Why Digital Native D2C Brands are Turning to TV

We’ve seen an explosion in the number of upstart direct to consumer brands – companies which build their audiences online and sell to their customers directly – over the past few years. When it comes to marketing, many of these disruptors have tended to use social platforms and podcast sponsorship to build direct relationships, and social video to communicate exactly what their product is and how it works.

While these digital natives eat up market share in established industries, it might initially look like bad news for TV advertising. However, the reality is that as these brands mature, many of them start to behave like “traditional” FMCG marketers and turn to TV advertising to help them scale further.

A report earlier this year from the Video Advertising Bureau (VAB) highlighted this growing investment in TV advertising by what they call “direct disruptors”. VAB analysis of Nielsen Ad Intel data found that TV spend by the fifty D2C brands it analysed grew from $322.8 million in 2015 to $1,313.6 million last year.

So what’s driving these brands to TV?

Advanced TV specialist Simulmedia has worked with several of these brands as they’ve branched out into TV, and CEO Dave Morgan says it’s a matter of scale and brand building.

“Everyone would expect that these digital first direct to consumer brands would build their full businesses on digital, but what happens in many cases is they perfect their product and customer segmentations online, but then they find they can’t really scale any further using digital only,” he said. This hasled them to turn to TV.

Julian Hearn, co-founder of meal replacement powder maker Huel, who raised an additional $26 million last week, agreed that TV’s huge reach made it an attractive medium to his company, which just this week launched its first TV campaign. “I’m not a fan of offline advertising,” he said. “It’s extremely hard to track performance and therefore difficult to optimise. However, TV is interesting, it has massive scale, and it’s an engaging medium.”

“Mattress in a box” company Casper meanwhile ran TV ads from the very beginning, again because it provided reach quickly and efficiently. “We decided to start running TV ads from day one as TV is THE mass media that provides a very large reach in a limited amount of time,” said Quentin Luce, who handles Casper’s European TV advertising. “TV is also, surprisingly enough for most advertiser, a very cheap medium when bought efficiently, which allows us to maximise repetition and therefore increase brand recognition.”

As these digital natives move onto TV, Morgan says they are more focussed on bottom of the funnel metrics than traditional TV advertisers. “None of them say I’ve bought my gross rating point so I’ve got my brand, I’m good,” he said. “They want to know exactly who they’ve reached. In every conversation we’ve had with these companies at Simulmedia, they have involved data scientists or people with deep knowledge of data analytics as part of the conversation.”

Luce agreed that while Casper looks to TV advertising for brand building, they also want to see direct results. “While at first our ultimate aim is of course to drive direct sales in order to cover the cost of a TV campaign, the halo effect of any campaign has a long lasting effect and definitely builds the brand,” he said.

The VAB’s data suggests this approach works very well. Its analysis found that emerging D2C brands (brands founded within the last five years) tended to see their revenues take off after launching a TV campaign or increasing investment. It also claimed that TV is very effective at driving greater audience engagement online – it found that as emerging brands increased online spend by an average of 93 percent, they saw 312 percent growth in search queries, 206 percent growth in social actions, and 177 percent growth in online video views.

“We directly see from day one a TV effect on website visits, and sales coming from those direct visit usually happen quite fast afterwards,” said Luce.

Good News for TV?

This all sounds like good news for broadcasters, with new money flowing into linear TV. “I think that it is not unrealistic to expect that between five and ten percent of US TV advertising revenue in three or four years, certainly within five, will be coming from these direct to consumer brands,” said Dave Morgan.

He cautioned, however, that this won’t necessarily increase TV ad spend overall. “The big question is, does the Casper mattress dollar take away the Tempur-Pedic incumbent money, is it a net positive for TV? And as things stand, that’s far from certain,” said Morgan.

It should however alleviate broadcasters concerns that the rise of DTC brands will be bad news for TV advertising. So even if TV’s traditional big FMCG spenders see a decline, it appears there will be new advertisers ready to replace them.

But the industry needs to be set up to accommodate these upstart brands. “Very few of them use traditional ad and media agencies, and very few large TV companies have sales teams dedicated to selling to them,” said Morgan.

read more here: videoadnews.com

Nielsen: Americans Now Spend Nearly 6 Hours Per Day With Video

Americans’ appetite for video just keeps rising. Measurement specialist Nielsen released its Q1 2018 Total Audience Report today, finding that U.S. adults now consume 5 hours 57 minutes of video per day. That’s an increase of 11 minutes per day just in the last quarter.

Of that 5 hours 57 minutes, 4 hours 46 minutes goes to live and time-shifted TV viewing, up 2 minutes this quarter. The biggest gain is with TV-connected devices (including internet-connected devices, game consoles, and DVDs) which average 46 minutes per day, up from 40 minutes last quarter.

Video on a computer gets 10 minutes, video on a phone (either through an app or browser) gets 10 minutes, and tablets get 5 minutes, all of which are fairly flat.

Looking at Americans’ total media diet, Nielsen finds we spend 11 hours 6 minutes each day connected to some kind of media. This figure includes all internet, phone, and radio use. That’s up from 10 hours 47 minutes in the previous quarter.

Two-thirds of U.S. homes own devices that let them stream video to the television set, and 2.7 percent subscribe to a skinny bundle (vMVPD) while 64 percent subscribe to a subscription service (SVOD). Even cord-cutters and cord-nevers find plenty to watch, as over 80 percent of non-TV homes still watch video.

For more, download the full Nielsen report (registration required).

Nielsen adds YouTube TV to audience measurement

Nielsen has announced that YouTube TV viewership at designated market levels (DMAs) will now be included in Nielsen Local TV audience measurement using Digital in TV Ratings (DTVR). This follows the introduction of YouTube TV into national TV ratings with DTVR last summer and is part of the company’s ongoing efforts to measure viewing everywhere as content consumption continues evolve.

To measure local media viewing, Nielsen developed DMA regions that group counties that form common local TV markets. There are currently 210 DMA regions across the US. By including YouTube TV in local ratings using DTVR, Nielsen says it will programmers and advertisers across these local DMAs to gain a more comprehensive view of audiences engaging with linear TV programming across digital platforms.

“Local broadcasters have been eagerly anticipating the inclusion of YouTube TV into Nielsen currency measurement,” said Jeff Wender, Managing Director, Nielsen Local. “We’re excited to be able to help local media buyers and sellers capture digital audiences, as well as provide advertisers a full account of all viewing activity, irrespective of distribution channel.”

As Sports Rights Soar, Maximize Content Across Platforms.

Like many other media companies involved in sports, local radio stations face a difficult game plan: Sports rights fees continue to soar, but consumers have more ways than ever to access sports news and entertainment. That leaves radio broadcasters, as well as their TV and digital counterparts, looking for ways to attract audiences to their game coverage and related content, and to generate ad dollars to support pricey sports programming.

To be successful, traditional media companies “must remain diligent to the threat posed by the tech giants and drive scale, innovation and the most relevant content to acquire and retain customers,” advises a new Nielsen report on commercial trends in sports.

In many markets, radio stations air local play-by-play rights to pro teams and top college sports and that marquee content attracts loyal listeners and top-dollar from advertisers. Such content can be a key differentiator for radio stations, as well as a valuable promotional platform for their other programming. To maintain that value in the face of growing competition online, on OTT services like Hulu and YouTube, and TV networks, radio networks can look to Nielsen’s new findings on the evolving sports market.

In one suggestion, Nielsen says sports rights holders should maximize their content across all possible platforms, including the obvious on-air and online extensions, but also smart speakers, augmented reality, virtual reality and subscription content.

In addition, Nielsen says, as brands increasingly look for layered, multi-platform sponsorships, sports rights holders can offer advertiser more access to teams and their hosts, as well as their expertise. Rights holders should also extend their sponsorship activities to other platforms, Nielsen advises, including “digital content and activation capabilities, in order to engage fans, collect data and service sponsors.”

Media companies should also look for underdeveloped programming opportunities, such as showcasing women’s sports, which are receiving more attention from fans and brands, Nielsen notes. Radio stations, for instance, could run women’s sports on-air or on streaming platforms, or even exclusively via digital streaming. “The sector is booming as the growth opportunity represented by under engaged females is recognized, as brands demand a focus on women’s sports and as gender equality takes ever-greater prominence,” the report says.

Youtube invades the Prime Time slot

A Google-commissioned study by Nielsen found that more adults watch YouTube on mobile than any other cable network alone during primetime. People watching on mobile are trading passive lean-back TV viewing for active lean-forward smartphone engagement.

YouTube is more popular than cable (0:27)

The Nielsen findings reveal two very interesting points which are worth exploring.

The first is that more adults are watching YouTube than any other cable network. The transition to online viewing has been happening for quite some time however it comes as a surprise that users find YouTube more appealing than any of the usual cable networks. YouTube has very little original programming or big-budget series. So, what are users watching?

According to the data, the top categories people watch are comedy, music, entertainment/pop, and “how to” videos. This type of content differs significantly from typical mainstream television, such as dramas, reality tv, and sports. Users seem to be preferring short comedy skits, music videos, celebrity interviews and educational videos. So why have viewers shifted their focus from the traditionally popular TV genres to YouTube shorts? The answer may lie in the device they are using, the smartphone.

Mobile viewing begets attention (1:25)

3-of-4 users watch YouTube on their mobile phone during primetime. While the popularity of YouTube might not be a surprise the way, people are watching it could be. Typically, at the end of a long workday, people slump on the couch and watch whatever takes their fancy on television. For many people, this behavior seems no longer to be the case. More users are pulling out their phones instead.

This new habit creates new viewing preferences. There are two modes in which we typically consume content: lean-forward mode, and lean-back mode.

Lean-back mode usually involves relaxing on a couch or lounge chair, passively watching video on a television screen. In this mode, we are not actively engaged with what we are watching. We are entertaining ourselves, relaxing, and killing time.

Lean-forward mode, however, involves exploring a passion, finding information about something or someone, or learning how to do something. In this mode, we are usually sitting upright and using our mobile phones. Users are more actively engaged in this circumstance. The study shows that “YouTube mobile users are 2x as likely to pay close attention while watching YouTube compared to TV users while watching TV.”

However, this begs the question: Why do consumers choose to be in lean-forward mode during primetime when they could be relaxing?

Is mobile taking over primetime? (2:50)

There could be many reasons for the move to watch on smartphones during primetime. Maybe the increase in mobile phone use has caused our habit to spill over into time usually spent relaxing. Maybe viewers enjoy an increase in attention and engagement. Maybe the content YouTube has is more appealing. Alternatively, maybe when users sit on the couch, they are simply too lazy to reach for the remote.

The specific reasons why we are spending primetime on our phones instead of the television are not clear. All we know is that we are.

read more here: nscreenmedia.com

The Real ‘Roseanne’ Effect: Energize Market for TV Comedies

The morning after “Roseanne” made its return to television, ABC Entertainment president Channing Dungey opened an email containing Nielsen’s metered-market ratings — the day’s first indicator of how the previous night’s primetime broadcast offerings were received. What she saw did not make sense.

“I looked at the numbers and I thought, ‘That can’t be right,’” Dungey told Variety. “I honestly was floored. I thought that it was a typo and how can that be.” She remained in disbelief until shortly after 8 a.m., when the fast-national numbers arrived, bringing what happened into focus. “I was like, this is actually real. This is really real.”

“Roseanne” averaged a 5.2 live-plus-same-day rating in the important 18-49 demo and 18.4 million total viewers — both figures higher than those of any other scripted broadcast program this season on a non-Super Bowl night, and better than the family comedy’s original series finale did 21 years ago.

The numbers have only continued to climb in the days since: The program scored the biggest total DVR lift for any telecast on any network after three days of delayed viewing.

Much of the analysis that followed focused on the show’s politics: Star Roseanne Barr is an eager champion of debunked right-wing conspiracies, and the premiere’s storyline hinged on her character’s support for President Donald Trump. And since the 2016 presidential election, television programmers have been working to find ways to reach working-class whites who voted for Trump. The success of “Roseanne” only reaffirmed those efforts. But looking ahead to 2018-19, “Roseanne” may be a harbinger of a less titillating, more significant programming shift — the revitalization of the broadcast comedy after years of emphasis on drama.

This season, three new comedies — CBS’ “Young Sheldon” (3.8 in the demo, 17.2 million viewers), NBC’s “Will & Grace” (3.0, 10.2 million) and “Roseanne” — paint a far stronger picture for broadcast comedy than in seasons past. They not only outperformed in the demo the highest-rated new comedy premiere of 2016-17, CBS’ “Kevin Can Wait” (2.6, 11.1 million), and of 2015-16, CBS’ “Life in Pieces” (2.6, 11.3 million), but also did better than this season’s top new drama, ABC’s “The Good Doctor” (2.2, 11.2 million).

“I’m encouraged by what’s happened here, and in terms of what it means for broadcast in general,” said Dungey, whose comedy lineup — which includes “Modern Family,” “Black-ish” and “The Goldbergs” — boasts more solid performers than most competitors. “We’re going to continue to develop strong comedies here at ABC.”

read more here: variety.com

Smartphone video, connected TV increase penetration and usage

According to Nielsen’s Q2 2017 Comparable Metrics report, released in December 2017, the amount of time we spend watching online video increased on all connected screens over the last two years. However, the number of people using the tablet and PC to consume video declined over the same period.

Connected TV enjoys steady growth

connected device penetration and use by age groupNielsen includes streaming media players, game consoles, and connected DVD/Blu-ray players in its accounting of connected TV use. Penetration of connected televisions has increased steadily between Q2 2015 and Q2 2017. In 2015, 40.7% U.S. adults watched at least 1 minute of video on one or more of the connected TV devices. That increased to 46.9%, or 115.2 million people, in 2017.

Connected TV users also steadily increased viewing time through their device of choice. In 2015, users watched 1 hour and 4 minutes a day, increasing over 10 minutes in 2017.

Penetration of TV-connected devices is deepest among people in the age range 18 to 49 years. Millennials (18-34-year-olds) spend the most time watching video on their connected televisions.

PC Video users decline, but usage increases

Those watching at least 1 minute of video per week on their PC declined from 34.7% in 2015 to 29.1% in 2017. Video mirrors the general decline in PC usage.

However, those watching video on their PC increased their viewing sharply. In Q2 2015, PC video viewers watched about 37 minutes a day. Two years later viewing has increased to 1 hour and 6 minutes day. An impressive gain for a device that is in decline.

The PC is most popular as a video platform among the 35-49-year-olds, though a smaller number of millennials watch for longer on the device.

Smartphone reach and usage increase sharply

Those watching video on their smartphone increased from 37% in 2015 to 52% in 2017. As well, the amount of time spent watching on the device by smartphone video viewers more than doubled, to nearly 14 minutes a day in 2017.

This surprisingly strong growth is likely the result of two factors:

The re-emergence of unlimited data plans
The aggressive bundling of video services with mobile plans from operators.
Expect both these factors to continue to drive the adoption and usage of smartphone video for the rest of 2018.

People in the age range 18-49-years prefer the smartphone, though millennials watch far more than any other age group.

read more here: www.nscreenmedia.com

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.

read more here: Adweek.com

Nielsen Will Publicly Share Ratings for Netflix Shows

Ever since House of Cards premiered in 2013 on Netflix, the TV industry has been frustrated by the streaming service’s refusal to share ratings data for its content. Netflix ratings have become the industry’s white whale, with many companies attempting to nail down the company’s metrics, but seemingly failing to do so in any precise way.

That is finally about to change, as Nielsen says it will now be measuring, and publicly sharing, Netflix ratings data, while allowing networks and studios to finally get a sense of how the audience for the streaming service’s shows like Stranger Things, Orange Is the New Black, 13 Reasons Why and American Vandal measures up to broadcast and cable series. The company has launched SVOD Content Ratings, a syndicated service that measures content from subscription video on demand services, though out of the gate, the offering will only provide ratings for Netflix content.

Nielsen’s SVOD Content Ratings will provide clients the same ratings and demo data for Netflix’s original shows, movies and acquired content that they receive for linear TV programs, broken out both by season and by episode.

Initially, the offering will only provide ratings for Netflix content, and will be restricted to programs viewed on connected TV devices like Roku, Apple TV, video game consoles and smart TVs (which accounts for around 75 percent of SVOD viewing).

SVOD Content Ratings, which Nielsen has been testing with select clients since August, relies on data from Nielsen’s national panel, which is comprised of 44,000 households and more than 100,000 people.

Eight TV networks and production studios, including A&E, Disney-ABC, NBCUniversal, Lionsgate and Warner Bros., have already subscribed to the new service, and the company said more will be added in the coming days and weeks. “We’ve got a number of clients in various stages of subscription and evaluation,” said Brian Fuhrer, Nielsen’s svp of product leadership.

Nielsen has been measuring streaming content since 2014, but previously, studios working with Nielsen only had access to metrics about their own shows. They were also only permitted to use the data internally, which meant they couldn’t discuss it with the press or use it in negotiations. Now they’ll have access to ratings for all content measured by Nielsen.

“The question I always get is, ‘How did my program do?’ And the second question is, ‘How did it do in comparison with everybody else?’ That second key question is what we’re trying to answer,” said Fuhrer.

While the ratings metrics will be similar to what Nielsen collects for linear shows, it will take as much as three or three weeks for the data to be processed. “It’s definitely not an overnight process,” said Furher of the ratings, which will be made available each week. He added that Nielsen’s clients have said they would rather the data be accurate and complete rather than rushed, “so that’s what we’re working through to be able to do that.”

Initially, the SVOD Content Ratings will measure viewing via connected TV devices only, and the company will analyze its data approximate to how much viewing is done on mobile devices.

Hulu and other providers consistently say that around 75 percent of their viewing occurs via a connected TV device. “I wouldn’t be surprised if that was a low estimate, particularly for the high-value content,” said Fuhrer. “People like to watch content on a big, high-quality screen.”

In its infancy, SVOD Content Ratings won’t be measuring every single piece of content on Netflix. “We’re continuing to build our library, so we don’t have a comprehensive library of everything on Netflix right now,” Fuhrer said. “What we’re focusing on right now is the most-viewed assets out there. It breaks down into three categories: movies, Netflix originals and back seasons of TV.”

Netflix, which has always refused to share any ratings metrics, has tried to impede Nielsen’s measurement efforts by stripping out the company’s digital watermarks from its content.

For its SVOD Content Ratings, Nielsen captures a content’s video signature, compares that against a high-quality video signature that it holds for each program and loads that information into its crediting engines to determine viewing among its national panel.

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OTT Platforms: If Cable Networks Can’t Beat Them, It’s Time To Join ‘Em

Last month, Nielsen painted a rather alarming picture for cable networks. – by Tyler Pietz

Despite an increase in the total number of TV homes (+1%), traditional cable subscriptions have continued to decline at an accelerated pace (-3.1%), Nielsen said [PDF]. Taken in totality, this suggests a widening gap of -3.9% in cable subscription growth as a proportion of total TV homes.

VMVPD subscriptions, such as Sling TV, Playstation Vue and DirecTV Now, often dubbed skinny bundles, have grown, but at slower rate than necessary to sufficiently make up for the declines in traditional cable subscriptions.

Skinny bundles are inherently less lucrative than traditional subscriptions for distributors and networks because the smaller number of channels erodes cable network penetration on a per-subscriber basis. And since the regional monopolies, equipment rental fees and contractual lock-ins historically enjoyed by cable operators are effectively eliminated, the bundles also put downward pressure on margins due to increased competition from other providers.

This underlines the precarious position of traditional cable bundles: In an effort to address weakening demand for a highly lucrative revenue stream – traditional cable subscriptions – distributors have introduced a less lucrative one that has so far failed to close the gap in subscribers, let alone revenue.

But while the shift toward OTT content delivery (which runs through operators’ pipes) and a lax regulatory environment (which opens the door to payments from platforms to prioritize their traffic) will help operators absorb losses, networks have little to take solace in.

Cable networks have historically operated as franchisors, focusing on creating, acquiring and programming content while relegating to their affiliates – cable operators – the messy business of bundling and selling access to their content in exchange for a per-subscriber fee. This worked when consumers had little choice in the matter, but cord-cutting and shaving has become an increasingly viable option as more direct-to-consumer offerings emerge and negate the hegemony once enjoyed by operators.

This leaves cable networks with a few choices, none of which are easy or particularly attractive compared to their legacy businesses.

Do Nothing (Base Case)

If recent trends hold, the average network will see a significant erosion of its traditional subscriber base year over year for the foreseeable future. Beyond the hit to affiliate revenue, which is now the primary revenue stream for most networks, this will also endanger ad revenues as TV ad rates are predicated on reach. Lower viewership density equals fewer eyeballs to monetize and threatens the utility that networks offer to advertisers as an easy button that taps into most, if not all, households.

Realistically, the only lever that networks can pull under this scenario is to demand an increase in the fee that cable operators pay per subscription. Operators have shown an increased aversion to abetting these increases, as these costs are passed directly to the consumer, creating a vicious cycle that makes bundle economics less tenable for current subscribers.

Develop Assets That Can Stand On Their Own

Most cable networks spread their content over several channels or properties, each of which commands its own subscriber fee. Demand for lesser properties will weaken significantly in a higher-choice environment, so networks need to focus on quality-over-quantity products that can command a loyal audience in an increasingly unbundled world, even if those audiences are smaller and more niche.

Beyond the world of linear content delivery, there is great demand at companies such as Netflix, Amazon and Hulu for high-quality, creator-driven video content, such as “Breaking Bad” and “Fargo.” Licensing these shows already brings in nontrivial revenue for networks such as AMC and FX, but windowing – where they are made available six or more months after the original air date, to avoid cannibalizing live TV audiences – limits this revenue stream.

And as TV ad revenues decline with audiences, networks with the luxury of owning the rights to such coveted content should get serious about day-and-date distribution on digital platforms to fully realize the value of their content.

Create A Discrete Direct-To-Consumer Bundle

Direct-to-consumer businesses, when executed correctly, confer extraordinary benefits on their owners, particularly in the form of user data that can be utilized for serving highly targeted ads and the ability to measure viewership data with precision and granularity.

But the lift is much heavier, and the stakes are higher. A move into direct-to-consumer necessitates a type of business acumen and degree of technical and product excellence that is currently lacking at most cable networks. It will involve creating business models that networks have never battle-tested at scale.

Disney, having recently announced plans to develop its own OTT subscription service, may serve as the ultimate bellwether in this case. But with service expected to launch no earlier than the second half of 2019, the hand-wringing decisions and harsh realities of such a strategy are already rearing their ugly heads. Namely, the success of the new venture will be predicated on Disney’s willingness to pivot from revenue streams that will be more profitable in the short term but recede in the long term.

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