Magna mediareconomyreport3 final

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Media Economy Report Vol. 03

Media Economy Report The Ultimate Video Advertising Deep Dive

Video Content

Magna Global

Š 2013 MAGNA GLOBAL USA, Inc. All Rights Reserved All property, including trademarks, are the property of their respective owners and have, as applicable, been licensed for use.

Video Consumption

June 2013

Video Advertising

Vol. 03


Page 3

Page Thirty years ago, the series finale of M*A*S*H on CBS

watch in a comfortable place, like the couch. Indeed, TV

earned a 60.2 rating, meaning that nearly two-thirds

concepts are alive and well in professionally-produced

of the households in the country were tuned in. Back

online content, where the notions of a “show” and a

then, there were only three broadcast networks, only

“season” persist.

a third of the country had cable subscriptions, and watching TV meant only one thing: sitting in front of

The way we watched has changed, but the power of

the set. Flash forward to today, when Nielsen can no

sight, sound, and motion has not.

Video Content "Shows" and "seasons" are not just for TV networks anymore Page

longer report the average number of channels each home receives because digital multicasting has called

Social media has created a real-time virtual water

into question what a “channel” even is. The TV set is

cooler that gets the audience more involved with

no longer the only screen in the living room. And, of

events onscreen than ever before. And although we no

course, watching a television series is no longer tied to

longer see ratings on the level of the M*A*S*H finale,

a particular day, time, place, or device.

tentpole events have become more important than

Video Advertising Less cluttered online environments draw more attentive viewers

Page

ever because they are rare in their ability to create So is the bell finally tolling for traditional set viewing?

synchronized mass reach.

CONCLUSION

There’s certainly evidence that young adults are watching less television than they were a few years

As always, a rapidly evolving landscape like the world

ago (and streaming more), and broadband connections

of video creates both uncertainty and opportunity, and

enable video content to be piped into the home without

we intend to harness both in order to generate value for

a multichannel subscription or an antenna. Plus, tablet

our clients.

penetration has grown exponentially in the last couple of years and provides a high-quality viewing experience

Read on for our comprehensive overview of video

on the go.

consumption, content, and advertising.

And yet…

Best,

Despite the multitude of device and content options,

Brian Hughes

traditional set viewing still commands the lion’s

SVP, Audience Analysis Practice Lead

share of video time. And even when video content is

MAGNA GLOBAL

streamed, we know that the audience still prefers to

Insights for a competitive advantage

Page

06 16 24 38

Video Advertising

More screens and more access have changed viewing behavior

Video Content

Video Consumption

Media Economy Report Vol. 03

Table Of Contents

Video Consumption

Viewing Outside the Box


01

Fox Family

remains integrated. Vertical integration is common in

producing content themselves (Netflix). The map

the upper layers of the value chain. The new online/

below illustrates some of the key players and the

OTT video aggregators have recently started to move

assets controlled by the main groups.

Page 5

"channels" (YouTube) and commissioning/

The "digital" value chain

The conventional "broadcast" value chain

Disney Family

upward in the value chain by aggregating content into

antitrust lawsuits, the traditional video value chain

Media Economy Report Vol. 03

The new video advertising Value Chain

After 100 years of history, technology changes, and

Viacom Family

Sony Family

Google Family

Netflix

Production

Comcast Family

02 Networks

*

04

OTT boxes and connected devices

Devices

*Multi-channel video programming distributors (cable, satellite, telco-TV)

*Hulu is jointly owned by NBC and Fox.

Source: MAGNA GLOBAL

Viewers

Video Advertising

Online/OT T vide o ag gregators/distributors

Delivery

Microsoft

Video Content

Apple Family

Video Consumption

03

MVPD's *


Page 7

This past year, Nielsen changed the methodology by which it calculates the video-viewing universe size. Despite the near saturation of TV ownership, the expanded methodology added over 1 million households to the universe estimate.

2013

114.2

Screen bloom has reached a point where Nielsen felt compelled to redefine a

Million Homes

video-viewing household to account for all the non-TV connected devices. Younger

Media Economy Report Vol. 03

Photo: Marquis de Valmont / photocase

Video Consumption

The new definition of a TV home

2014

115.6 Million Homes

Source: Nielsen, 2014 number is preliminary

viewers are adopting alternative video-playing devices mostly for short burst

viewing sessions. The lion's share of time spent watching video is in the evening, in a comfortable place, on a large format television set. Mobile and connected devices are enabling new behaviors like multitasking, binge viewing, and video sharing. The devices are capable of far more than simply splicing in ad units in the video stream. Standards for native video ads for connected devices are to be determined.

Per Nielsen, the traditional definition is:

The new Nielsen definition will be:

“…at least one operable set that receives at least one channel via traditional means of antennae, cable STB or Satellite receiver.”

“at least one operable TV/monitor with the ability to deliver video via traditional means of antennae, cable STB or Satellite receiver and/ or with a broadband connection.”

1. Cable subscriptions in the US have maxed out.

will plateau this year at 106.2 million

106

Video Advertising

6. Tablets are a popular multitasking device.

Traditional multichannel TV subscriptions

105

104

103 Video Content

5. Digital devices provide quick hits of video content.

Calling the top of the multichannel TV Industry in the US

102

101

100 2007

2008

2009

2010

2011

Subscriber gains over the past three years have only masked churn

2012

2013E

2014E

2015E

2016E

Broadband video delivery options (OTT) will cost cable, telco, and satellite providers more than a million subscribers over the next five years

Video Consumption

4. Television still accounts for the lion’s share of video viewing time.

Millions Source: MAGNA GLOBAL estimates

3. Mobile video is more likely to be a solo experience.

Key Takeaway

2. Younger viewers are adopting alternative video viewing devices.


100

Device per User

0

1.74

1.38

Number of Devices

02

1.40

0.90

1.08

0.71

1.74

04

Number of Users

Boxee

0.35

Samsung

Google TV

Apple TV

8.4

5.8

0.09

4.0

0

Hulu Plus

Xbox Gold

15.98

7.99

4.17

DVR

Live TV

21.2

Page 9

VOD

34.8

Min

36

Min

Min

35.4

3.3

0.4

PC

Tablet

Smartphone

Hours

Per Session

Hours

4.4

Hours

24.0

Source: MAGNA GLOBAL estimates

0.8

3.3

Min XBOX

Media Economy Report Vol. 03

average Duration of usage by Device

Per Week

Min

Min

PlayStation

21.6

In Million Devices

Game consoles are the most common method for bringing internet content to the TV set. All-in-one devices from manufactures like Samsung and Apple TV should grow as connected TVs become the only type of TV sold. Standalone boxes will be low-cost options.

.5

Netflix

Active users watch fewer overall hours of video on smaller screens and in shorter viewing sessions. Adults watch their sets for longer periods of time when using on-demand sources like DVRs and headend VOD, as opposed to live broadcasts.

installed base of the different Connected TV Providers

56

Video Advertising

200

0

0.6

Hours

0.3 Hours

US adults 18+ Sources: Nielsen, ComScore, Rentrak, USA Touchpoints, MAGNA GLOBAL estimates

0.2 Hours

Video Consumption

Millions

300

71 .0

Video Content

Connected TV

0

HBO 15-20

Depends on Provider

DVR

.5

Broadband Connection

49.99 per Year

Tablet

73

Cell Bill

15-25 Mbps FCC

PC

US-Dollar per month

Smart phone

Cable Subscription

Popularity of standalone video subscription services will put consumer pressure on cable operators to limit costs and potentially offer Ă la carte options.

Average per Individual

Video On-Demand

Source: Nielsen, ComScore, Arbitron, MAGNA Global Estimates

TV

PCs and TVs are shared video-playing devices, whereas mobile devices tend to have just a single user.

Costs of various video access methods

Streaming

Deployed Devices and User Bases

01

03

7.99 Streaming 7.99 for DVDs

Usage by Device


01

Age Profile of users by device type

Page 11

02

Decline in TV Usage Emerges Among the 18–24 Demos

Media Economy Report Vol. 03

Video Consumption by Demographic

Younger adults are more likely to use alternative video-viewing devices than older adults.

age 25–34

age 18–24

18–24

-7%

25.0

-10%

22.5 20.0

-4%

17.5 15.0

-5%

18–34

12.5 10.0

-2%

7.5

-3%

18–49

5.0 2.5

-1%

50+

+1%

+1%

DVR Playback 60

PC

50

40

30

20

10

0

0

2010 2011 2012

Smartphone Tablet

Sources: Nielsen, ComScore, MAGNA GLOBAL estimates

age 55–64

age 45–54

Over the past three years, there has been a steady decline

10

20

30

18–24 year-olds are spending 54% more time online and

50

60

Source: Nielsen

Teenager 12–17 30

in TV usage among young adults. The losses are more prevalent among males than females. At the same time,

40

Video Advertising

Live TV

25–54

0%

+ Video Content

age 35–44

0.0

20

their streaming video activity has doubled since 2011. 10

Video Consumption

age 65+


Tablets And TV

monthly

85%

daily

of tablet/smartphone owners use their device while watching TV at least once a month

Smartphones And TV daily

Page 13

Binge Viewing Not the Threat it’s Made Out to Be While the proliferation of internet-connected

78% of Americans have watched TV “on [their]

devices has made binge viewing a fact of life,

own schedule,” and 62% of those have watched

it is not the threat to traditional television that

multiple episodes of a TV show at a time (“binge

many press stories would have us believe. In

viewing”), according to survey results from

fact, there is plenty of evidence that when

Harris Interactive.

Media Economy Report Vol. 03

New Access Methods Enable New Viewing Behaviors

viewers binge to catch up on a show that is currently airing, it can actually help increase the audience for the regularly scheduled

41%

39%

Skews Older

Skews Younger

39% Social Media

36% of people 35–54 and 44% of people 55–64 use their tablets to dive deeper into TV programs they are currently watching. Surfing and emailing 55–64 are the heaviest web surfers and email-checkers

≥ DVD Release Mar. 8, 2011

Series Premiere Oct. 31, 2010

21%

to 50% of 25–34 year olds are

More than twice

25%

their smartphones during both

15%

watching TV.

For the full duration

Source: Yahoo

commercial and programs while

demos, with over 50% of users checking during commercial and

Sport Scores

programs.

Nearly a third of all tablet users aged 25–64 check sport scores

Shopping

on their tablets while watching

29% of 25–34-year-olds shop

TV.

on their smartphones while watching TV. Source: Nielsen Cross Platform Report 2Q12

Viewers

Available for streaming on Netflix Sep. 30, 2012

DVD Release Aug. 28, 2012

Season 3 Premiere Oct. 14, 2012

Downton Abbey Season 1

Season 2

Emailing smartphone activity across all

breaks and programs.

Season 2 Premiere Oct. 16, 2011

10.2MM

visiting social network sites on

is the heaviest simultaneous

on tablets during commercial

6.6MM Viewers ≥ Available for streaming on Netflix Oct. 7, 2011

44% of 18–24 year olds and close once or twice

Season 3 +55%

4.1MM Viewers Series Premiere Jan. 9, 2011

≥ DVD Release Jan. 11, 2011

+17%

4.8MM Viewers Available for streaming on Netflix and Hulu Plus Feb. 9, 2011

Sources: Walking Dead = Nielsen Live+3 Commercial Data Downton Abbey = Nielsen Live Data

Season 3 +63%

Season 2 Premiere Jan. 8, 2012

7.8

≥ DVD Release Feb. 7, 2012

MM Viewers

Available for streaming on Netflix and Hulu Plus July 7, 2012

Season 3 Premiere Jan. 6, 2013

Video Advertising

Seeking Information

Less then once per show

5.2MM Viewers

+27%

Video Content

i

Typical Activities

Season 2

Video Consumption

Typical Activities

TV at least once per day.

I multitask while watching TV

The walking dead Season 1

while watching TV.

their smartphone while watching

Nearly half of 18–24 year olds use

are the most likely to use their

Age groups 25–34 and 55–64 tablets multiple times per day

telecasts.


Client Perspective

provide to earn more of your advertising budget? We need the digital video industry to enhance their ability to target specific online audiences and stick by devices owned by same users, helping us to deliver the most relevant message and drive identifiable behaviors.

Page 15 Media Economy Report Vol. 03

What does the digital video industry need to

How will the US TV upfront be different in five years? We are seeing different consumption habits on each device dependent on audience; as well as

Q

&

A

the ability to get greater scale within the cable networks. Cable is not only allowing “on-demand viewing” regardless of device type, but the ability for product integration into their programming, creating richer, relevant, seamless experiences for the customer we are targeting. The publishing community and networks will need continue to evolve in their delivery mechanisms to best enable satisfying experiences for consumers and

EVP, Director

Amy Peet

advertisers.

Senior Digital

of Forecasting

Marketing Manager

MAGNA GLOBAL

Chrysler Group LLC

How does sight, sound, and motion fit in to how you tell

We have embraced video across the board in a

your brand's story?

measured test-and-learn fashion. What started out as

Video Advertising

Vincent Letang

the spectrum, ranging from premium “TV-everywhere”

nailed the ability to deliver a story through sound, but

to networks and in-stream pre-roll. We have even seen

the ability to incorporate gesture- and sound-based

some interesting results from our mobile video buys.

Video Content

tests has now evolved to healthy levels of video across In automotive, experience is key. We believe we have

interactions with our advertising, making the customer apart of our brand story, is an opportunity. As the living

Digital video is a mixed bag. What aspects of digital

room evolves, we are looking to integrate and expand

video advertising have the most promise?

these developing trends.

Video Consumption

our creative and advertising platforms to capitalize on We see in-app, on-demand viewing on platforms like Hulu deliver the best results. Tablet-based How have your investments in video advertising

opportunities have proven the ability to drive success

changed over the last five years?

on our online properties.

Photo: David Sundberg/ESTO


Video Content

On TV set without a set top box

The definition of a TV show is changing. Connected devices allow viewers to follow the narrative arc beyond regularly scheduled episodes. There is a flood of new cheap-to-produce video content being originated to run only online. While online viewers tend to be more engaged in the content they are watching than TV viewers, the challenge will be for digital shows to build enough reach

Page 17

Surveyed video viewers report using digital devices for short-form video, while the big screen is used for movies and sports.

Full-length movies and TV series

51

Live content (e.g., sports, news, TV programs)

48

On TV set connected through a set top box

On PC or laptop

63

User-genereted content (e.g., videos on YouTube)

17

16

1. Many inexpensive shows are now being produced to run exclusively online.

Short videos/clips

16

14

Do not watch this type of video content

16

On mobile phone/ smartphone

47

53

to rival linear TV outlets.

Media Economy Report Vol. 03

Content Genres by Device

On tablet

14

38

33

21

61

29

50

51

49

49

44

2. Unscripted “reality� series remain relatively inexpensive to produce and

primetime TV series. 5. Online viewers are more engaged than TV viewers.

16

11

Source: Accenture Video Solution Survey 2013 Percentages do not add up to 100 because of multiple positive responses.

Reality and unscripted TV continues to grow in popularity, now earning the

6.8

second most primetime rating points.

6.9 7.7

TV Genre Popularity

11.8

Percentage/Primetime Genre, Share of GRPs

11.9

23.1

31.8

Drama

Sitcom

Reality

News

Movies

Sports

Video Advertising

4. Tentpole events generate far more social chatter than any episode of a

6

Other Source: Nielsen, 1Q13, broadcast and cable

Video Content

individual YouTube channels are much smaller.

12

Video Consumption

3. In aggregate, the YouTube audience rivals a cable network; however,

Key Takeaway

are popular with mass audiences.


Made-forTelevision Series

Are there any examples?

The Big Bang Theory (CBS) The Walking Dead (AMC) The Voice (NBC)

Short-Form Web Series

The Guild (YouTube) Wainy Days (My Damn Channel) Electric City (Yahoo)

TV Shows

14 %

DVD Trailers

13 %

Professional

Page 19

14 %

Media Economy Report Vol. 03

the characteristics of a modern, Professionally produced video “show”

Long-Form Web Series

Battleground (Hulu)

Sharing Video Clips online

House of Cards (Netflix)

Excerpts/ Short-Form

The Bannen Way (Crackle)

ShareThis reports that each time a link to a video clip is shared online, it generates 25 clicks. The ability to

Are there seasons?

How many episodes per season?

How long is each episode?

Yes

Yes

capture and share video content will

Yes

grow beyond embedded web videos.

22 for broadcast TV, 10–16 for cable TV

10–12 Episodes

clip generates 25 clicks

Less than 10 minutes

Yes, most shows are available after their linear air date through headend VOD, network websites, or full episode player mobile apps

Can be streamed via PCs, connected TV devices, tablets, or smartphones

$2.5–$5 million per episode for dramas

$10,000–$100,000 per episode

Cats

13 Episodes Every shared link to a video

22 Minutes for comedies, 45 minutes for dramas

9%

9%

22 Minutes–1 Hour

7%

Home and Garden

Heath and Fitness

5%

Autos

5%

Movies

4%

Travel

$400,000–$2 million for sitcoms

3%

Parenting

$300,000–$1 million for unscripted shows

3%

Clothing

3%

Other

2%

Technology, Book Reviews, Food and Drink

Source: MAGNA GLOBAL estimates

each

Video Content

Video Games

Video Consumption

How much does it cost to produce?

$750,000–$2 million per episode

5%

Video Advertising

25

Is it available on multiple platforms?

Can be streamed via PCs, connected TV devices, tablets, or smartphones


25

Tweets (Million)

20

Page 21

In aggregate, YouTube has the daily reach of a cable TV network, but its individual channels are far behind.

200.000

Social chatter around TV shows

01

New mass reach video networks

03

Media Economy Report Vol. 03

New consumption patterns by content genre

The average number of tweets per

150.000

episode shows that live tentpole events have much higher activity levels

15

than even the most tweeted regularly

100.000

programmed shows. 10

Source: SocialGuide. For ongoing series the total number of tweets was divided by the number of first-run telecasts.

50.000

5

fli x oa @ db Yo an NB uT dT C ub V En e te r @ tai Yo nm uT e ub nt e

N

et

u ul H

uT

Br

er

ak M

VE

VO

@

Yo

Ch Di

sn

ey

Yo

ub e St @ udi Yo os uT In ub c. e

TV M

an

ne

l

E!

e uT

ub

PN ES

AB

C NB Th

TV C Sh atfi ow sh (M : Th TV e ) Am er ic an (F Ido OX l ) Du ck Dy n (A ast & y E)

ng D (A ea M d C)

ki al W e

et Pr

ho ’C

Source: TV= Nielsen, Total Day Unduplicated Reach, A18+, 1Q13. Top 30 Broadcast and Cable Networks. Online= Comscore, A18+ reach, 1Q13.

Ki

ds

ty

ic

Li

e

tt

Aw

ar

le L (AB iar s C)

ds

es ob Gl en ld

Go

Gr Aw am ar my ds Th e Os ca rs

55

th

rb o XL wl VI

pe Su

C

0

0

02

Neuroscience research by UM and Vevo showed that

High

engagement was highest when watching full TV shows online. Music videos on any platform drove the highest emotional feelings.

Med

Content Measurement Engagement

Emotional Intensity

Long-Term

Content-Ad Break

Measure of personal

Measure of the strength

Memory Encoding

Transference

relevance and viewer

of the emotional reaction

investment in content

elicited by content

Measure of whether an ad

How well does content

is encoded into long-term

transfer its strength to the

memory

subsequent ad break?

High ad memory encoding

A crucial element

correlates with consumer

in determining ad

choice and purchasing

effectiveness is how much

behavior

of the program‘s strength

More engaging content

Higher emotional intensity

tends to be more appealing,

indicated strong emotional

enjoyable, and successful

appeal

The stronger a viewer‘s emotional or engagement

Low

reaction, the more likely they will be to remember it TV

Online TV

Online TV Clips

Music Videos

Ad Measurement

is converted to higher ad performance

Video Content

Emotional Intensity

Video Consumption

Content Engagement

Brain activity by Content Genre

Video Advertising

Key Metrics and Terms


Page 23

Media Owner Perspective

Media Economy Report Vol. 03

What are the opportunities for advertisers in the multitasking living room?

Todd Gordon

It might sound obvious, but the biggest opportunity for an advertiser is to fully surround a viewer with their message. By connecting what’s being viewed on TV with unique, complementary, and action-oriented messaging on digital platforms, advertisers can drive their business

Peter Naylor

directly from someone’s living room. That’s pretty powerful. The most important considerations for advertisers are that their messaging

How has multi-platform delivery influenced the content you create?

is insightful, provides a service, and is entertaining. Ideally, the advertiser’s message would be customized for real-time marketing.

Todd Gordon EVP, Integrated

That’s a true service to the viewer.

Everything we create today goes through a filter of: "What will the

Trading at

experience for our audiences be across platforms?" We understand

MAGNA GLOBAL

that our audiences might be watching our programming in their living rooms, during their daily commutes, on a plane, or during a short break at work. That means we have to pay special attention to the variety of platforms they’re using. When we build content, it’s all about

Peter Naylor

How do you build your advertisers into the show?

EVP of Digital Media Sales at NBCUniversal Todd Gordon

leveraging the native attributes of each platform to make the viewing experience more engaging and rewarding. Combining video series with

By listening to their needs. There’s never a one-size-fits-all solution. Some advertisers want high-impact creative. Others are looking

content enhancements—like accompanying web-only video, second

for product integration or complementary content sponsorship. And

screen possibilities, and highly sharable components—only leaves our

still others are looking to get their products directly in the hands

audiences more engrossed in and devoted to the story.

Peter Naylor

of consumers. Whatever the advertiser’s needs, media companies know their audiences best. It’s essential we provide our advertising partners with our guidance and expertise in crafting unique solutions that resonate with fans of our shows.

What are you doing about the ever-growing demand for video? At NBCUniversal, we’ve got a wide range of audiences who represent Todd Gordon

watch live, while entertainment and primetime can be a combination of the two. Live versus time-shifted viewing can result in different user perspectives—ranging from a lean-forward to a lean-back mindset. For advertisers, an understanding of the mindset of a media properties viewing audience is essential, so that their messaging can be customized to be most relevant to that viewer, whenever and however they’re watching.

Peter Naylor

Video Content

both viewing behaviors. We know that news and sports audiences Well-watched video can come from anywhere—not only from our internal producers, but also from viewers and advertisers, too. At NBCUniversal, we’re aggressively developing new ways to build engaging video for audiences. We just created the TODAY Show Digital Studio, where we easily extend the TODAY TV story in web-only extras. Additionally, we have a full-service, in-house production team that helps our advertising partners create sponsored videos that we know will resonate with our audiences and work seamlessly with our programming.

Peter Naylor Video Consumption

Todd Gordon

Video Advertising

Is there a difference between a live view and a time-shifted view?


02

Page 25

In 2013, the global video ad market will be dominated by North America ($67bn, 34%) and Asia-Pacific ($64bn, 30%). APAC, however, will grow a lot faster in the next four years (+7.6% CAGR v. +3.1% for North America) to become the biggest region for video advertising.

TV is suffering from attention pollution. Increased ad clutter is undermining TV

North America

commercial’s effectiveness. Online video provides a much less cluttered and attentive environment for ads. However, the ability to accumulate reach online is limited—early

51

67

$

models suggest that shifting 5–10% of a TV budget is the optimal way to expand reach. Shorter ads in high-quality content viewed on tablets offer the most value.

Media Economy Report Vol. 03

Video AdvertisinG

Global Video Advertising Revenues By Region

EMEA

APAC

Advertising Revenues in Billion Dollar

1. Global online video advertising will double in the next four years to 5% of total video ad spending.

LATAM

25

2. Linear TV is getting more cluttered in terms of ad minutage and units per minute.

64

3. Increased clutter has reduced the impact of TV advertising on brand sentiment

Source: MAGNA GLOBAL

Key Takeaway

6. 5–10% of TV budgets should be shifted to online video to maximize reach.

Programmatic video buying

03

Ad revenues in billion dollars

01

Global Video Advertising Revenues By Format

As of 2012, global ad video revenues were $203

Online Video

billion, of which free TV represented 73%, pay TV $

24%, and online video 3% ($5.2bn). By 2017, the global market will reach $270 billion, with online

Pay TV Free TV

video tripling to $14bn (5% of the total).

300 250 200 150

$

$

$

$

$ $

$ $

$ $ €

$ $ €

$ $

$ $

250%

$4,000,000

200%

$3,000,000

150%

Online video is a bit behind display in

$2,000,000

100%

terms of the proportion of inventory

$1,000,000

50%

$0

2008

2009

Source: MAGNA GLOBAL

2010

2011

2012

2013

2014

2015

2016

2017

time bidding in exchanges), is developing rapidly.

being bought programmatically, but is catching up quickly.

0% 2012

Source: MAGNA GLOBAL

0

“big data” and—sometimes—real-

$5,000,000

Traditional

50

buying (automated trading based on

US Online Video: Programmatic vs Traditional Buying

2011

100

In the US and Europe, programmatic

2013

2014

Programmatic

2015

2016

2017

Programmatic Growth Rate

About 15% of the $2 billion online

Video Advertising

5. Tablets lead other video devices in the unaided recall of ads.

Video Content

4. Online video is significantly less cluttered, contributing to higher ad attentiveness.

video transactions in the US in 2012 were "programmatic". We believe that proportion will grow to 60% by 2017.

Video Consumption

over the past five years.


Commercial Clutter in Primetime

A UM analysis of Kantar-reported ad spending and BrandIndex health metrics shows the impact of TV advertising on brand sentiment has declined significantly over the last five years. The impact on 60%

has been flat. However, the

Methods of Ad Avoidance

number of commercial units

Moving thumbs to fast-foward through

per minute has increased

commercials is the least of our problems.

broadcast prime minutage

TV: Brand Sentiment Non-TV: Brand Sentiment

50%

Video Ad Effectiveness

In the past five years, US

non-TV media has not been as pronounced.

40%

by 7%.

30%

60 %

IPG Media Lab research has shown the real problem is moving heads to look away

US cable TV commercial 20%

Page 27

03

Advertising Struggles to Break Through

Media Economy Report Vol. 03

01

from the TV set.

minutage is up 14% in the last five years.

10%

The number of units per

8%

minute in cable is down 7%.

0% 2007

2008

2009

2010

2011

Q3 2012

Source: Universal McCann Advanced Analytics, based on BrandIndex & Kantar data, December 2012

Broadcast TV Cable TV

7%

loads increasing.

Primetime TV

2.2

3%

Online TV

2.4

1.3 min

16 min

Change Channel

Video Advertising

Online still low, but ad

Turn Head

14%

Fast Forward

2011/2012 Commercial Units per minute 5-year growth in commercial minutes

Source: Nielsen and ComScore Source: Nielsen and Kantar. Five

Source: Turning Head: YuMe Attention in the Wild Study; Channel Changing: Nielsen aggregate

broadcast networks and 20 top tier

Broadcast/Cable Prime rangs; Fast Forwarding based on DVR Penetration, DVR Activity and

cable networks.

Commercial Skip Rate. Q2/11 (YuMe in the wild)

Video Content

Ad Minutes per Hour by device Type

Video Consumption

02


01

Video unit length by device

Ad retention in time-shifted playback is higher in sitcoms than drama or reality series.

The length of video ad units

Ad Length Effectiveness

02

most commonly used is similar on TV and online.

50% Online TV 40%

30%

30 sec

15 sec

100

89

84% 80%

75%

70%

Source: Nielsen Live+3 Day viewing, 1Q13

60%

(includes broadcast and cable)

Low clutter and higher attention levels make online video ads more effective than regular TV ads. :15s are more than half as effective as :30s.

Regular TV

Page 29

04

88%

90%

Media Economy Report Vol. 03

Video Ad Unit Characteristics

Fast-Forwarding in Recorded Shows

Drama

Unscripted Reality

Sitcom

State of Product Integration Product Placement Spending by Region 800

15 sec

Source: Measuring Ad Format Impact

11,6%

200

11,5% 11.4

Study; Google/ARF/Wharton/Stanford

Sources : Freewheel, Nielsen

0

11,4% USA

Online content length impacts ad viewing. Video ad completion rates are significantly lower in short-form content, as viewers often decide it is not worth it to sit through an ad. Source: Freewheel

100%

93%

Source: PQ Media

81%

80%

Product Placement Spending by Device

68%

60%

Spending in Billion $

03

Viewers less tolerant of ads in short clips

Global

40%

20%

30%

400

20%

200

10% 12.9 8.1

0 0% 20+ min

5-20 min

-5 min

31.4

600

TV

Movies

0% Online & Mobile

According to the PQ Media global Product Placement Spending Forecast 2012-2016, Global product placement spending continues to increase, with the US leading the way as the largest market. Most global spending on brand placements is in the TV category, followed by movies and then online and mobile. However, online and mobile brand placement spending is increasing at the most rapid rate.

Video Advertising

More then 30 sec

400

YoY Growth Rate

Time of Ad

16–30 seconds

11,7%

Video Content

30 sec

15 seconds and below

11.7

600

Video Consumption

10%

134

11,8%

YoY Growth Rate

149

Spending in Billion $

20%


Where can you target households in 2013?

As of mid-2013, four multichannel video programming distributors (MVPDs) offer addressable linear TV ad campaigns: DirecTV and Dish (satellite), Verizon FiOs (telco TV), and Cablevision (cable TV in the greater New York area).

How many households can be reached?

DirecTV has run 43 addressable campaigns between January and April 2013, compared with 12 for the whole year 2012. Brands include auto, insurance, and movie studios.

100%

2012 January–December

2013 January–April

44

0

2014

12

Campaigns

43

Campaigns

Page 31 Video Consumption

25

2013 Source: MAGNA GLOBAL

DirecTV’s addressable TV campaigns

Video Content

118

Millions

In the US, 26 million homes (22% of all TV households) are addressable by multichannel TV providers. With new MVPDs expected to expand or launch in 2013–2014 (e.g. Comcast, TWC), that number will grow to nearly 50 million by end 2014, e.g. a critical mass.

Traditionally, MSOs can use their cable avails to insert linear commercials in only some sectors of their footprint, down to zip-code levels. Household-level addressability will now allow MSOs, as well as satellite TV and telco TV providers, to use their avails to target individual homes using subscriber data or third-party data (income, family status, car ownership, etc). Watching the same network in the same area, one family will see a car commercial while others will see a soft drink spot.

Media Economy Report Vol. 03

Households meeting criteria for a given ad campaign

04 02

From area targeting to household addressability

Source: DirecTV

01

03

Video Advertising

Addressable TV advertising


01

Page 33

02

Existing Solutions

Cross-Platform Campaign Ratings

Media Metrix Multi-Platform

Media Economy Report Vol. 03

State of crossplaTForm measurement

Potential Solutions

5-Platform Ratings

TAXI Initiative

Online Audience

Television Audience

+

Combines Nielsen’s Online Campaign Ratings product with Nielsen’s full National People Meter Sample for TV audiences

Includes mobile element via ComScore’s MobileMetrix panel

Tagging of TV ads enables overnight tracking of ad performance Enables the user to see TV and online reach individually as well as the combined reach of both -

Strengths

-

Provides unduplicated audience across online display, mobile display, and online video

Details on methodology not yet released

Weaknesses

Future of the initiative is uncertain given the potential Nielsen-Arbitron merger

Video is limited to PC only; no TV or mobile video is captured Weaknesses PC audiences only; does not include tablets or smartphones Still largely geared toward online display ads Does not include viewability metrics for online video, e.g., was the content “above the fold?”

Goal is to measure display, audio, and video content across five platforms

Reporting is monthly and content-based; not specific to ad performance

TAXI stands for Track-able Asset Cross Platform Identifier, a simple open standard for tracking video assets (content and ads) across platforms and formats Will withstand digital compression

Preliminary work has begun with ESPN properties A combination of existing Ad-ID (advertising) and EIDR (content) tags Gaining serious momentum now that all ads produced with SAG-AFTRA talent will require Ad-ID Has the potential to save billions in administration costs and enable real-time tracking of video across all screens

Video Content

Strengths

Video Consumption

+

Video Advertising

TV & Online


Page 35

Experiments in the IPG Media Lab

Media Economy Report Vol. 03

01

TV Audiences Migrate between channels when ads come on

show that 10% of linear TV's audience changes the channel when the first ad in the pod comes on. Channel switching stablizes after the first ad in the pod.

100%

Commercial Break

% of audience watching by channel

80%

Commercial Break

60%

Commercial Break

Commercial Break

40% 20%

Commercial Break

Commercial Break

0%

Seconds elapsed from start of content

Video Ad Effectiveness by Device

A study by the IPG Media Lab and

A study by the IPG Media Lab and

Undertone revealed that a large player

YuMe found that the biggest impact

size on a high-quality site was the

on ad recall came from video ads

largest driver of video ad effectiveness.

played on a tablet.

04

Unaided Ad Recall

Quality Size

43%

Placement

Reallocating 5–10% of TV dollars to online Full Episode Players optimizes target reach

81

49%

47%

45%

40%

20%

80

79

78

User-Initiated

0% 77

33%

Tablet Source: IPG Media Lab, Undertone Media Trial, August 2012

Smart phone

PC

TV

% of TV Budget Shifted to FEP's Source: UM CAT Reach Combination Analysis, Audience Women 18–49

Video Consumption

14%

56%

W18–49 Reach %

13%

60%

Optimize Video Reach Across TV and Online

Video Advertising

03

Video Content

Attributes of an effective online video ad placement

Delta (Test-Control)

02


Page 37

other channels on the plan. What is the optimal

resource that is the standard for defining overall

sequencing of messages? Optimal frequency by

population size. Then (and only then) can we

channel? This level of insight was impossible just

determine what percentage of that audience we

a few years ago—now it is real and exciting for

are connecting with. Unfortunately, we still operate

marketers.

in a world where some research tools operate on a campaign by campaign basis and are not

Will video buying be automated like digital display?

universally accessible by buyers and sellers. So,

The business will continue to expand in two

for an individual campaign in-market or post-

directions. High-touch, strategic, custom programs

market we can get a good read, from a pre-market

will continue to thrive and offer us the opportunity

perspective it is much harder without an open

to break through the advertising clutter. In addition,

standard.

data-infused, platform-enabled programmatic

Media Economy Report Vol. 03

Agency Perspective

coverage, there needs to be an open industry

solutions will also flourish. Some video buying will

Q

&

A

What is the biggest bargain in the video market?

be bundled into custom deals, but the vast majority

Dogs on skateboards. We can run ads there very

will be automated like digital display. We see that

cheap. Seriously, the real-time programmatic

happening in earnest over the next several years,

video marketplace has gotten red-hot. We can use

and we are organizing ourselves to take advantage

a variety of first- and third-party data to target

of that exciting opportunity for brands.

specific audiences, eliminate waste, and maximize performance. Video as a platform is a bargain today —as we know there are few tools more powerful than sight, sound, and motion to drive a brand’s business.

Douglas Frederick Director, North America Investment

David Cohen Chief Media Officer

How do you measure digital video ad

UM

effectiveness?

MAGNA GLOBAL

The possibilities are truly endless. Depending on the role that digital video is playing in an measurement framework to read, analyze, and

No. Next question (kidding). It is valuable to think about

of valuing those impressions, there is still work to do.

this in two ways. First of all, we need to think about

Early studies we have conducted, as well as industry

our ability to simply count impressions the same way

research, is showing that online video impressions

across channels. Then, the more interesting question

can be more effective than television at driving brand

becomes how we think about determining a value for

recall and preference. With price parity becoming a

each of those impressions. The good news is that the

reality and consumer usage as our guiding light, we are

marketplace has advanced tremendously across both

very optimistic at driving our platform-neutral video

dimensions in the past year or so. We now have the

planning approach across our clients.

ability to measure audience-based impressions across screens in a much more meaningful way. Demographic

Can you predict audience coverage in a video-anywhere

impressions and rating points across channels is

plan the same way we can in a TV-only video plan?

a reality. We have even begun to push into custom

Tough question. The answer is yes and no, and it varies

lifestyle and behavioral segments with the help of some

by market. In order to accurately measure audience

react. If we are using digital video as a means of extending reach to a plan, we can measure deliveries against discrete audiences. If we are looking to drive brand preference or purchase intent, we can use a variety of qualitative tools and surveys to measure the impact of our video efforts to drive those metrics. Most importantly, we now have the tools to understand the

Video Content

of our measurement partners around the world. In terms

optimal relationship between digital video and Video Consumption

Are all video ad impressions equal?

Video Advertising

overall communications plan, we can adapt a


Video Content

1. Cable subscriptions in the US have maxed out.

1. Many inexpensive shows are now being produced to

New Finding: Households that view broadband video on

run exclusively online.

their TV sets will now be included in Nielsen’s definition

New Finding: While generally less than 10 minutes per

of a television home.

episode, they retain the concept of a “season.”

2. Younger viewers are adopting alternative video

2. Unscripted “reality” series remain relatively inexpen-

viewing devices.

sive to produce and are popular with mass audiences.

New Finding: Adults 18–24 are spending 54% more

New Finding: They also currently account for more

time online, and their time spent streaming video has

prime air time than any other single genre.

doubled since 2011.

3. In aggregate, the YouTube audience rivals a cable

3. Mobile video is more likely to be a solo experience.

network; however, individual YouTube channels are

New Finding: Digital devices like tablets, smartphones,

much smaller.

and even PCs have a lower user-per-device ratio than

New Finding: Netflix and Hulu are also popular, but

TV sets.

reach fewer unique people than even some YouTube

4. Television still accounts for the lion’s share of video-

channels.

viewing time.

4. Tentpole events generate far more social chatter than

New Finding: Between live and delayed viewing, US

any episode of a primetime TV series.

adults spend over 39 hours per week in front of the set.

New Finding: Social activity for ongoing programs still

5. Digital devices provide quick hits of video content.

provides valuable insights.

New Finding: Video sessions on PCs, smartphones, and

5. Online viewers are more engaged than TV viewers.

tablets are under five minutes on average.

New Finding: Watching a TV series online generates

6. Tablets are a popular multitasking device.

stronger emotional responses than watching on a set,

New Finding: 41% of tablet users say they multitask

likely because of the on-demand element.

while watching TV daily.

Page 39

1. Global online video advertising will double in the next four years to 5% of total video ad spending. New Finding: Within the same time frame, programmatic buying of online video will grow to 60% of all transactions. 2. Linear TV is getting more cluttered in terms of ad minuteage and units per minute. New Finding: Cable is driving the growth of

Contributors Brian Monahan @brionic Managing Partner, Intelligence Practice, MAGNA GLOBAL brian.monahan@magnaglobal.com Brian Hughes @bhughes_magna SVP, Audience Analysis Practice Lead, MAGNA GLOBAL brian.hughes@magnaglobal.com

commercial minutes in primetime.

Vincent Letang @vletang_magna

3. Increased clutter has reduced the impact of TV

EVP, Director of Forecasting, MAGNA GLOBAL

advertising on brand sentiment over the past five years.

vincent.letang@magnaglobal.com

New Finding: While there has also been a decline

Kara Manatt @karamanatt

among non-TV media, it is not as pronounced.

VP, Consumer Research Strategy, IPG Media Lab

4. Online video is significantly less cluttered,

kara.manatt@ipglab.com

contributing to higher ad attentiveness.

Todd Gordon @tpgtweets

New Finding: Completion rates are highest in content

EVP, Integrated Trading, MAGNA GLOBAL

that is 20 minutes or longer. 5. Tablets lead other video devices in the unaided recall of ads. New Finding: TV had the lowest recall percentage,

Media Economy Report Vol. 03

Video Consumption

Video Advertising

todd.gordon@magnaglobal.com Douglas Frederick @dougmfred Director, North America Investment, MAGNA GLOBAL douglas.frederick@magnaglobal.com

behind even smartphones. 6. 5–10% of TV budgets should be shifted to online

Stefanie Morales Associate Director,

video to maximize reach.

Audience Analysis Practice, MAGNA GLOBAL

New Finding: In addition to additional reach, Full

stefanie.morales@magnaglobal.com

Episode Players also deliver a more attentive audience.

Graeme Hutton @graemehutton SVP, Group Partner, Research, UM graeme.hutton@umww.com Art Thomas

Video Advertising

Summary Cheat Sheet

Partner, Advanced Analytics, UM

Concluding Tweet

Vincent Letang @vletang_magna

Madeline Wirthman @maddiewirthman Executive Assistant, MAGNA GLOBAL Madeline.Wirthman@magnaglobal.com

Video Content

art.thomas@umww.com

seek high quality, lean-forward, clutter-free environments to drive results

Design by Martin Oberhäuser @oberhaeuserinfo Founder, oberhaeuser.info martin@oberhaeuser.info

Video Consumption

Video ecosystem exploding—Advertisers should


About MAGNA GLOBAL MAGNA GLOBAL is the strategic global media unit of IPG Mediabrands, driving forecasts, insights, and negotiation strategy across all media channels. The MAGNA GLOBAL Intelligence Unit delivers the industry’s most accurate and authoritative forecast of media value. The MAGNA GLOBAL Investment Unit harnesses $36 billion of IPG Mediabrands global media billings.

About IPG Mediabrands Created by IPG to manage all of its global mediarelated assets, IPG Mediabrands employs 8,500 communications specialists operating in 90 countries and manages $36B in global media billings. A proven entity in helping clients maximize the impact of their marketing investment to deliver explosive business results, IPG Mediabrands enhances the communications offering and performance across its network of media agencies including Initiative, UM, MAGNA GLOBAL, and a roster of Specialty Service Groups. IPG Mediabrands is part of Interpublic Group (NYSE: IPG), one of the world´s leading organizations of advertising agencies and marketing services companies. For more information, please visit www.mbww.com or follow us on Twitter at

Photo: kamaera / photocase

@ipgmediabrands.


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