The issue of cookies, ads and co.
Recent years have seen a significant growth in ad-free environments for video, whether it is SVOD services like Netflix, Disney+ and Amazon Prime, broadcasters offering subscription-funded ad-free tiers to their BVOD services or collaborating to create their own SVOD platforms, or YouTube offering its own premium services.
This increases the amount of time people are spending on media platforms where they are inaccessible to advertising. This unreachable audience is likely to be more affluent audiences who can afford to pay to use these ad-free platforms.
Certainly, our experts did acknowledge a tangible threat to local and regional media companies from global platforms with large content budgets, scalable businesses, and distribution across the world. Mergers are creating global giants that present a real challenge to the media ecosystem as we know it today.
However, there was less consensus from our experts about whether subscription-funded media would become the predominant media type. Some predict a renaissance of ad-funded media and specifically AVOD as the cost of household subscriptions start to mount up and the novelty starts to wane. Others anticipate that companies like Netflix will inevitably adopt hybrid models with ad-funded elements or tiers, possibly via more native forms of advertising.
Despite the success of YouTube Premium, revenues for it are ‘a drop in the ocean’ compared to revenue from advertising, confirms Niels Marslev of Google. He argues that, whilst it is important to serve a market for those who want to pay to skip advertising, this is anticipated to be incremental revenue for YouTube as opposed to the main tranche of their business.
This sentiment was echoed by the broadcasters who are diversifying and making subscription services available. Some of them are joining forces to make their content available on more platforms. However, advertising revenue is likely to remain the heart of their business.
Meanwhile ad-funded media continue to offer content that will attract large linear audiences to news, sports, and must-see events.
It’s important to note that there is some debate about the actual degree to which linear television viewing is declining. It is acknowledged to be more evident as a trend in the US and UK, particularly amongst younger age groups, but less so in markets like Germany, where linear TV plays more prominent role.
Our panel believes that linear TV will remain an important building block for advertising campaigns, but with an increasing need to supplement it with non-linear platforms like BVOD and social media platforms.
It was argued that broadcasters should be embracing the move away from linear TV and making the most of the revenue opportunities presented by online, non-linear platforms. For example, TV4 has seen a ‘fantastic payback’ from driving viewers towards their digital platform - exploiting the opportunities of addressability and user data - instead of trying to protect linear viewing.
However, it should be acknowledged that this optimism is not universal amongst broadcasters. The advertising load in an hour of broadcast commercial television is significantly higher than for the same programs presented in online platforms.
This presents both revenue challenges for broadcasters and reduces the inventory available to advertisers looking to build reach.
Nonetheless, as things stand, linear TV offers a simpler route to reach when it comes to the effort required to build media plans to reach equivalent audiences online.
The point was raised that TV consistently scores best in marketing models for awareness and is also easier to plan and buy when compared to online campaigns, which he describes as being relatively poor for extended reach.
We can debate the speed - and the profile - of the decline in linear TV viewing, but TV is seen as a highly effective tool for reaching audiences at scale. It remains to be seen how effective – and cost-efficient – online campaigns can be to compensate. Sarah Ostkamp of Unilever predicts that TV will continue to be a big and important building block of reach in their campaigns for a long time to come, but the onus will be on measurement to identify the overlaps with, and incremental reach of, forms of non-linear media like Connected TVs.
There has much anticipation of the imminent demise of the cookie, which will make it harder to track audiences and optimize reach. This has been compounded by the increasing efforts of Apple to enforce consumer privacy and actively limit targeting.
It’s clear that the demise of the cookie will lead to a heightened importance of first-party data and of opt-in research panels. Advertisers and media owners are focusing on what they have in their own systems, in their customer databases, and how to grow data stacks.
With a move to first-party user data, a greater role is anticipated for the research companies in auditing these forms of data to ensure that they are verified and correct.
Nonetheless, it remains to be seen how effectively this combination of first-party data and panels can guide effective strategies for reach when compared to simply dropping a cookie. It’s not just the cookie issue alone that is presenting challenges. Apple has increased its focus on user privacy and the ability to block tracking on its devices. Given that Apple devices tend to be significantly more expensive, this may introduce a demographic skew into how effectively audiences can be tracked.
For retailers, this impairs their ability to target by store location using GPS data on smartphones, as the opportunities to geotarget using Google and Facebook data have been limited on Apple devices.
The dominance of video advertising
It is clear that video is by far and away the dominant form of advertising, which has implications for the platforms used to grow reach. Audio is experiencing a renaissance, but the name of the game for brand building and for sales uplift is video across all channels, and all devices. As one panelist put it, video is not just the king, it's King Kong.
Video is arguably the most eye-catching form of media. This also means that it is the type of advertising most likely to actively annoy consumers, compared to more ambient and integrated media such as radio/audio and outdoor.