THE AVOD ECOSYSTEM: As cord-cutting shifts the revenue model of media companies, the ad-supported streaming space is poised to take off — here are the key players brands need to know, and how to work with them
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The video streaming marketplace has expanded to include a widening set of ad-supported OTT video platforms, across both free and hybrid (subscription-based and ad-supported) offerings. And, as these services grow, ad-supported OTT will become an increasingly important channel within media plans as a way for ad buyers and brands to add incremental reach to their linear TV campaigns.
A wave of new movement in the ad-supported streaming video space has accelerated over the past 12 months:
In 2019 and early 2020, media companies including ViacomCBS, NBCUniversal, and Fox Corp. have each acquired free, ad-supported TV services, including Pluto TV, Xumo, Vudu, and Tubi. Meanwhile, after Disney gained majority ownership and full operational control of Hulu last May, NBCUniversal and AT&T's WarnerMedia each announced plans to launch their own ad-supported SVOD services — Peacock and HBO Max, respectively — which are each forthcoming. (At launch, HBO Max will be ad-free, but will have an ad-supported tier sometime in 2021.) Further, CTV device-makers including Roku, Samsung, and even Amazon have increasingly emphasized their own advertising inventory. The majority of ad sales that go to each company come from CTV inventory sold on other publisher apps carried on their devices: Roku and Amazon each take a 30% cut of ad sales from inventory sold on partner apps. But a portion of advertising revenue has also resulted from increased viewership on their own free AVOD platforms that are integrated into and prominently displayed on their devices, including The Roku Channel, Samsung TV Plus, and to some extent, Amazon's IMDb TV.
OTT video advertising offers some benefits over linear TV to advertisers looking to reach audiences on premium video content — but brands and media buyers still face several frustrations with advertising on ad-supported OTT. OTT video advertising is considered to be more efficient and less wasteful compared with traditional TV because it's more addressable — meaning it has more granular, audience-based targeting capabilities. But advertisers must also navigate several challenges that will impact their strategies in this area. These challenges include considerable fragmentation in the long tail, low service differentiation among some AVOD services, a lack of standardized measurement, and a confusing assortment of different ways to buy the same or similar inventory. In The AVOD Ecosystem, Business Insider Intelligence examines the expanding range of major, growing, emergent, or forthcoming ad-supported OTT services in the US. We look at how ad spending is growing on ad-supported streaming, based on the rise of connected-TV advertising, and why cord-cutting is likely to drive additional spend. We further assess the state of consumer interest in AVOD in the US, in terms of the share of time spent with streaming video and user growth, and identify how multiple factors including the coronavirus are boosting usage. Finally, we discuss how ad buyers and brands are approaching these services, and outline emerging opportunities for advertisers as well as ongoing challenges. We focus our discussion of AVOD on the free AVOD services (e.g. Tubi, Pluto TV), hybrid SVOD/AVOD (e.g. Hulu), and CTV services (e.g. The Roku Channel). Given its size and importance, this report also includes discussion and figures about YouTube. For the purposes of this report, we exclude analysis of other platforms that fall under the technical definition of ad-supported OTT, including: social platforms that feature ad-supported digital video like Facebook, Twitter, Snapchat, and TikTok; livestreaming video platforms like Twitch; and skinny bundles (or vMVPDs) like Sling TV and YouTube TV. The companies mentioned in this report are: AB InBev, AT&T, Amazon, Capital One, Disney, Eko, Facebook, Fox Corp., General Mills, Hulu, L'Oreal, NBCUniversal, Netflix, PepsiCo, Procter & Gamble, Quibi, Roku, Samsung, Snap, State Farm, Taco Bell, TiVo, TikTok, Twitch, Unilever, Verizon, ViacomCBS, Vizio, Walmart, WarnerMedia, YouTube. The ad-supported OTT platforms mentioned in this report include: CBS All Access, Crackle, ESPN+, HBO Max, Hulu, IMDb TV, Peacock, Plex, Pluto TV, Quibi, STIRR, Samsung TV Plus, The Roku Channel, TiVo+, Tubi, Vudu, WatchFree, Xumo. Here are a few key takeaways from the report:
A large part of video advertising that goes to ad-supported OTT platforms is driven by connected-TV advertising sales, since the majority of viewing on these platforms happens on TV screens. In 2020, US advertisers will spend $7.99 billion on CTV advertising, up from $6.38 billion in 2019 — and that spending will surge to $13.62 billion by 2022, according to an eMarketer forecast updated in June. Of total ad spending on CTV, the overwhelming majority of spend comes from video ads, with a small remaining portion going to display ads that appear on CTV platform interfaces. To reach a growing population of cord-cutters and cord-nevers, agency ad buyers and brands will increasingly need to supplement their TV ad campaigns with OTT video inventory. The vast majority of advertisers are already using digital video to add incremental reach to TV ad campaigns: 78% of US marketing and agency execs surveyed in October 2019 said that they buy digital video inventory to TV ad campaigns to add reach, according to a FreeWheel survey conducted by Advertiser Perceptions in October 2019. That incremental transfer of ad dollars into OTT will grow in 2020 and into 2021, particularly as TV advertisers expect to dramatically reduce TV ad spend and shorten upfronts commitments. As ad buyers prepare for a significantly disrupted TV upfront market in 2020 amid uncertainty around the return of live sports and the availability of other premium programming, half (50%) indicated that they believe they can make up necessary GRPs from TV — or gross ratings points — using OTT, CTV, or digital video advertising inventory, according to a recent Advertiser Perceptions survey of media-buying executives.
In full, the report:
Analyzes consumer usage and preferences around ad-supported OTT services. Discusses how ad spending is growing on ad-supported streaming platforms, alongside the rise of connected-TV advertising. Identifies and examines the outlook for key players and purveyors of ad-supported premium video, including hybrid AVOD/SVOD services (e.g. Hulu, CBS All Access), free AVOD services (e.g. Pluto TV, Tubi), and connected-TV platforms (e.g. The Roku Channel, Samsung TV Plus). Explains how advertisers are approaching AVOD services, and how they can navigate ongoing challenges in the buying process. Contains 54 pages and 19 figures — including 3 landscape grids.
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THE SPORTS STREAMING ECOSYSTEM: How sports are going over-the-top and eroding the last bastion of pay-TV
This is a preview of the Business Insider Intelligence Sports Streaming Ecosystem premium research report. Purchase...This is a preview of the Business Insider Intelligence Sports Streaming Ecosystem premium research report. Purchase this report here. Interested in getting more content like this from us? Check if your company already has BII Enterprise membership access. Live sports content is one of the strongest and last-remaining drivers of value for traditional pay-TV — for both viewers and advertisers alike. But like entertainment programming, live sports content is migrating over the top (OTT) to streaming services — meaning that sports fans can increasingly access sports programming without the need for a pay-TV subscription or watching on linear TV channels. Streaming access to sports programming has been led by a diverse range of platforms and services, including: Skinny bundles (e.g. Sling TV, YouTube TV) that carry live sports programming distributed by traditional TV networks; Media-branded OTT services (e.g. ESPN+, CBS All Access, NBCUniversal's Peacock) that feature live sports where respective networks hold rights; League-branded services (e.g. MLB.TV, NBA League Pass, NFL Game Pass); Digital startups like DAZN that typically cater to more niche fan bases; Tech platforms (e.g. Amazon, YouTube, Facebook, Twitter, Twitch) that have each acquired live game rights; Social media platforms (e.g. Facebook, Twitter, YouTube, Snapchat, TikTok) that are increasingly partnering with both leagues and broadcasters to to develop and distribute highlights or original short-form programming around live sports events. So far, the majority of prior dealmaking with digital players has been limited and experimental — there's too much value still tied to the status quo for leagues to hand over exclusive rights to digital partners just yet. But we expect that leagues will increasingly look to form partnerships with tech and social platforms for opportunities to reach young people, who are more likely to be cord-nevers or cord-cutters. In the meantime, OTT platforms that carry sports offer incremental, new-in-kind opportunities to reach sports fans in more targeted, interactive, and hyperengaging ways that complement or even surpass the typical capabilities of linear broadcast. In The Sports Streaming Ecosystem, Business Insider Intelligence examines how the OTT sports landscape is expanding and fragmenting, and how the fan experience is evolving on digital services and devices. We discuss how and why traditional TV relies on live sports content; how some sports rights packages have been allocated to digital platforms; and how digital players are expected to vie for live sports rights packages as current rights deals are set to expire. We further lay out the expanding range of OTT video services and platforms that currently distribute live sports and other sports programming. In each section, we explore the evolving roles of existing and emergent players within the OTT sports landscape across both free and paid services, live and on-demand streaming, games or matches and ancillary content. Additionally, this report features a section on how we expect the coronavirus pandemic to impact live sports programming and advertising spend through 2020. In it, we discuss how the unprecedented lack of live sports programming will impact US ad spending this year — in particular on TV — by examining how sports advertisers have responded to the crisis so far, and how they anticipate changing their spend over the next 12 months. Second, we discuss early strategies that leagues and broadcasters have taken to fill the programming void — and how we expect these changes to familiarize consumers with digital, on-demand access in ways that could accelerate longer-term shifts to sports streaming. The companies mentioned in this report are: AB InBev, Amazon, AT&T, Bleacher Report, DAZN Group, DirecTV, Dish Network, English Premier League (EPL), FaceBank Group, Facebook, Fox, International Cricket Council (ICC), Major League Baseball (MLB), Major League Soccer (MLS), NASCAR, National Basketball Association (NBA), National Collegiate Athletic Association (NCAA), National Hockey League (NHL), NBCUniversal, NFL, PGA Tour, Procter & Gamble, Snapchat, TikTok, Twitch, Twitter, The Walt Disney Co., WarnerMedia, World Wrestling Entertainment (WWE), YouTube. Here are a few key takeaways from the report: While sports fans are the stickest pay-TV subscribers — and therefore the least likely to cut the cord — streaming platforms are gaining favor among some sports fans. Among US internet users who regularly watch sports, 79% subscribe to traditional pay-TV, compared with just 61% of sports nonviewers, per Altman Vilandrie & Co. But sports fans increasingly view streaming alternatives as valuable complements or cost-effective substitutes. Among US sports fans who use a streaming service to access live sports, 57% do so to get access to sports that aren't available on TV, and 38% do so because "it's less expensive than pay-TV," per Verizon Media/Sapio Research. The indefinite cancellation of live sports due to the coronavirus pandemic could exacerbate cord-cutting in the US in 2020. While pressure on consumer discretionary spending will be the most likely factor causing people to ditch pay-TV, the prolonged absence of live sports programming in 2020 could have at least some influence on cord-cutting in the near term: 11% of respondents who had either already cut the cord or were planning to do so said their most important reason was the postponement of live sports, according to Business Insider Intelligence's Coronavirus Consumer Survey, conducted on March 31, 2020. US live digital sports viewers have nearly doubled since 2018 and will become a growing proportion of total live sports viewers in coming years. This year, there will be 36.5 million digital live sports viewers in the US, up 97% from 18.6 million in 2018, according to eMarketer's first forecast for US live sports viewers and digital live sports viewers. Further, digital live sports viewers represent 11.0% of the US population, and are set to grow to 14.2% by 2023 — that's compared with total live sports viewer penetration of 46.3% in 2020, which will grow only slightly to 46.9% by 2023. In full, the report: Analyzes the market forces, consumer preferences, and changing consumption habits that have led pay-TV and traditional TV networks alike to depend on live sports programming. Discusses how leagues could reallocate sports rights to digital players as existing rights deals expire starting in 2021 — and presents complete grids displaying existing US broadcast sports rights deals as well as digital sports rights deals (including some global digital rights deals). Identifies and examines the key players in the OTT sports landscape, including skinny bundles (or vMVPDs); media, league, and startup pure-play OTT services that offer sports programming; tech giants; and social media companies — and presents complete grids displaying the existing players and offerings within each group. Explores how digital platforms are enhancing or changing sports broadcasts and the overall fan experience through new features. Contains 77 pages and 40 figures — including 9 landscape grids. Interested in getting the full report? Here's how to get access: Business Insider Intelligence analyzes the media and marketing industry and provides in-depth analyst reports, proprietary forecasts, customizable charts, and more. >> Check if your company has BII Enterprise membership access to the full report Purchase & download the full report from our research store. >> Purchase & Download Now Join the conversation about this story »
Ad spending data reveals how streaming TV services like Netflix and Disney are changing their marketing tactics
With people spending more time in front of their TV sets, an advertising battle is emerging...With people spending more time in front of their TV sets, an advertising battle is emerging among streaming-video platforms that are vying for an audience surge like the one Netflix recently reported. New subscription services like Quibi, Disney Plus, and Apple TV Plus, as well as players like Hulu and Amazon Prime Video, are driving up ad spending in the entertainment category. The video-entertainment category spent 41% more on national TV ads during March 2020 compared with a year earlier, reaching a total of $52 million, largely because of on online platforms including Amazon Prime Video, Hulu, and Disney Plus, according to data from WPP's research arm, Kantar. Data from iSpot.tv, Pathmatics, and MediaRadar showed the streaming-ad wars continued in April, both on TV and online. Netflix is one streaming service that isn't spending more on advertising, but experts say it may just be marketing more efficiently. Click here for more BI Prime stories. With people spending more time in front of their TV sets, an advertising battle is emerging among streaming-video platforms that are vying for an audience surge like the one Netflix just reported. Netflix said on Tuesday that its audience swelled to 183 million paid subscribers worldwide, after it signed up nearly 16 million paying members from January to March. New subscription services like Quibi, Disney Plus, and Apple TV Plus are trying to buy their ways into audiences' consideration sets, while Hulu and Amazon Prime Video are stepping up advertising to maintain their leads. The combination is driving up spending in the category overall. The video-entertainment category spent 41% more on national TV ads during March 2020 compared with a year earlier, reaching a total of $52 million, largely because of on online platforms including Amazon Prime Video, Hulu, and Disney Plus, according to data from WPP's research arm, Kantar. Amazon Prime Video spent nearly $7 million to promote the series "Hunters" on TV, on top of other campaigns it ran during the month. And Hulu dropped millions on a brand campaign and promotions for "Little Fires Everywhere" and FX's "Devs," to name a few of the big-budget pushes. The uptick in ad spending by video services came as other major ad categories, such as automakers, fast-food chains, and airlines pulled back on ad spending, which helped amplify those marketing messages even further. "It's not just that they're stepping up, it's that everyone else is stepping down and there's a wider opportunity to influence," said Stephen Davis, global product director for advertising-intelligence services at Kantar Media. "We're all seeing more entertainment advertising because there's not as much auto, or there's as much insurance." Streaming TV's marketing war continued in April Data from iSpot.tv, which tracks national-TV ad airings, estimates that prior to lockdown the streaming-video category aired about $20 million to $25 million worth of TV ads per week. Since late March the category has aired about $40 million worth of TV ads per week, the firm estimates. Note: iSpot.tv's media-value estimates wouldn't include discounts platforms like Disney-owned Hulu or Disney Plus may have received from airing ads on parent-company-owned TV networks. The data represents how much the advertising was worth, rather than what it cost. That's partly because there are more services than there were before. Quibi, a mobile-video platform, launched on April 6, and planned a big marketing push for its debut. Disney Plus and Apple TV Plus are months old and still advertising heavily. And NBCUniversal's Peacock and WarnerMedia's HBO Max are laying the groundwork for their national launches, though they haven't rolled out large ad campaigns yet. Some services are also taking advantage of the opportunity to reach people who are home and looking for things to do. "Streaming companies are seeing an opportunity in all of this chaos to complement the natural behavior for people to consume more video during the day," said Stuart Schwartzapfel, senior vice president of media partnerships at iSpot.tv. Apple TV Plus, Hulu, and Quibi broke into the top 60 ad spenders in US TV during the period of March 20 to April 20, joining Amazon Prime Video, analysts at research firm LightShed Partners wrote in an April 21 blog post, which also cited iSpot.tv data. Amazon Prime Video was the only streaming-video service in the ranking during the prior 12-month period. Hulu blanketed the airwaves advertising for "Mrs. America," "Little Fires Everywhere," and FX content that was coming to Hulu, iSpot.tv data showed. Disney Plus pushed new releases like Disneynature's "Elephant" and "Dolphin Reef," "Frozen II," and Pixar movie "Onward," which came to Disney Plus less than a month after it hit theaters. And Apple TV Plus showcased its breadth of titles, as well as new shows like "Amazing Stories," "Defending Jacob," and "Home Before Dark." Digital marketing is an even bigger opportunity for streaming-TV services, some experts say Disney Plus is spending a ton of money on marketing overall. Ad-analytics platform MediaRadar, which has a broad view of ad spending including mobile, web, national TV, print, and platforms like Snapchat, said Disney spent 318% more on advertising during the month of March than it did in February. Pathmatics, which tracks digital advertising, estimates Disney Plus shelled out nearly $99 million in the 30 days ending April 14, more than four times what the next largest streaming advertiser, Hulu (also owned by Disney), spent during the period. Online, Disney Plus also pushed the final season of "The Clone Wars" and "Frozen II," and Hulu promoted subscription add-ons like HBO and Starz, the Pathmatics data showed. Quibi, which said prior to the pandemic that digital advertising would be a big part of its launch strategy, spent more $10 million on digital ads, according to the Pathmatics data, which includes most US desktop and mobile advertising, as well as advertising on Facebook, YouTube, and Twitter. Anecdotally, it appears Quibi has also been all over Instagram and TikTok, but those platforms were not included in the advertising data that Business Insider analyzed. "Why fish where the fish aren't?" Rich Greenfield, analyst at LightShed, told Business Insider via email. "I don't understand heavy TV ad spend when everyone is on digital devices ... The spending should be on YouTube, TikTok, Snapchat, Twitter, Instagram, etc." Netflix hasn't boosted ad spending but may be marketing more efficiently Digital marketing is where industry leader, Netflix, has been focusing much of its ad efforts of late. In February, before lockdowns were widespread, Netflix partnered with Samsung to promote its originals with exclusive outtakes and behind-the-scenes videos for subscribers with certain Samsung Galaxy smartphones. In April, Netflix teamed up with Instagram for a series of social videos that feature talent like Caleb McLaughlin from "Stranger Things" discussing issues young people are facing, alongside mental-health experts. today at 4pm PT / 7pm ET — understanding and adapting your self care needs can be really challenging when you’re in quarantine. Noah will be interviewing Dr. Ken Duckworth from @namicommunicate to discuss self care and how it may look for different types of people. So...do you Wanna Talk About It? A post shared by Netflix US (@netflix) on Apr 9, 2020 at 12:58pm PDT on Apr 9, 2020 at 12:58pm PDT Despite Netflix's stellar subscriber growth in recent months, the streaming company has not appeared to spend more on advertising, which may suggest it's getting efficient in how it's marketing. "Advertising CPMs are down significantly, across all forms of media, driven by a combination of increased consumer usage and decreased advertiser demand," analysts at equity-research firm Bernstein wrote in an April 22 note. "This creates opportunity for Netflix to either: a) deliver the same advertising weight, spending a lot less money; or b) spend the same amount of money, delivering much more advertising weight." MediaRadar said Netflix's spending has remained steady week over week. From January through March, when Netflix added more subscribers than during any other quarter in its history, the streaming company said it spent 18% less on marketing globally than it did a year earlier. And Pathmatics estimated the Netflix spent about $9 million on digital marketing during the 30 days ending April 14, down 17% from a year earlier. There have been some subtle shifts in Netflix's marketing tactics. The Pathmatics data suggested that Netflix ran a broader range of online campaigns than in the year-ago period, when it was primarily pushing "Bird Box" and "Our Planet." This year, it promoted the platform as a whole, as well as shows including "Love Is Blind," "I Am Not Okay With This," "Elite," "Ozark," and "Tiger King," the data showed. MediaRadar also spotted a slight shift in Netflix's spending toward TV in April. "Netflix is way more committed to digital than everyone else," said Todd Krizelman, CEO of MediaRadar. "However, their digital spend is decreasing. They're putting more money back into TV just in the last few weeks." Netflix has had some recent success with TV ads. In March, Netflix ran a $1.2 million campaign for the original film "Spenser Confidential," its largest TV push during the month, the Kantar data showed. The campaign paid off. Netflix said the movie was watched by 85 million households in its first four weeks on the service.Join the conversation about this story » NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America