In previous years, new forms of TV were value-adds and didn’t take center stage at the upfronts. This year it’ll be the centerpiece of every successful sell-side pitch, even though it’s likely that buyers and sellers will strike deals in a completely new way. In fact, most of the big media owners have canceled, or are in the process of canceling their upfront events. The deals will get done, but not in the fashion we’ve seen before. Here’s why connected TV (CTV) will anchor unified sales offerings at the 2020 upfronts.
This year’s upfronts and the months that follow will be a make or break for big media owners
Targeted ads are driving TV ad sales growth. Addressable TV—ads delivered via cable and satellite boxes—grew 37% last year, according to an eMarketer report. Another eMarketer report predicts CTV (an umbrella term for IP-enabled streaming) will grow from $7 billion in 2019 to more than $14 billion in 2023.
But it’s not simply about following advertising dollars. After multiple years of growth in targeted TV ads, media owners have had a chance to embrace new technology. They’ve had several business cycles to build new infrastructure and run limited experiments with their advertising partners. That hard work has brought them to a new point in terms of their business.
What’s new this year is a business imperative that sees the value of unified sales where media owners can plan, sell and track attribution for each campaign. In fact, many media owners are touting their capabilities for unified sales offerings as their key market differentiator in 2020 and beyond. Making that pitch at this year’s upfronts, and delivering on it in the fall, will determine each media company’s future. And while COVID-19 and the ongoing disruption of the television industry have combined to make for rough, uncertain waters, one thing is clear: the companies that make bold moves today will be rewarded in the years to come.
Advertisers want unified buying
Advertisers are always especially sensitive to consumer trends. That sensitivity has reached a tipping point in terms of our media consumption behaviors. We’re beyond the point of saying that consumers are increasingly fragmented across screens and channels. Right now, the billion-dollar question is, what are advertisers doing to address the reality of fragmentation?
Seventy-five% of U.S. households view some form of traditional TV over the course of a year, while 55% of U.S. consumers have access to CTV. According to Nielsen, Americans spend 10.5 hours each day in front of screens. But no single screen dominates. Audiences hop between linear, CTV, mobile, and digital video throughout the day. Oftentimes, we watch two screens simultaneously. So, while advertisers might imagine a typical linear viewer as one type of audience and a typical CTV or digital video viewer as a different type of viewer, the reality is that they’re more than likely the same person. Yes, different demographics over-index toward different media consumption patterns, but the 30,000-foot view suggests that the vast majority of people are highly fluid in terms of the way they consume media.
As the fragmentation continues on the consumer side, advertisers are redesigning their organizations in order to execute audience everywhere media plans. Media partners that can deliver unified buying opportunities are essential to this new model because advertisers need to be able to engage the same audiences wherever they happen to be watching. Just as important, advertisers need to be able to target those audiences across channels so that they can adjust reach and frequency accordingly.
The digital disruptors are circling
Legacy media owners have a number of advantages. They own premium content. They have decades of expertise and advertiser relationships. Most important, given the fact that we’re still in the early stages of a multi-year transition, legacy media owners have both linear and CTV audiences. Media owners need to continue to be proactive to defend their turf and even more important, they need to decide whether they’re going to embrace technology as the key to their continued success.
The big digital disruptors like Amazon and YouTube TV have financial resources and deep data capabilities. Those advantages are likely to become more pronounced, at least in the short-run, because social distancing has, for the moment, transformed us into a digital-first society. In all likelihood, those disruptors are seeing significant subscriber growth at the moment. Recent comScore data from March points to a 29% year-over-year increase in CTV households and a 43% increase in “streaming box/stick” consumption. The interesting thing is that those compelling numbers apply to all CTV players.
Of course, media owners are also seeing an increase in audiences due to social distancing measures. So, while this year’s upfronts will likely include some unexpected numbers from March, April, and May, it’s important for media owners to keep their focus on the big picture. The last two quarters of 2020 and beyond will likely see a 19% increase in the CTV market, according to Goldman Sachs research. So it’s critical that media owners act now to put themselves in a position to capture the growth that’s on the horizon.
The bottom line is that media owners can win the race against their digital disruptor rivals. Deep pockets and big data aren’t the same things as decades of expertise in the media business. By and large, media owners control the industry’s most valuable asset—premium content. They just need to move with a sense of urgency when it comes to adding value to that asset through data, targeting and unified sales offerings.
