GroupM, the world’s largest ad buyer, is forecasting total TV advertising in the U.S. will drop by 7% in 2020 and another 12% in 2021. National TV will drop 11% in 2020 and gain 6% next year. Local TV will bear the brunt in 2020, dropping 34%, due to slowing retail and automotive advertising. But when one-time political ads are added in for 2020, GroupM sees a 1% total increase in local TV advertising.
However, it is forecasting a “modest” 3% decline in advertising revenue for TV “digital extensions” (which it defines as both “digital ad revenue realized by traditional media owners for their traditional properties and the pure-play digital media owners with directly competitive products”). GroupM includes Hulu, Roku and others in the digital extensions category. And for 2021, GroupM sees TV digital extensions advertising increasing by 15%. GroupM believes that TV digital extensions spending will add up to around 14% of national TV ad spending in 2020.
We had 2 terrific keynote interviews at our recent 7th annual Online Video Advertising Summit, with Brian Lesser (CEO, GroupM North America), which was conducted by Matt Spiegel (Managing Director, Marketing & Technology Solutions, MediaLink) and with Troy Young (Global President, Hearst Digital Media), who I interviewed.
Taken together they provide invaluable insights from both the buy and sell sides about how to succeed in the rapidly changing video industry.
Each interview is a little over 30 minutes. Links to all of the session videos from the Ad Summit are included at the bottom of this post. Enjoy!
One of the highlights of the June 4th Online Video Ad Summit was an in-depth session on the recent NewFronts, Upfronts and the larger changes in the video advertising landscape, featuring Michael Bologna, Director, Emerging Communications at GroupM and Adam Shlachter, SVP, Media, Digitas, with Jim Nail, Principal Analyst at Forrester Research moderating.
It was a dynamic, wide-ranging discussion that touched on the following topics: what impact the NewFronts will have, how to de-duplicate audience viewing given the proliferation of screens, why advertisers continue to pay more despite smaller TV audiences, what role new ad creative can play in online, how new targeting techniques play vs. traditional content-as-a-proxy-for-audience mindsets and lots, lots more.
The video is below and runs 35 minutes, 18 seconds.
Following are 4 items worth noting from the Oct 19th week:
1. FCC kicks off net neutrality rulemaking process among flurry of input - As expected, the FCC kicked off its net neutrality rulemaking process yesterday, with all commissioners voting to explore how to set rules regulating the Internet for the first time, though Republican appointees dissented on whether new rules were in fact needed.
Leading up to the vote there was a flurry of input by stakeholders and Congress. Everyone agrees on the "motherhood and apple pie" goal that the Internet must remain open and free. The disagreement is over whether new rules are required to accomplish this, and if there are to be new rules what specifically should they be. As I argued here, the FCC is treading into very tricky waters, and law of unintended consequences looms. Already telco executives are talking about curtailing investments in network infrastructure, the opposite of what the FCC is trying to foster. The FCC will be seeking input from stakeholders as part of the process. Even though chairman Genachowski's bias to regulate is very clear, let's hope that as the data and facts are presented, the FCC is able to come to right decision, which is to leave the well-functioning Internet alone.
2. New Cisco research substantiates video, social networking usage - Speaking of the well-functioning Internet, Cisco released its Visual Networking Index study this week based on research gathered from 20 leading service providers. Cisco found that the average broadband connection consumes 4.3 gigabytes of "visual networking applications" (video, social networking and collaboration) per month, or the equivalent of 20 short videos. (Note that comScore's Aug data said of the 161 million viewers in the U.S. alone, the average number of videos viewed per month was 157.) I'm not sure what the difference is other than Cisco is measuring global traffic and comScore data is at U.S. only. Regardless, the Cisco research continues to demonstrate that users are shifting to more bandwidth-intensive applications, and the Internet is scaling up to meet their demands.
3. Netflix reports strong Q3 '09 earnings, streaming usage surges - Netflix continues to stand out as unaffected by the economy's woes, reporting its Q3 results late yesterday that included adding 510,000 net new subscribers, almost double the 261,000 from Q3 '08. The company finished the quarter with 11.1 million subs and projects to end the year with 12 to 12.3 million subs. If Netflix were a cable operator it would be the 3rd largest, just behind Time Warner Cable, which has approximately 13 million video subscribers.
Netflix CEO Reed Hastings also disclosed that 42% of Netflix's subscribers watched a TV episode or movie using the "Watch Instantly" streaming feature during the quarter, up from 22% in Q3 '08. Hastings also said in 2010 the company will begin streaming internationally, even though it has no plans to ship DVDs outside the U.S. He added that in Q4 Netflix will announce yet another CE device on which Watch Instantly will be available (just this week it also announced a partnership with Best Buy to integrate Watch Instantly with Insignia Blu-ray players). Net, net, Watch Instantly looks like it's getting great traction for Netflix and will continue to be a bigger part of the company's mix. Yet as I've mentioned in the past, a key challenge for Netflix is making more content available for streaming.
4. Yahoo's pact with GroupM for original branded entertainment raises more questions - Shifting gears, Yahoo and GroupM, the media buying powerhouse announced a deal this week to begin co-producing original branded entertainment for advertisers. The idea is to then distribute the video throughout Yahoo's News, Sports, Finance and Entertainment sections. GroupM has had some success in the past, as its "In the Motherhood" series, created for Sprint and Unilever, was picked up by ABC, though it was quickly canceled. As I pointed out in my recent post about Break Media, branded entertainment initiatives continue to grow.
Less clear to me is Yahoo's approach to video. CEO Carol Bartz said last month that "video is so crucial to our users and our advertisers..." that "there's a big emphasis inside Yahoo on our video platforms" and that "a big cornerstone of our strategy is video." OK, but these comments came just months after Yahoo closed down its Maven Networks platform, which it had only acquired in Feb '08. Having spent time at Maven, I can attest that its technology would have been well-suited to supporting the engagement and interactivity requirements of these new Yahoo-GroupM branded entertainment projects. Yahoo's video strategy, such as it is, remains very confusing to me.
Note there will be no VideoNuze email on Monday as I'll be in Denver moderating the Broadband Video Leadership Breakfast at the CTAM Summit...enjoy your weekend!