How appropriate that Nielsen’s new Cross-Platform Report is called “Shifts in Viewing.” You would have to be insensate not to know that people are consuming more digital video. We know it because our video content publishers are seeing rapid upticks in traffic. In summary, the report says that although TV viewing has declined, most sharply among young people, not only has digital video viewing gone up, but the total time people spend interacting with has increased. Therefore, as Nielsen says charitably, we should not look at this shift as a game with winners and losers, but instead as an opportunity for everybody. Opportunity indeed. This must be what newspapers were told when news moved online twenty years ago. I’m not sure the opportunity here is for TV stations as much as it is for advertisers, who now have a solid new channel, mobile video, through which to reach those customers who have disconnected from TV. And according to Experian Marketing Services, that number is now 7.6 million households — up 44% in the past four years. But not having TV reception doesn’t faze them. fact, year over year among the younger 18-34 demo media consumption has grown four percent overall, two percent among Hispanics, eight percent among Blacks, and ten percent among Asians. That’s because the young are looking at TV-like programming on their phones and tablets.. Nielsen says, “We are seeing year over year overall growth in digital use of sixteen percent among persons 18-34 with fifty-three percent growth in digital video viewing. ” But the truth is that not only the young are increasing the amount of video they consume online. Fast growth is also reflected in the 35-49 group, and the 50-64 demographic is surprisingly the fastest growing group of digital video consumers. Digital video consumption in this group increaed 60%. TV viewing is down in every age group. And we look for that trend to continue, because this report shows that the highest increase in number of hours spent consuming video are spent on either time-shifted TV or mobile phones. Once the time-shift pattern was established, it became only a matter of time before video shifted online, and especially to the smart phone. As a culture, we’ve made a shift and we won’t be going back. Indeed, as phone screens get bigger, we expect video viewing on mobile phones to increase even faster.
Nielsen’s 2014 Advertising and Audiences Report, available as a free download, highlights the complexity of reaching an audience that is fragmenting and changing. While this report still sees TV as garnering the largest share of advertising dollars, the growth in TV advertising is slowing down, and the prices for TV spots are declining with the difficulty of reaching the audience on many different platforms, most of them mobile.
TV as spend has grown only 3% over the last year, and the cost of a single 30-second spot has dropped $1000 over the past five years. Where will the money be going? To a diverse marketing mix that will probably change every year until marketers figure out exactly where the consumer would like to see their messages.
And that’s a new kind of consumer. After years of watching the Baby Boomers age in America and Europe, a new population is emerging; it is younger, more racially and culturally diverse, and more tech savvy. It is also global by definition, since so much TV is time-shifted and streamed. Even people sitting on the couch watching the familiar TV set are different: 86% of smart phone owners are using a second screen while watching TV, and they are increasingly seeing mobile ads rather than those on TV. Media planners are adapting with cross-platform campaigns. But how do we measure which parts of those campaigns are effective? Nielsen says,
As accountability from the largest global advertisers is becoming
increasingly important, marketers and media planners seek ways to
optimize advertising efforts in a way that yields return on investment
through measurable, quantifiable results that align directly with overall
business objectives. While massive amounts of data are available,
sorting through it all in a straightforward, easy-to-understand way that
provides specific, ad-performance based insights is the true challenge.
Right. There’s data enough to drown a media planner, but which numbers matter?
It’s still an open question how best to measure these kinds of campaigns, but we’re moving with our customers toward something that makes them feel they are getting the ROI they deserve. For ZEDO and ZINC customers, the metric for our video ads is now Cost Per Complete View, something we can easily track and provide to the advertiser on our network, and something advertisers care about. Our advertisers are definitely concerned with unduplicated Reach across platforms, but as Nielsen adds, “Resonance,” and “Reaction,” — sometimes translated as engagement. If someone likes a video ad enough to finish watching it, the ad is almost certainly viewable, contains the right message, and carries that message with powerful creative. When you put an ad like that into a high impact format like InArticle, where it has the potential to reach a text reader, you have what it takes to catch the attention of a premium mobile consumer.
A snarky Ad Age columnist, Dave Morgan, has said that marketers will have a tough time shifting 10-20% of their TV ad dollars online as they’ve said they wanted to:
With the upfront looming, and increasing pressure to be innovative, many advertisers and agencies today are in a headlong race to shift and diversify their TV ad budgets, taking greater advantage of multiplatform-platform “video.” And why not? TV advertising is expensive and campaign reach is declining thanks to audience fragmentation.
However noble and well-intentioned, however, the expectations of many of these advertisers and agencies are unrealistic, particularly those calling for 10% to 20% budget shifts out of TV into digital video. That’s because, you see, 97% of all video viewing in the U.S. still occurs on TV. Yes. Whether the data is from Nielsen, Pew or eMarketer, all agree that only a small fraction of video viewing in the U.S. today occurs on devices other than the TV.
Yes. And no. Because this data is misleading.
First, reach in the old sense of the word — mass markets — doesn’t even exist on TV these days. To reach the consumers major brands need to reach, they already need to diversify channels and platforms. When they say they are shifting TV ad dollars, they may mean they are going for integrated or converged campaigns across TV, print, and digital. That’s what they ought to be doing, because the new research says recall is much better in converged campaigns, as are conversions.
Second, the digital video audience skews younger and better educated than the TV audience, which means a more powerful consumer is watching video online. And that same consumer might be watching video on multiple screens simultaneously, which Nielsen has just begun to measure.
Third, Morgan may be thinking that creative dollars have to shift. But they don’t. We have high impact formats, especially InArticle Video, that allow advertisers to take standard IAB creative units and insert their already produced TV ads into those units. When a viewer mouses over the ad, the audio begins to play, and if she clicks on the ad, it expands to full screen. This format is the most engaging in the industry today; the statistics on completion and viewability are off the charts.
So a blanket assertion that there is nowhere to advertise with video dollars online, or that its reach is not comparable, is failing to see the forest for the trees. Digital is global, which is automatically greater reach, and it is on 24/7, rather than in a specific time slot. Digital video ads should be as good as TV, they will be as good as TV, and in terms of the old standards of reach and frequency for the dollars, they have TV beat by a mile.
The future of the cable business may not include TV, says one television executive.
Predicting that transmission of TV will move to the Internet eventually, Cablevision Systems Corp. Chief Executive James Dolan says “there could come a day” when his company stops offering television service, making broadband its primary offering.
We’ve already noticed the shift of TV ad dollars online in our ZINC business, where TV networks are promoting their fall shows guess where? Online. They’ve begun to run our inArticle video format, which expands to fill the screen for a TV-like appearance, with our online publishers. And the CPMs are much higher than our publishers have been getting with more traditional ad units.
Part of the shift of ad dollars from TV to online video is the stratospheric rise of mobile; for the first time last year, consumers spent more time playing with their devices than watching television.
Digital agencies are shifting the dollars first
Digital ad agencies believe that the effectiveness of TV advertising is on the decline, and are making a move to online video, according to a survey conducted by Rocket Fuel among 149 digital agency professionals, the majority of whom directly authorize media spend. 8 in 10 respondents plan to spend more on online video this year, even as 60% recognize there are serious barriers to shifting money from TV to do so. Chief among those barriers? Building reach (58%) and prior budget commitments (56%).
As soon as they’re told they can reach their target audiences online, and as soon as their prior budget commitments expire, we look for TV dollars to shift even faster, following the audience online.
Even Variety has noticed the shift in momentum:
… advertising on digital media is primed to explode, according to projections from Magna Global. The media research firm expects digital ad revenue, cobbled from a variety of areas, to rise 13.4% to $113.6 billion in 2013. Meanwhile, TV ad sales are projected to increase just 2% to $196.5 billion.
To be sure, TV remains the biggest recipient of ad dollars, but winning cash is growing more complicated, as advertisers yearn to test out social media and mobile devices.
And here’s another ingredient in the new media mix: online outlets can do more accurate targeting than TV, and can run contextual or native ad formats, which is difficult to do on TV (although Mad Men tried it). In study after study consumers have indicated a willingness to see ads they believe are relevant to them, and an almost rabid intolerance for irrelevant ads. TV’s mass broadcasting model makes it far more difficult to target with online’s precision.
So we will continue on our path to develop innovative formats for online video advertising, and perhaps hasten the shift by providing better ROI for advertisers and more sustainable income for publishers.
Followers of this blog know that I have been encouraging our industry toward more inspired online video ads. This is because the statistics are already emerging to prove that video will be the most effective form of advertising for online publishers looking to get premium CPMs. And it will be the most effective options for brands wanting to reach and engage customers easily and quickly with their already tested TV ads.
Although we’ve heard quite a bit about how adept this new generation of digital natives is with ad blocking software, they don’t seem to be using it for online TV. A new study by YuMe and Frank Magid Associates tell us that connected TV viewers actually prefer ads to paid models. According to this study 30% of all Internet homes have TVs connected to the Internet, and users of those sets are generally receptive to advertisements.
In addition, “almost 90% of connected TV users reported that they noticed ads on the platform, particularly pre-roll ads. The majority of those users also interacted with ads and nearly one-fifth of users (19%) subsequently purchased a product as a result of an ad they’ve seen.”
This is good news both for online publishers and brands. We do believe that in the next five years, the best advertising will appear either on tablets or streamed to TVs from the Internet. So the entire cable-cutting argument will become moot as viewers will indeed swap cable for Internet. They will use their big TVs as another option for a screen. They will be using a variety of “computers” such as tablets, Roku (a ZEDO customer), video game consoles, phones and set top boxes to connect the TV screen to the Internet.
The message is clear: viewers are accustomed to the traditional model of TV programs interrupted by advertising and are now willing to engage with it as well. In this viewing environment, for our partners in the publishing and advertising industries, ZEDO‘s new Full Screen TV ads on the web will prove to be a big moneymaker.
When you are in the middle of a disruptive time in history, it’s sometimes difficult to maintain perspective. The publisher ecosystem is right in the middle of such a time. It has already converted to digital, but it hasn’t quite figured out the best monetization models.
The length of time ZEDO has been in the ad tech business has given us a chance to reflect on what is happening and look forward a bit into the future. Here are five major trends we see approaching on the horizon. Some of them are already apparent, but some are just at the edge of a transformation in the advertising and publisher ecosystem.
1. Banner ads will decline in effectiveness. Advertisers will instead rely on TV Commercials (videos) that run on the web. This has already happened. Click-through rates have dropped from .063 in 2009 to .01 in 2011. And they’re only going to go further down, which has reduced most standard sized banner ads to low end commodities.
2. TV Commercials will get better. Both on TV and on the web they will become information sharing or entertainment based content, and not hard sells. That’s because new tech-enabled consumers can choose not to view them if they’re not worth seeing. Ordinary TV advertising has suffered from Tivo and other on-demand and time shifted viewing habits. The new commercials will look more like high end superbowl ads. Infomercials, or performance-based ads, will give way to compelling advertising.
3. Consumers will search for ads. Active shoppers will proactively search for and watch these new types of informative video commercials. They will want to see what is on offer – especially when they are researching a product. So the line between content and advertising will continue to blurr. Brands will therefore move more and more to “content marketing,” in which they generate actual content rather than mere “commercials.”
4. All about the tablet. This new device not the TV, will be the primary way that brand advertisers reach their audience. Even if the content is streamed to the TV set, the place it originates will be the internet, on the tablet. News consumption on tablets goes up on a monthly basis, and mobile devices increasingly accompany consumers into the bedroom.
5. Publishers will try to make ads difficult to ignore. Publishers who have to make money for high quality content will become more comfortable asking or even demanding that users watch these high quality TV ads in return for getting access to content. The better the quality of the TV ads the more the publishers feel comfortable doing this. And with better quality video ads, consumers will be less inclined to use technology to avoid them. So overall as the stats clearly show, the ad supported content model is compelling: Some 60% prefer 15-second to 30-second ads over a monthly subscription or the pay-per-view model for short-form video.
For years, ZEDO has led the market toward better online advertising. We think of ourselves as innovators without being risk takers, working to ensure the success of our publisher partners by helping them realize higher CPMs from innovative ads.
At the same time, we help provide brands and agencies a better return on investment with our High Impact Formats. And we do that without requiring that creative be customized, because our formats fall between standard ads and rich media formats. Our High Impact Formats take advertisers’ existing creative without customization and do more with them. And the formats do work well: users see them and they allow great advertising.
Our vision is a win-win in digital just like the one we are used to in TV. The content provider benefits. And the advertiser benefits.
So we understand why our customers get so excited about our 99% viewable impressions formats. The sales people want to sell them: they get better results and premium CPMs. We know that sometimes the editorial teams and the UI teams are suspicious that users will react react badly. We can understand that, because publishers also have brands to maintain and build. And we therefore offer 9 different high impact formats AND many settings to control how they look on the site.
Now we’ve been serving these formats long enough to know that users actually don’t mind them – some even like them. We have formats that shuffle, formats that contain video, formats that play full screen video and formats on travel sites that look like beautiful content pieces.
That’s why we call them “high impact formats,” they are fun and cool and people see them. They are not standard, boring old banner ads. We’d be interested in showing them to you and asking your feedback.
At last week’s ComScore State of the Internet Webinar, the internet research firm presented data indicating mobile users would surpass desktop users in 2014. So why hasn’t the mobile advertising problem been solved? In fact, why do some tech pundits think that mobile advertising revenues will NEVER materialize, and are only “a mirage’?
We think it’s because most publishers have not applied real creativity to mobile advertising. They’ve been content to take the same performance-based ads they used on the desktop–the ones that they can only sell at low CPMs and the same ones that don’t perform well for brands–and move them to a smaller screen.
This won’t cut it. It’s what drives Jean Louis Gassee to say
Now we have advertising on smartphones, and we’ve fallen into a comfortable, predictable rut: “It’s just like Web advertising on the PC, shrunk to fit.” We see the same methods, the same designs, the same business models, wedged onto a smaller screen.
Mobile needs new formats and new creativity. Throughout the past year, we at ZEDO have created new formats that we refer to as “high impact”: they are the inView, the InView Shuffle Ad, and on-page video. These formats test out as providing 99% viewable impressions, no matter where they are on the page. They’re designed to be viewed on tablets, and even on smartphones. Best of all they don’t require more work from the advertiser – infact they require little or no work from the advertiser. We just take standard “made for TV” commercials and run them on our high impact formats.
These few formats themselves are already starting to become compelling. One TV station website in Maryland sells them at $20 CPMs. Theor sales team loves to be able to show online video ads in a great way so that the advertising works as well as TV advertising- or maybe better.
Now it’s time for advertisers to take a good look at these mobile formats and run their best TV ads on them. It does, after all, take a marriage of innovative form and great content to create a compelling ad. While some agencies are already doing this in per-roll video advertising campaigns, these new formats are a great opportunity for most brands and agencies to do what they still love to do best — run some great television advertising that is memorable and effective and has huge reach everyday.