Conference Takeaways: Programmatic I/O Las Vegas
By Kendra Tang, Programmatic Supervisor Programmatic I/O brings the digital marketing industry together for updates and/or actionable insights for the programmatic ecosystem. Below are the main takeaways from the 2022 conference hosted in Las Vegas, Nevada. Streaming/OTT/CTV The streaming war continues. Even market leaders like Netflix are pivoting their “no advertising [is] coming onto Netflix” (statement by CEO Reed Hastings) strategy and the company is now expecting to launch an ad-supported tier by the end of 2022. Amid consumer demand for more choices, fragmentation of revenue models, and more accessible data analysis tools, content providers are also dealing with record high subscriber churn rates (44% in 2022) and political season on the horizon. To stay relevant and capture disloyal subscribers, advertisers should prioritize content ROI, meet customers where they are, know where they are going, and “drive the data, steer with technology.” ID Deprecation Laura Martin, a media and tech analyst at investment bank Needham & Company, spoke at Programmatic I/O with an optimistic perspective and believes that the advertising revenue pendulum will swing back in favor of the open internet and the programmatic ecosystem (opposed to the walled gardens). Her predictions are rooted in privacy changes and the current weaknesses of the open internet. The strongest programmatic companies such as The Trade Desk and Criteo are clearing the billion dollar mark in ad revenue, compared to the multi billions in ad revenue generated by Alphabet (Google, YouTube), Meta, Amazon, and Disney. Martin forecasted that a “tiny” 1% or 2% shift in budgets from the big platforms could double or even triple the ad revenue for open programmatic. In a consumer privacy-centric environment, these shifts are looking more and more like a reality. Martin also predicts that Google will continue to delay the cookie deprecation until an open industry solution, such as Unified ID 2.0, reaches scale. Google will likely opt to join that program rather than constructing their own solution. The thought here is that anything Google develops related to tracking and measurement alternatives would inevitably face lawsuits by regulators. Ultimately, marketers should continue to collect and leverage first-party data to be prepared as the open internet grows, with or without ID deprecation from the walled gardens. If the open internet catches up to the walled gardens with measurable scale, it will be interesting to see which way the big platforms will pivot – will they join the industry solution or develop their own? In either reality, the walled gardens will likely continue to dominate mobile advertising, but CTV is still up for grabs and is another significant driver of programmatic growth year over year. Clean Rooms It was one of the conference’s favorite buzzwords. To put it simply, clean rooms are a technological solution that allows advertisers, publishers, and platforms the ability to securely share their own aggregated user-level data without actually sharing any PII/raw data with each other. Currently, there are two different classes of clean rooms: (1) the walled gardens-operated clean rooms that give brands a look inside their own ecosystem, and (2) an option operated by software companies, acting as a conduit between parties that want to share their data. Clean rooms allow for a safe environment where all sides can set parameters to what is actually seen. The data stored in clean rooms can be used to gain first-party insights into audiences and measure campaign performance, depending on which partners are participating all while being privacy compliant. Though clean rooms may seem like a privacy-friendly solution to rich data, they aren’t quite as ready as we would like them to be. Some challenges are that consumers still need to give consent to advertisers before brands share their data, along with issues scaling because most clean rooms are operated one-to-one (partner-to-partner). Essentially, clean rooms take a lot of legwork that does not currently exist—because rather than doing that leg work “we’ve used legacy technology that’s been somewhat abusive to the perception of consumer privacy,” according to Nancy Marzouk, CEO of MediaWallah. In summary, there are still many unknowns ahead for our industry. One thing everyone can agree on is that you need an identity solution, period. To stay competitive, advertisers need targeted strategies backed by big data. Make the most of your data in a user privacy-centric world to stay ahead. This article is featured in Media Impact Report No. 36. View the full report here.
Media Consumption Trends: OTT Growth Shifts to Older Consumers
By Nora Cortez, Director of Media Planning and Robin Cohen, EVP Integrated Media Investment and Planning OTT and streaming video consumption continues to grow as consumers across age groups shift their video viewing habits. While that may not surprise you, who is driving that growth might. Early Growth Spurred by Young Consumers In the early days of OTT, younger consumers were the first to sign on – tech enthusiasts and early adopters flocked to OTT platforms as a supplement to, or in lieu of, traditional linear TV. As a result, these younger demographics now account for the largest share of time spent with OTT. As of April 2022, P25-54 consumed an average of 136 hours of OTT per month, compared to P55+ at 114 and P65+ at 107 (Comscore OTT Intelligence). While overall streaming usage continues to grow and those young early adopters were responsible for early streaming growth, younger demographic groups have recently started to see a decline in share of audience as older audiences have started to embrace streaming. Powerhouse Potential of Older Consumers With younger demographics already having high levels of OTT adoption and consumption, their continued growth potential becomes more limited. Although older audiences don’t currently account for the largest share of time spent with OTT, they are driving the most growth and represent an emerging and largely untapped audience in the OTT space. The P50+ audience is expected be a predominant source of growth in the OTT and streaming landscape in the future, a trend that is already evident in the marketplace – key publishers and smaller players alike have seen evolutions in their user base, with the 50+ audience accounting for an increasing share of users year over year. Interestingly, within the broader senior audience, older age segments within that are seeing the most pronounced growth. In Q1 2022, P65+ saw double the growth rate of P55+ demographic—from January to April, P55+ saw a 4% growth in OTT viewing households, compared to P65+ with an 8% growth (Comscore OTT Intelligence). Growth of older audiences in the OTT space creates a unique opportunity—for advertisers looking to reach senior demographics, it demands diversification of their video portfolio to effectively reach consumers. These older audiences will not only drive OTT growth in the coming months and year, but they historically spend more time with TV than younger demographics. This trend will likely translate to OTT, particularly because of the bingeable nature of OTT and because streaming platforms will continue to develop more content that appeals to older viewers. Increasing Importance of Unified Measurement With the continued diversification in video viewing, the importance of looking at performance holistically cannot be emphasized enough. As an agency, that is why we have developed a partnership with iSpot.tv, while also partnering with leading marketing measurement technology company Leavened on marketing mix modeling approaches for all-in views of performance across the video ecosystem. We leverage this data via an integrated scorecard, which combines the deterministic methodology of our platform data with iSpot and our proprietary latent response optimization tool, WaveCast™. This article is featured in Media Impact Report No. 36. View the full report here.
July 2022 Media Impact Report
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Currencies, Clean Rooms, and the Up/Newfronts
Last month, our media team participated in the Upfront and Newfront presentations. These events represent updates from our media partners including new programming, attribution partnerships, distribution updates, and more. Leading up to the meetings, we had an expectation that companies operating in the linear space would focus a lot of attention on the topic of alternate currencies. For years, upfront deals have been built on audience delivery guarantees tied to Nielsen viewership data. Exploring New Currencies Following the suspension of Nielsen’s accreditation by the Media Rating Council (MRC), media companies began looking for alternate solutions, which would also allow for cross-platform audience verification. One such example was NBCUniversal, which sent RFPs to over 100 companies in search of a new currency provider. In March, the company announced that it would be leveraging iSpot.tv data as the currency for national ad buys. Most of the broader discussion has been about secondary guarantees, which do not replace Nielsen, but begin to test the waters for new measurement approaches. Clean Rooms Data clean rooms have also been a key topic in attribution discussions, and Roku revealed a new solution in this space ahead of the Upfront/Newfront season. Roku’s clean room will be a “privacy-first data collaboration environment that allows advertisers and agencies to use their encrypted first-party data to make planning and measuring advertising campaigns with Roku easier, all without relying on cookies or consortiums.” Our agency has embarked on a first-of-its-kind relationship with iSpot.tv to help solve this gap in the marketplace. We will continue to leverage all available data, including audience data verified by Nielsen and Comscore, in-week performance data confirmed by platform data and iSpot.tv, and most importantly, Market Mix Modeling which will evaluate the total impact of all marketing channels on incremental sales. Clean rooms also require the integration of both advertiser and publisher data. While this concept is still new to market, Rain the Growth Agency will continue to explore various technology solutions to prepare for the next evolution of data, attribution and privacy needs. Interestingly, the Upfront presentations overall contained very little content pertaining to these items, with most of the discussion happening prior. Overall, agencies, media companies, and brands are all seeking a common currency that will allow for audience verification across channels and platforms, and more sophisticated measurement. This article is featured in Media Impact Report No. 35. View the full report here.
Infographic: OTT Digital Video: Who’s Watching What
There’s a lot of hype to navigate when it comes to understanding who consumes OTT video. As part of the OTT Market on Demand guide, we are focused on three groups that we can compare and contrast based solely on consumption of content without worrying about what technology they use to access it: Streaming Only—those who exclusively streamed OTT content in the last seven days. Linear TV Only—those who exclusively watched traditional cable or broadcast television in the last seven days. Mixed Platform—those people who watched video content by streaming and on traditional TV cable and broadcast networks. These three groups offer clear, distinct consumption patterns regardless of what’s plugged in or what device people use. It’s the habit we’re after, not the technology. When you focus on those who view ad-supported streaming video, there are currently about 130 million viewers and that number is expected to grow to 165 million by 2025. To put that in perspective, that’s more than half of the current U.S. adult population and will grow to almost 70% over the next few years. Conclusion: Streaming OTT entertainment content is mainstream. What’s changing across these three groups is undeniable. As TV ratings for cable and broadcast television continue their significant declines, the Mixed Platform group will shift more toward streaming and the Streaming Only group will grow. For a deep dive into each of these demographic groups and trends to watch, download the full OTT Market on Demand guide.