from the previous quarter
– 336 million monthly active users Total
– $665 million in quarterly revenue (down 67 million from the prior quarter)
– $575 million in advertising revenue
– 69 million monthly active users in the United States
– Profit was $61 million
– Cost per engagement (CPE) was down 28 percent from the year prior

Types of Videos Facebook Won’t Monetize

Facebook is expanding pre-roll video ads to more areas on the platform. The company is also clarifying its monetization policies giving additional detail on the kinds of videos that aren’t eligible for ads.

The company has announced that after testing pre-roll ads for shows in its video section, Facebook Watch, it will be expanding the test to other places where videos can be found, like in search results or on a Facebook Page timeline.

In addition to previous ad-eligibility guidelines released last fall that restricts ads from running on certain kinds of content — including videos that have sexual themes, depict violent or illegal activity, contain inappropriate language, or misappropriate children’s characters — Facebook will not monetize certain low-quality videos or publishers who engage in sharing and distribution schemes.

“We are focused on growing payouts for creators and publishers who develop engaged and loyal audiences and are working on growing payouts for partners who develop loyal, engaged viewing,” the company wrote in a blog post.

Other types of video content ineligible for monetization include:

Manufactured sharing and distribution schemes:

Content partners with paid arrangements for Pages to methodically and inorganically share videos can no longer monetize views originating on the third party Pages. According to Facebook, this behavior optimizes for distribution rather than quality and does not build deep relationships between people and content.

Formats unsuitable for an ad:

When content partners use video formats that aren’t actually video – like static or minimal movement videos or content that just loops – they are creating experiences not intended for ad break monetization, says Facebook. People do not expect to see ads in this type of content, and this is not the type of content advertisers want to run ads in.

Limited editorialization of content:

Facebook says that pages primarily distributing videos of repurposed clips from other sources with limited editorialization do not foster engaged, loyal communities in the way that Pages that produce and publish original, thematic or episodic videos do. “While we will not be taking immediate enforcement action on this issue, we want to signal to content producers that this is a programming style we will more deeply evaluate over the coming weeks and months to assess what level of distribution and monetization matches the value created for people,” the company wrote in the blog post.

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Snapchat Ad Length: In Average about 8 Seconds Long

Advertising intelligence company MediaRadar has analyzed Snapchat brand activity and issued a report showing that the average Snapchat ad length is eight seconds.

No other social platform makes it as easy to bypass video ads, so marketers need to grab the viewers’ attention by the first frame. Simply tapping on a Snapchat ad lets viewers bypass it and get on to something they’d rather watch. Some Snapchat advertisers are running ads that are less than 5 seconds long, says MediaRadar. The majority of ads on the platform-60 percent-are between 8 and 10 seconds long.

MediaRadar also looked at where advertisers put their ads on Snapchat. Some of the platform’s Discover channels are far more popular than others. For example, the iHeartRadio channel was the most popular, getting placements from 61 advertisers. The CNN channel was the least popular. It’s no surprise, then, that CNN ended its Snapchat Discover channel in late December.

The data MediaRadar looked at was for ad placements carried out through its platform from November 2017 through January 2018. In that timeframe, 397 brands placed video ads on 52 Discover channels. The average buy was for 4 or 5 channels, and the largest was for 29 channels.

“We found almost no examples of a brand buying across all of a single publisher’s Snapchat channels. For example, no advertiser buys both Wired and Vogue (Condé Nast), or Cosmo and Esquire (Hearst). This reinforces the idea that buys are gender targeted,” MediaRadar’s report says.

Brand categories advertising on Snapchat most often are media and entertainment (48 percent), technology (13 percent), and retail (12 percent).

For data on much more than just the average Snapchat ad length, download “MediaRadar’s Snapchat Snapshot” for free.

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TV ad spending will continue its decline this year, according to eMarketer’s latest US advertising forecast.

With cord-cutting accelerating and over-the-top (OTT) viewing on the rise, outlays on TV ads will slip 0.5% in 2018 to $69.87 billion. As a result, TV’s share of total US media ad expenditures will drop from 33.9% in 2017 to 31.6% this year.

TV ad spending will see a slight uptick in 2020 (due to the US presidential election and Summer Olympics in Tokyo), but it will sink back to negative territory in the following years and fall to less than a quarter of total ad spend by 2022.

“The shift of audiences to OTT viewing is changing the climate of the TV ad market,” said eMarketer senior forecasting director Monica Peart. “As ratings for TV programming continue to decline, advertiser spending will also continue to see declines, especially in years that do not boast major events such as presidential elections and Olympic games.”

Meanwhile, total digital ad spending in the US will climb 18.7% this year to $107.30 billion. OTT platforms, which have a small but growing share of the market, will continue to play an important role. This year, Roku’s US ad revenues—mostly video but including some other display formats as well—will surpass $293 million, up 93.0% over 2017. And Hulu’s US ad revenues will increase by more than 13% to reach $1.12 billion. Overall Hulu’s ad business is increasing as well as the company revenue from subscriptions.

“Over-the-top platforms are growing in number and size, and many compete directly with pay TV by offering bundles of live channels at attractive price points,” said eMarketer principal analyst Paul Verna. “Consumers who want to cut or shave the cord now have a wealth of options that didn’t exist a couple of years ago. And we expect the offerings to become even more robust as more players enter the market.”

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How To Make Money From Live Online Newscasts

A handful of major news companies are trying to figure out how live news broadcasts fit in digital media.
The challenges are steep. Streaming live news requires large, ongoing investments, and it’s difficult to monetize audiences, as live news can be a hotbed of brand safety concerns.

Plus, Facebook’s recent algorithm shift lowered the ratio of news content on the platform. Co-founder and CEO Mark Zuckerberg said at the time the change was meant to elevate content that drives positive sentiment.

“If you think about the mission of a news reporting company, sometimes the news isn’t going to entertain people or make them happy,” said Yaser Bishr, executive VP of digital media at Al Jazeera Networks.

Can it pay?

Late last year, Bloomberg unveiled its Twitter-based news channel TicToc, which is the only social news network that broadcasts 24 hours a day.

But TicToc is nothing like a linear, 24-hour news network. It’s built more as a repository for video packages shown throughout the day. When news breaks, the newsroom jumps into action.

For Bloomberg, the goal is to win early mind share among online news consumers and to use it to pull viewers into owned-and-operated sites or apps, where there’s packaged video content and video ads.

But monetizing live news itself can be difficult or downright counterproductive.

TicToc gets large live audiences when big news breaks, but it gets more bang for the buck with on-demand clips and short packages that people can watch asynchronously during the day, said M. Scott Havens, Bloomberg’s global head of digital.

TicToc’s live coverage of breaking news is often related to natural disasters, terrorist attacks or general tragedy, which is unappealing to advertisers, Havens said.

Linear broadcasters have an easier time anticipating potential brand safety issues, like pulling an airline commercial if they know it’s going to follow a segment on a plane crash.

And viewers who are watching on their phones, tablets or laptops are turned off by ads in a way that linear TV news channels aren’t. Plus, digital viewers might be using ad blockers.

But Bloomberg is still committed to live news online because of the gigantic opportunity to cement itself as the go-to online source when news breaks, Havens said.

Online audiences accumulate extremely quickly compared to linear.

In linear TV, conventional wisdom suggests that it takes about 25 minutes for a big audience to show up for breaking news events, said Dan Colarusso, Reuters’ executive editor and digital head of global programming.

For live mobile coverage, especially after the explosion of news notifications, scaled audiences can be aggregated in a minute or two.

Platform partners … or prisoners

When advertisers can plan for positive breaking news and partner with YouTube, Facebook or Twitter, digital streams can pull in live audiences that match top linear news programs. The lack of ad inventory can be supplemented with a presenting sponsor, as CNN did with Volvo during its eclipse coverage.

But live news can’t be seen without a place to host it – and often that means working with the social media platforms, where ensuring discoverability can be expensive.

Competing live news streams and on-demand videos often end up “mixed up and pushed to the feed,” Bishr said.

So without a pre-planned promotional campaign orchestrated with the social media platform and day-of ad spend to drive traffic, live news is easily buried or swamped by topical on-demand content.

Also, social media platforms don’t always present the most seamless interface for live news. Facebook is building news content in Facebook Watch, the platform’s video hub, but Bishr said it’s a big change in habit to get people accustomed to scrolling through their news feeds to click on the Watch section, then to a news section and then to a media company’s page.

The ideal situation is for publishers to own their own live news platform rather than rely on Twitter or Facebook.

Reuters prioritizes driving viewers from social or search channels to Reuters TV, its OTT app with live broadcast, Colarusso said. Social platforms may generate more ad revenue per view and high raw viewership numbers, he said, but viewers of Reuters TV are higher-value: They tend to watch for longer periods of time and become return viewers, while social platforms may include tens of thousands who merely zipped past in their feed.

The Reuters TV app’s superior engagement and attention metrics “are what we hope to monetize when the platform has a little more scale to it,” Colarusso said.

So publishers like Reuters and Bloomberg know that while their investments might not pay dividends today their learnings could advantage them in the future, especially when platforms start to aggressively compete for exclusive content.

Exclusive distribution rights are becoming a more common feature in platform distribution deals or content partnerships, Havens said, and “usually come with better terms than the platform’s undifferentiated content.”

But exclusivity can also box in media companies. Snapchat attaches exclusive rights to many media partner programs in the app, for example, but it’s hard to promote content and build an audience if you can’t feature the shows elsewhere.

And Bloomberg’s TicToc could theoretically be distributed on a platform other than Twitter, but a big part of TicToc’s value is derived from Twitter, which often autoplays TicToc in desktop sidebars or promotes the stream atop user feeds.

BuzzFeed produces a daily live news program on Twitter called “AM to DM,” and the social platform “provides tremendous support and investment,” said Cindy Vanegas-Gesuale, the publisher’s head of programming.

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Live sports drives one-quarter of U.S. online ad views

Freewheel’s Q4 2017 Video Monetization Report says a lot about how the premium video ecosystem is changing. For example, live is starting to drive ad view growth, the TV is the place to be for engagement, and the smartphone is the swiss-army-knife of streaming.

Freewheel says that total U.S. video views grew 26% in 2017 and total ad views by 22%. However, where the viewing is taking place continues to shift as consumers embrace the connected television and entrench around the smartphone.

Live comes to online

We have seen a steady change in the way premium sports providers approach online delivery. The Internet has proven a remarkably effective mechanism for deepening the engagement with tent-pole events such as the Olympics and the World Cup. Sports such as football and soccer are increasingly available live online through authenticated apps, vMVPDs like Sling TV, and for free through platforms like Facebook and Twitter.

[READ} Niche Sports, Another Blow to Traditional Television
All this activity appears to be paying off. Freewheel says U.S. ad views in live video increased from 19% in Q4 2016 to 31% in Q4 2017. What’s more, sport dominates the category with over three-quarters of all live ad-views. In other words, sports are driving one-quarter of total ad-views. Entertainment continues to lead in ad views but only grew its share slightly, from 49% to 53%. The big loser in 2017 was short clips. Its share of ad views halved, to 16%.

The television extends dominance

ad view share by content type Q4 2017Overall, half of all U.S. ads tracked by Freewheel were delivered to the TV in Q4 2017, up from 41% one year earlier. Pay TV set-top boxes accounted for 1-in-5 of those views. Operators started deploying ad insertion technology for the VOD systems in 2014, and this effort ramped up in 2016 and 2017.

Nearly one-third of all ad views came from connected television devices in Q4 2017, an increase of 27% one year earlier. The increasing use of authenticated TV content provider apps and ad-supported services like Crackle and The Roku Channel is one factor in the continued growth of this category. However, the rise of vMVPDs could be the biggest factor.

[READ] Sports Streaming Shakeup in the Cord Cutting Era (GUEST)
vMVPDs like Sling TV and YouTube TV enjoyed rapid growth in 2017. TiVo Q4 2017 numbers suggest the size of the vMVPD market could be much larger than the 4.5 million estimated. Dish Network reports that Sling TV has 2.2 million subscribers. YouTube TV could already have more than 4 million subscribers, and it could also mean the total number of vMVPD subscribers is almost double the previous estimates.

The smartphone is the swiss army knife of video

In the free 2016 white paper The Secret Life of Streamers, nScreenMedia found that the smartphone was being used about evenly between live, long-form, and short-form video. According to Freewheel, this is still the case. The company says about one-third of ad views on the smartphone come from each of the live, long-form, and clip categories of content.

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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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