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Articles by: "Todd Krizelman, CEO – MediaRadar"

Revenue

What Hulu’s AVOD success story tells us

Streaming video has long been synonymous with Netflix. However, ad-supported services (AVOD) has started growing in share. According to Nielsen, a third of U.S. streaming households use a AVOD service today, and that viewership is only going to continue to grow this year.

Amid this growth, it’s worth looking at what successful AVODs are doing to break through the noise and succeed. Who better to learn from than Hulu, one of the original AVOD platforms? Here are some things that set Hulu apart from the pack and that other streamers should pay attention to:

Hulu’s tiered structure

Streamers that launched in 2020 bet big on gaining subscribers. So, they gave their platform away for free or in bundled deals. However, we’ll soon start to see subscribers question whether they really need every service they’re subscribed to, especially as the pandemic comes to an end.

Platforms that offer tiered options, including a much cheaper or free ad-supported version, will emerge victorious. With an ad-supported model, consumers are less likely to cut a platform when reviewing their entertainment budget. Hulu is ahead of the pack as it already has a tiered model with an ad-supported offering at a mere $5.99 per month.

They make up the revenue because CTV is very attractive to advertisers today given its popularity among consumers. Hulu has been able to take advantage of this trend with major brands. Our platform found top advertisers on Hulu during February 2021 include DraftKings, Samsung, Mercari Mobile App, Verizon, Kia, Taco Bell, T-Mobile, TurboTax, HelloFresh and Geico.

Hulu’s innovative partnerships

It’s not just the tiered model that set Hulu up for success, Hulu has also made a number of strategic and competitive partnerships to take on other streaming giants. Of note, in 2019, Disney acquired 21st Century Fox, which included the 30% stake Fox had in Hulu, giving them a 60% stake. This meant investment in original programming increased significantly.

Taking advantage of the rise in audio streaming, in 2018, Hulu and Spotify announced a bundling partnership that gave users a discounted rate to two very popular platforms. Finally, earlier this year, Hulu entered an agreement with ViacomCBS (rebranded to Paramount+) to include continued carriage in the live TV service of CBS broadcast stations. This also includes CBS Sports Network, Pop TV, Smithsonian Channel, and the CW, as well as continued distribution of Showtime as an add-on.

Hulu as a linear TV substitute

Network partnerships are key for making customers happy. One of the most critical factors of these partnerships is the turnaround time for linear television shows appearing on Hulu. This all depends on what network the show is from, and what type of subscription the customer has.

For example, Fox, ABC, ABC Family, and ABC News shows will generally be available the day after broadcast on Hulu, otherwise they are only available eight days after broadcast online. For a cord-cutting country, this is an invaluable value add. It is worth noting that this is separate from the live TV programming that the platform (which launched in May 2016). Even if the viewer doesn’t subscribe to Live TV, they will have access to new shows the day after they first air.

Content is hugely important on streaming channels. As we see other streaming services launch, it’s important to note the differences in content. For example, Netflix is known for offering the widest selection of movies. Hulu offers a larger collection of current-season TV shows and a smaller selection of movies. This means different viewership and advertisers know it. A full 60% of Hulu advertisers are not advertising on any other ad-supported OTT platforms. These stats tell us that Hulu’s advertisers are unique and that they find value in Hulu’s audience.

As the pandemic comes to an end and people head back into offices and social activities, now is the time for streamers to open an ad-supported tier, develop strong partnerships and differentiate their content offerings. Despite the change in the time spent at home coming soon, we predict that AVOD platforms like Hulu will only grow in popularity as a channel for marketers to reach engaged audiences. The lessons that Hulu can teach new streamers at this time are priceless.

Advertising | Industry-Research | Perspectives

Media industry predictions for 2021: OTT, video, social, and more

There is no doubt that 2020 was a year for the books. The pandemic turned nearly every aspect of life upside down, affecting many industries. While some were severely hurt, others greatly benefited. The advertising industry was no different, experiencing ups and downs. 

Looking ahead to this new year, we predict there will be some major turning points, particularly in OTT, social media, video and conferences. Here at MediaRadar we’ve taken a look back at 2020’s unique advertising trends and predicted what 2021 will bring. 

The OTT shakeout will play out faster than expected

Last year, we predicted that the numerous OTT launches would lead to a crowded, overly competitive market. Since then, we’ve seen a significant movement of advertisers to the new platforms and the pandemic has been a large catalyst of this shift. 

For 2021, our prediction remains, although we think the process is accelerating. What’s causing it to speed up? 

Competition in the OTT space is bruising. HBO is going to get a seat at the table, as they’re bringing blockbuster movies directly to their platform. Like a game of poker, they are raising the stakes. Moving forward, it will be more expensive for others to win if they don’t match the quality and breadth of offerings currently in the market.

Disney and Netflix are also consuming a disproportionate share of the winnings, with Disney’s growth happening much faster than expected. These platforms’ tremendous success, however, may leave fewer consumers able to buy alternate paid subscription services (SVOD), as households won’t subscribe to every OTT service.

Many of the top firms, including Disney and AT&T, are saddled with meaningful debt. This will encourage firms to sell their under-performing or less-core assets. For example, AT&T sold Crunchyroll to Sony in December 2020. Wall Street Journal reported, “Crunchyroll is the latest asset that AT&T is cutting loose to trim the debt load.” 

Years worth of change in the OTT space were squeezed into 2020. This means the endgame will arrive faster than anticipated.

Social will remain powerful in 2021, but year-over-year growth will be tepid

While 2020 disrupted many types of business models, social media was not one of them. 

In 2020, Facebook’s ad sales performance was tremendous, as seen in its stock ending the year up 83% from their March lows, while popular app TikTok claims to have reached almost 20% of Americans every single week.  

But, 2021 will offer fewer advantages. Take away the mandatory stay-at-home quarantine, as well as the most generous presidential election ad spend ever, and what is left could be more challenging. There could also be a hostile regulatory environment, with bi-partisan support to curb ad targeting. Apple has already promised to disable the ability to track and target users across apps on iPhones in early 2021.

Time spent on video will decline

Online video certainly benefited from the increased time people spent at home during the quarantine. But, as the population is vaccinated, the amount of time spent away from our  screens will increase.  

Based on Alphabet’s quarterly filings, YouTube revenue was up 30% year-over-year (YoY) in Q2 2020 to $5B. In the summer of 2021, it will be a challenge to reproduce these numbers, especially in Q3 when people spend more time outdoors. 

The return of in-person events will bring much-needed relief 

Live events have proven to be the hardest area of life to migrate online during the pandemic.  This is not a case where people feel virtual has been a positive substitute.

In business, live trade shows allow for professional and social interaction, facilitating deal-making, etc. Without the ability to meet in person, the demand for lead generation has increased significantly. 

Luckily, we expect the second half of 2021 to be a major turning point for the conferences industry, with in-person events returning en masse. Informa, one of the largest event companies in the world, saw its stock price shoot up 21% in a single day when the efficacy of early vaccines was announced. 

Advertising trends will look more like 2019 in the second half of 2021

The popular logic today is that the world has changed and, even when vaccines are administered and the world begins to emerge from Covid-19, we will not be returning to what we knew before. However, it will not be as radically different as some have hypothesized.

In 2020, we saw markets like live events, travel, and restaurants drastically reduce their ad spending as they cut costs to survive. Meanwhile, children’s toys, food subscription boxes, RV’s, and communication services like Microsoft Teams accelerated their advertising to capitalize on opportunities in the market. 

However, we do not expect this to last, especially as we get into the second half of the year. For example, we expect travel companies to begin advertising soon, to attempt to lure consumers and capitalize on pent-up demand. China’s Golden Week holiday offered a preview, as over 500M people traveled during the holiday, 80% of pre-Covid levels.

Looking ahead 

Not only will 2021 bring the much-needed Covid-19 vaccine, but also some much-needed relief for businesses of all kinds. In the advertising space, we look forward to seeing the industries most impacted by the coronavirus return to more stable advertising spending. 

The “Streaming Wars” will be interesting without quarantined consumers, the return of live, in-person events will restore a key part of the B2B market, and much more. Most importantly, we look forward to the breath of fresh air that this new year will undoubtedly bring.

Perspectives | Video

What the future looks like for OTT

In 2020, the over-the-top (OTT) landscape shifted greatly, ushering in a new era for subscription-based OTT video streaming services. New players like HBO Max, Disney+, and Peacock joined the scene. All the while, service providers like Netflix, Hulu, and Amazon Prime Video continued to dominate the market. 

So, what is next? OTT services are predicted to generate just over $158 billion in ad revenue by 2024. 

As OTT experiences these major growths and investments, it brings about some key advertising questions – What are the best practices for selling advertising in this emerging channel? Which channels have the best measurement? How is OTT different from linear TV? And, more. With that, MediaRadar hosted a virtual panel to explore these recent and upcoming changes in OTT, plus what the future holds for this type of advertising.

Los Angeles Times reporter Wendy Lee moderated the discussion. And panelists included Bill Condon of Xumo, Justin Gutschmidt of Premion, and Matt Graham of Acorn TV, as well as myself. Here is a recap of some of the key insights discussed. 

Ad innovation 

While TV advertising has been largely the same for decades, OTT platforms are changing the game, offering new ways for advertisers to get their messages across. Hulu, for example, has a choose‐your‐own‐adventure‐type ad option, allowing viewers to select which of multiple ad options they would like to watch. Hulu also uses interstitial and binge ad options, a format where viewers can watch all their ads at once so they don’t have to be interrupted later. 

After a lifetime of seeing TV ads presented in one way, these new, more creative ad options feel refreshing. They also help keep audiences engaged. With more of a change in what they’re watching, most people are much less likely to get bored. In fact, Hulu claims that the options provided by their platform lead to a 150% increase in brand recall.

Targeting 

OTT advertising offers many advantages to brands looking to get more for their money, as well as more views, more click‐throughs, and more sales, and provides opportunities to get a message in front of the right people at the right time. Leveraging the audience data that OTT channels provide, advertisers are able to produce highly targeted campaigns. They can segment audiences based on geographic location, demographics, preferred content, and much more. Advertisers can also capture impression data for guiding future ad buys.

By narrowing down an ad’s audience to include only those to whom it is relevant and applicable, brands drive awareness. They also save money by not showing ads to obvious dead ends. Audiences also appreciate not being shown ads that don’t apply to them.

Consolidation 

As OTT content becomes more popular, the industry is starting to consolidate. For example, Xumo was acquired by Comcast in February 2020. According to Bill Condon of Xumo, being tied to a larger company has boded well for them. 

“Right before the pandemic hit, we were doing well. But, being tied to a larger company has been really beneficial. I’d say there’s four key areas in terms of what has been helpful to Xumo,” Condon explained.

Condon shared that distribution, discoverability, content, and data were four primary benefits of the merger for Xumo. With Comcast’s help, Xumo now reaches a wider audience and is easier for potential audience members to find. It has also seen a large increase in the content acquisition budget, and has access to more data and data processing tools. Other companies are likely to undergo similar merges and find similar benefits, moving forward. 

The number of unique OTT providers will likely decrease, now that all of the major players have introduced their OTT platforms. The average OTT consumer is willing to pay for about 3.2 platforms. Past this threshold, they are willing to accept ad-supported OTT, which major leaders already offer (i.e. Peacock and HBO Max starting next year).

What’s Next? 

At MediaRadar we track what happens to our customers and, out of those 2,400 customers we track, there was more M&A activity last quarter than any single quarter in our ten years of doing this. As for the number of OTT platforms, this consolidation is a strong sign that the industry is maturing. As the platforms band together for various benefits, we will soon learn what else they can offer. 

With many big name players already on the scene, the future of OTT advertising will be interesting. As advertisers continue to capitalize on the benefits of OTT, it is only a matter of time before we begin seeing even more of its potential and profitability play out. 

Advertising | Industry-Research

The industries surprising us with their ad spend in correlation to Covid-19

There is no doubt that Covid-19 had a negative effect across industries. However, some sectors, including Consumer Packaged Goods (CPG) and bicycle brands, have actually done well during this time. Throughout the pandemic, these industries have experienced significant and unprecedented increases in sales. With those increases, the same industries upped their advertising spending as well. 

Here at MediaRadar we took a deep dive looking for industries that have increased ad spend levels in response to Covid-19, as well as those working towards a recovery. Back in June, we analyzed how the ad industry fared during the pandemic, highlighting the industries that had just begun bouncing back. Now, three months later, we’ve reassessed how those industries, plus others, are progressing. Based on what we’ve found, things are continuing to look up. 

Industries that increased ad spend

Pet brands – Pet adoptions experienced a dramatic increase during the pandemic. In fact, the Humane Society noted that in March and April there was a 34% year-over-year (YoY) increase in the number of pet adoptions. Capitalizing on this trend, pet brands (i.e. pet food, grooming supplies, etc.) upped their advertising, with the most recent weeks spend gap showing that pet brands’ ad spending has jumped 52%, YoY. 

Bicycles – Covid-19 caused many to avoid public transit. It also afforded people more time to take bike rides for leisure and as alternative exercise to gyms. These are just some of the reasons why consumer interest in bicycles significantly spiked during the pandemic. Since March, ad spending from bicycle brands is up 56%, YoY. As a matter of fact, the N.P.D. Group, a market research company recently reported that in March, sales of commuter bikes was up 66%, YoY, and sales of leisure bikes was up an incredible 121%, YoY. 

CPG products – As consumers have become extra cautious, and care more than ever about cleanliness, bath and shower products, such as body wash, soap and hand sanitizer have increased marketing efforts. Since March began, ad spend from bath and shower products is up 81%, YoY. Unilever reported that in Q2 of 2020, body wash sales increased 12%, hand soap sales increased 155% and hand sanitizer sales increase was off the charts. Ad spend from home fragrance brands are also up 51%, YoY. Since March began, every week except for one, ad spend in the CPG category is up when compared to its 2019 counterpart. If you’re going to be stuck at home all day, it might as well smell nice.

Commercial furniture –  It probably comes as no shock that as the world was forced to work from home. Thanks to Covid-induced lockdowns, the commercial furniture category saw an extreme increase in ad spend. According to a survey by YouGov, 54% of office workers didn’t have any sort of home office set-up before the pandemic. With everyone now purchasing office furniture for their homes, commercial furniture ads, normally reserved for the world of B2B, have entered the B2C sphere. Year-to-date, ad spend from commercial furniture brands is up 225%, YoY, with no signs of slowing down. 

As reported on DCN in June, additional industries to increase their advertising spend in response to Covid-19 include RVs, food subscription boxes, video games, skincare and childrens toys. Each of these industries is still outspending their 2019 levels, with food subscription boxes jumping 235% and RV’s jumping 378%, YoY, since April, respectively. 

Industries on the Mend 

Automotive – The automotive market continues to slowly but surely recover, as ad spend nears levels similar to last year (2019). During the week of August 10th, automotive ad spend was down just 8%, YoY; the industry’s best mark since the pandemic began. For automakers who are still reporting sales, results are getting better by the month. While Toyota’s sales were down YoY in July, they were still at their highest point since the pandemic began. Also in July, Kia and Hyundai were both roughly flat, while Mazda’s sales were up 3.4%, YoY.

Hospitality – Hotel brands seem to have found a new equilibrium for weekly advertising. Since mid-June, ad spend levels have consistently remained around $4M per week. While this is up nearly four times when compared to April and May, it remains down by about two thirds, YoY. According to STR, a hospitality industry data firm, US hotel occupancy for the week ending August 15th was at 50.2%. While this remains down 30%, YoY, it was the 17th week of increases in the past 18 weeks. 

Bars & Restaurants – Bars and Restaurants are seeing ad spend slowly return to levels consistent with last year (2019), with national chains being the main drivers of the recovery. During the week of August 10th, ad spend was down only 10%, YoY, its best level since mid-March. According to NPD, customer transactions at major restaurant chains were down 44%, YoY, in mid-April, its worst point. But, after 21 weeks of being down double digits, sales were down just 9% during the week of August 10th, signifying major improvement. 

Electronics – Consumer electronics experienced a major spike in sales during the early days of the pandemic, however, it quickly fell off. Best Buy reported a surge in sales as consumers transitioned to work from home, with online sales alone up 242% in Q2, YoY. However, Best Buy’s executives were quick to say this was a temporary spike as people adjusted to quarantine life. During the week of June 8th, after ad spending hit a low point of -70%, YoY, spend has been recovering and is now down only 20%, YoY, with sub-categories including cell phones, computers and WiFi equipment helping to drive the recovery. Back-to-school may have provided another boost, as parents are much more likely to be shopping for computers and tech instead of clothes or backpacks this year. 

Shock and recovery

The early days of the pandemic were a shock to the entire country, as well as most of the ad industry. While the road to recovery will not be easy or fast for every industry, our data does show that many are making strides. And while it may not always be the usual players buying up ad space, we’ve found that advertising remains an important part of any industry’s strategy, so long as they have products they can sell.

Industry-Research | Revenue

Advertising’s return to “normal” following Covid-19

Nearly every industry has faced unprecedented changes and challenges due to Covid-19. As a result of shifts in the economy, sectors have had to adjust their advertising spend. Some have fared better than others throughout the past few months. But with the U.S. entering the path to reopening and businesses slowly beginning to return to “normal,” more changes are upon us. Advertising is now making its own comeback. 

Here at MediaRadar we took a deep dive into how the ad industry has fared throughout the pandemic and the sectors that are beginning to see a rebound. 

How the advertising industry has fared 

In January and February 2020, ad spend was up 8% YoY. When Covid-19 began impacting the U.S., ad spending plummeted. According to our data, the trough occurred the week of March 22, when spend was down -36% YoY. 

Now, every state in the U.S. has started reopening business in some capacity and the ad dollars are beginning to return to the market. While some industries will be slower to return to “normal” than others, many who saw steep declines early in the pandemic are beginning to advertise more regularly again.

Industries making a rebound 

Automotive

Amid the country’s reopening, spend from the auto industry is accelerating. Ad spend during the week of May 24 was nearly double where it was just three weeks earlier. Brands reviving their spend in recent weeks include Toyota, GM, Nissan, Subaru, and others. 

Total car sales also recovered somewhat in May. The annualized sales rate, although still down nearly one-third YoY, jumped 42% MoM in May. China, which is further along in recovery than the U.S., saw car sales increase 12% YoY in May. This marks the second consecutive month of YoY growth. In the U.S., many consumers who do not own cars are now considering buying one to avoid public transit and ride-sharing, and to enable road trips and travel closer to home.

Domestic & regional tourism 

Domestic tourism is beginning to pick up, as the pandemic eases across the U.S. The week of May 24 saw more than 3x the advertising spend than just one month prior, with more than 350 active local tourism bureaus buying.

YoY, spend during the week of May 24 still remains down 63%. However, this is a stark improvement over April, where spend was down 89% YoY. 

There are other positive signs for the industry. Airbnb, for example, is experiencing a surge in interest, with more U.S. bookings between May 17 and June 3 than during the same period last year, much of which is being driven by relatively nearby trips. American Airlines is also boosting its domestic flight schedule as they see increased domestic demand, specifically to places like Florida or mountains out west. According to The Economist, Google search data reveals that travelers are much more interested in domestic travel for the remainder of 2020, favoring smaller attractions over large tourist destinations. All of this is likely to lead to a further increase in domestic tourism advertising.

Hair care 

From March 8 through May 16, hair care ad spend was down 31% YoY. However, the last two weeks have both been up YoY, the first time since the beginning of March. 

In April, Unilever estimated that people were using personal care products eleven fewer times per week due to shelter-in-place orders. Unilever’s CFO specifically called out shampoo as an example of a product consumers are using less as they stay indoors. But with people beginning to go outside again, hair care ad spending has now picked back up to levels consistent with last year.

Real estate

Real estate advertising was hit hard amid Covid-19. It was down 55% in April when compared to the January through March average. But ad spend levels in mid-May were 34% higher than where they were in early April, showing an early sign of recovery. 

States that reopened earlier, like Texas and Florida, have seen real estate ad dollars return more quickly. The average weekly spend in April ($6.7M) was down by more than half, 55%, when compared to the average weekly spend in January – March ($14.9M).

New home sales also increased 21% YoY in May, according to a survey of 300 U.S. construction companies. And mortgage applications for the week of May 24 were up 17% YoY, their seventh consecutive week of increases, according to the Mortgage Bankers Association. Experts attribute the rise to pent-up demand, as well as a desire to move into a new home before a possible second wave in the fall.

Health & fitness services 

The reopening of gyms around the country has resulted in a strong bounceback for health and fitness brand advertising. Ad spend during the last week of May was at its highest point in 11 weeks, bringing the last three weeks up to YoY levels.

Normally in the summer these brands typically begin to taper off their ad spending. But this year, they are ramping up to get customers back. Many states such as Minnesota, Florida, California, Pennsylvania, and others have begun reopening gyms, However, visitors will find things different when they return – with spaced out equipment for social distancing, caps on capacity, stricter hygiene rules, and more.

The road to recovery 

While a full recovery is still far off, we can clearly see some segments beginning to reemerge and put ad dollars back into the market.  It will take more time, But data that shows early signs of recovery is certainly a great start. It helps show that industries feel confident and optimistic about the road ahead. 

Advertising | Industry-Research | Perspectives | Revenue

An analysis of the spend amidst Covid-19: threats and opportunities

As we approach Q2, we know that advertising spend is going to look dramatically different than it did in 2019.  In large part, this will be part of the aftermath of the novel coronavirus pandemic, which includes nationwide shutdowns and disruptions to businesses. Here at MediaRadar we dug into our most recent advertising spend insights, as well as an analysis of Q2 2019, to better understand what is happening – and what is at stake in the coming months. 

Our deep dive revealed that some industries under duress will likely adjust their advertising spend, or have already begun to do so. Others, however, are seeing their businesses flourish and are marketing aggressively to take advantage.

Industries “at risk”

While all types of businesses are being impacted by the Covid-19 pandemic, some industries are certainly getting the short end of the stick. Last year, in Q2 alone, more than $31B was spent on advertising across all media formats, and over 205k unique brands ran ads. When looking at industries that appear to be the most “at-risk” due to the impact of Covid-19 (restaurants and bars, films, lodging, US tourism, cruises, airlines, auto dealerships, foreign tourism and movie theaters) we saw that last year, these industries had about 12.5k brands advertising, collectively spending just over $2.6B on advertising in Q2 2019.

Restaurants and bars

The largest category in that group, in terms of advertising spend, is restaurants and bars. Last year in Q2 over 4.5K brands advertised, spending about $1.2B on advertising. The majority of this spend (91%) came from major chains, such as McDonald’s, Taco Bell, and Burger King. Now, as dine-in restaurants and bars are being ordered to close or shift to take-out/delivery only across the US, this industry is facing hardship. This crisis will not only change how restaurants do business, but how they promote products, too. 

McDonald’s has already closed its dining rooms and moved all of its services to takeout. Other major chains have done the same. These businesses are not immune to the impact of coronavirus. However, they are also not at risk of going under like smaller local eateries. Instead, Charley Grant at the Wall Street Journal predicts they’re likely to take up even more of the market share after this is over as they will have the ability to rebound in a less-saturated market. 

We have not yet seen any shifts in advertising spend from these large chains, although we are seeing the first wave of brands shifting their messaging. We’ve seen Outback Steakhouse and Panera Bread are promoting their delivery capabilities, while Dunkin has shifted its marketing to support their line of home-products like Dunkin K-Cups, Creamers, Coffee Grounds, etc.

Travel and tourism 

While restaurants can temporarily pivot to take-out and delivery, the travel industry, including lodging, US tourism, cruises and airlines, are facing true hardships. In Q2 of 2019, the advertising spend of these categories was about $850M, combined. 

In terms of companies withdrawing advertising spend, we will be keeping an eye on airlines, in particular. During Q2 of last year, 72% of their budgets were spent on digital advertising, a format that is bought – and canceled – on the shortest of notice. So far, the travel industry has reduced its advertising spend with spending cuts starting mid-February of 2020. Comparing the first week of February 2020 to the first week of March 2020, we saw the travel industry decrease advertising spend by 30%. 

Ads on the rise

While there are certainly businesses suffering due to the changes Covid-19 has brought to our economy, others will benefit from millions of Americans staying home for weeks on end. We analyzed a few of them to see how their marketing has changed in recent weeks.

Streaming services

Subscription streaming services have already seen how quarantines abroad have impacted their business. For example, during the first week of quarantine in Italy, downloads of Amazon Prime Video increased over 2x when compared to the week prior. Meanwhile, Netflix downloads saw a 60% increase in the same time period. 

Armed with that knowledge, streaming services were quick to adjust their marketing strategies once Covid-19 began impacting daily life in the US. According to our analysis, streaming services increased their own ad spend by 155% WoW during the first week of March. Looking at the first week of March YoY, it was a 34% increase in ad spending.  Two advertisers during this surge, Amazon Prime Video and Hulu, spent $29M in advertising in just the first half of March 2020. That is 16% more than they spent during the entire month of February.

eCommerce

The eCommerce industry is also fully aware that many Americans will be spending much more of their disposable income online in the coming weeks. Based on our data, in just one month, eCommerce sites have doubled ad spend, jumping from $4.8M during the week of February 17th to $9.6M in the week of March 9th. 

Companies with e-commerce sites should be aggressive in the market right now, as it’s not only good for business but, more importantly, it’s good for the economy. For example, on Amazon roughly 50% of all sales are from third party sellers, many of which are small businesses. Furthermore, the company has announced they will hire an additional 100,000 employees, explicitly inviting those who were recently let go in the retail and food service industries to apply for one of its open jobs.

Conclusion 

Everyday there are heavy developments and news surrounding the Covid-19 crisis and its wide-ranging impact across nearly every industry. And, as the country grapples with the realities of the pandemic, brands are faced with the question of whether or not they should increase ad spend due to larger audiences spending more time at home, or decrease spending as a way to cut their own costs. Our study underscores that there is not one answer, and brands are moving in both directions as the pandemic continues to affect life across the country.

Perspectives

Digital media in 2020: What lies ahead?

From the boom of direct-to-consumer (DTC) brands to the introduction of new OTT streaming services such as Disney+, 2019 brought significant innovation to the digital media space. As we begin 2020, it’s time to think about which media trends will shake up the new year. Here’s what the MediaRadar team sees on the horizon.

The year of paradox for linear TV

In 2019, it was estimated that 6.4 million paid subscribers stopped paying for television. In 2020, as OTT streaming services continue to gain control, an almost equal, incremental decline in number of paid subscribers is predicted. However, despite “cord-cutting” in the TV industry, linear cable and broadcasters are poised to have a successful year. This is due in part to several major TV events set to occur throughout 2020.

The 2020 presidential election will have politicians spending significant amounts of ad dollars to get their messages across. Some estimate that spending will approach as much as $10 billion – or almost $6 billion more than the 2010 election. Advertisers are also predicted to allocate heavy ad spend towards the Tokyo Summer Olympics, as well as other large tent-pole sporting events like the Super Bowl. This year’s Super Bowl is expected to deliver strong financial results, as Fox reported in early December 2019. In fact, 80% of the inventory had already sold at a reported $5.6 million per 30 seconds. That marks a 7%  jump from last year.

Amidst the evolving TV landscape, providing viewers with real innovation will become crucial for success. Keeping that in mind, in 2020, it’s believed that nearly all major broadcasters will either reboot or unveil their paid streaming businesses. While this is just the start, this shows broadcasters are committed to re-engaging with their audiences and future proofing subscribers.

Politics’ role in digital media

An exploding ad spend isn’t the only way the presidential election will shape the industry this year. The election is expected to take over much of the news cycle and political ads. Every platform will be scrutinized for accuracy more than ever before. Ahead of the election, digital ad companies are expected to face strong public pressure to ensure their political ad policies are tightly “buttoned up.”

Twitter recently announced they will be opting out of politics, disallowing political ads entirely. Google announced that they are restricting targeting capabilities for political ads and Facebook is predicted to follow suit, despite pressures to go further.

Based on these companies’ decisions, it’s likely that other media will feel the same pressures in 2020. It will be up to these companies’ leadership to navigate this evolving digital landscape during the election cycle. Foremost: an emphasis on clear and ethical business decisions.

OTT remains hot

Over the past few years, investment in the OTT space has been heavy and rapid. It shows no signs of slowing down in 2020. UBS estimates a combination of 16 media firms will spend $100 billion to produce content in 2020. Of that $100 billion, just three firms – Netflix, Disney and WarnerMedia – are projected to account for 25%, producing unique content for their viewers.

For the financial health of the companies competing in the space, it’s likely that this investment cannot last long-term. Bob Iger, Chairman and CEO of The Walt Disney Company, has acknowledged that Disney+ will probably not break even for at least the first five years. Meanwhile, AT&T has said the same of upcoming streaming platform, HBO Max.

Eventually, it’s predicted that end user prices will rise, ad-supported models will become more common – SVOD versus AVOD – and spend on content will decrease to ensure profitability. Being in the early days of the streaming wars, however, the major players are willing to gamble with losses now to gain profits later. In the fight to capture the attention, and monthly payments of consumers around the world, and to make the investment worth it, not all can win.

2020 outlook

2020 looks to be both an exciting and transformative year for digital media. The TV industry will shift focus as they seek to re-engage with audiences through paid streaming businesses and offerings. Major TV events, specifically the 2020 presidential election and flagship sporting events, will help sustain linear cable and broadcasters through the year. Investment in OTT is only expected to increase, especially as “cord cutting” continues.

Perhaps the biggest change in 2020, though, will be as a result of the state of politics. With politics playing a larger role in the space than ever before, media companies will begin adjusting their strategies and policies accordingly – a change that could have a lasting impact on the future.

Innovation | Perspectives

How Disney+ and AppleTV+ are changing the OTT landscape

It’s a big month for streaming. The launch of Apple TV+ and Disney+ are finally upon us. So it’s a good time for an update on the state of the streaming wars. 

In this strange new world, tech companies like Apple are investing in content, and media companies like Disney are investing in technology. So how does? all this effort stack up? A closer look at the content and ad spend of these new OTT major players provides some insight into the future of streaming.

Content spending among new OTT services

At launch, Disney+ unsurprisingly boasts a sizable catalog of Disney-owned content. The company has also announced that $2.5 billion will be allocated to producing more original content for the platform over the next 5 years. 

Conversely, Apple has opted for a small but mighty catalog. At launch AppleTV+ was armed with considerable “star power” to entice subscribers. The platform will host entirely original content exclusively available to AppleTV+ subscribers. And pre-launch advertisements reveal some of the biggest names in acting and directing.

Although these two major players bring promising new content to the OTT lineup, they will have to continuously find ways to retain value in the eyes of consumers.  

Monthly subscriptions to the top seven streaming platforms will collectively cost $61. Consumers will more realistically pick and choose the platforms they actually want to pay for.  These leaves companies pitching both price point and content.  

Clearly, these numbers indicate that Disney and Apple are attempting to join the royalty of OTT, made up of existing streamers like Netflix, Amazon, and Hulu, which all have their own originally produced hits. With the launch of HBO Max in 2020, AT&T’s WarnerMedia may join the club soon. 

With content creation underway and platforms officially launched, OTT services can now shift focus to conveying value to win the favor of consumers, who have more options than ever before. And that is where marketing and advertising come in. What does advertising an OTT option in an already crowded space look like? 

Apple and Disney spend big ahead of streaming launch

For now, let’s look at the two headline makers: AppleTV+ and Disney+. 

Here at MediaRadar, we found that both platforms only started running ads in late August. AppleTV+ quickly overtook not only Disney+’s ad spend, but the entire streaming space. In the month of September, AppleTV+ was the top ad spender out of all streaming platforms. This includes established players like Netflix, Hulu, and Amazon Prime Video.

To date, Apple TV+ has outspent Disney+ five times over on paid media. What’s more, AppleTV+ has not slowed their efforts now that the platform has launched. Ten days into November, AppleTV+ is on pace to once again be the top ad buyer out of all the streaming platforms this month.

The two companies differ in strategy, as well. Disney has promoted its new streaming platform as a whole, using clips from owned content to pitch the breadth of the platform. While Apple has been promoting its original content in stand-alone spots. So far, it has focused ad spend around eight shows in particular.

AppleTV+ may be outspending Disney+ on paid media. However, that does not mean Disney’s marketing push has been insignificant in any way. In fact, Disney has been orchestrating a massive marketing push using all of their various channels. 

This push includes everything from on-air endorsements from Tom Bergeron (host of “Dancing With the Stars” on the Disney owned ABC network), to billboard and bus ads around Disney’s theme parks, to QR codes on lanyards worn by Disney’s 7,000+ retail workers at various Disney store locations. In one of the more interesting moves, Disney posted a video on YouTube titled “Basically Everything Coming to Disney+”, using snippets of movies available on the platform. The video was over 3 hours long.

On top of this, Disney has rolled out packaged deal after packaged deal thanks to its extensive holdings and powerful partnerships. For example: Verizon announced a year of free Disney+ for both new and existing customers, and more impressively Disney announced a $12.99 bundle with Disney+, ESPN and Hulu (both of which are majority-owned and controlled by house mouse). Visa card holders who have a Disney branded credit card can even lock in a discounted price for 2 or 3 years. Apple, for its part, is including a year subscription to Apple TV+ with the purchase of any Apple product. 

Apple is almost on the defensive in this new world, playing as a tech company against media giants like Disney. No one says the best movies come from Apple today. They have a real deficiency in terms of changing perception that they are a place where you should go to watch your content.

In a bid to make that case, Apple has spent $20 million advertising its two biggest shows ahead of the launch. 

In contrast, Disney’s robust offerings, combined with constant messaging across Disney properties, may immediately drive Disney+ to the top. “Think of Disney like a giant pinball machine, with content and initiatives pinging between divisions in an effort to drive up the ultimate score,” Gene Del Vecchio, a marketing professor at USC, told The New York Times. 

With all this activity from the new platforms, and platforms like HBO Max and Peacock yet to join the fray, the streaming wars are heating up. It will certainly be interesting to watch how these companies market themselves as they fight for subscribers who will have many providers to choose from.

Advertising | Perspectives

B2B companies up digital marketing in response to industry trends

As the B2B space evolves and matures, so must its marketing. In recent years, consumer-facing brands have come to terms with the “adapt-or-die” scenario. Now, B2B brands are following suit by adopting people-based marketing and new levels of personalization. In response to opportunity (as much as out of necessity), B2B advertisers are shifting their advertising dollars towards digital advertising.

B2B focuses on digital advertising in 2019

According to a December 2018 study by eMarketer, the US digital B2B ad spend is on the rise,  increasing from $2.9 billion in 2015 to $6.08 billion in 2018. The biggest jump in spend, a 24.9% increase, occurred between 2017 and 2018. The following month, January of 2019, Mark Treacy, Head of Sales – B2B at Oracle, predicted that B2B marketers would continue to invest more in data and analytics capabilities, which would increase the competitive edge within the industry.

In July 2019, my company, advertising intelligence and sales enablement platform, MediaRadar decided to take a closer look. So, we analyzed whether B2B brands had shifted to buying both print and digital ads, as a follow up to our 2018 B2B recap trend report, which had found that most B2B brands would only spend on either print or digital. In fact, according to the 2018 report, only 11% of brands bought both print and digital placements.

Our deep dive in July of 2019 revealed that, while not much has changed, there was a slight deviation toward digital and print ad spend within B2B in the first half of 2019. The study also found that B2B companies’ digital ad spend rose 36% year-over-year, when comparing the first half of 2018 with the first half of 2019. This indicates a pretty significant shift toward digital ad spend within the B2B space.

Who is taking the lead? 

Industries paving the way towards increased digital advertising include both those that are spending the most on digital ads as well as those who are increasing their ad spend the most. Our study revealed that the B2B industries that spent the most on digital ads in 2019 included the Pharmaceutical, Finance, and Professional Services industries. The B2B industries that increased their ad spend the most year-over-year were Cigarettes & Tobacco, Beer, Wine & Spirits, and Beverages (Non-Alcoholic).

Looking at the top companies within these categories, the analysis found that the digital ad leaders in the pharma industry included Endo International, Pfizer, and GlaxoSmithKline. Pfizer, who has partnered with multiple platforms to serve its programmatic ads, has spent over $100 million across all media. They have placed video, direct and programmatic ads on major domains in 2019. 

Additionally, the data revealed that TD Ameritrade, Schwab, and Vanguard lead the pack within the finance sector. Vanguard, specifically, ran display ads on major online publications such as U.S. News & World Report and BBC.

Within professional services, our research saw that Informa, USPS, and Accenture spent the most on digital ads. USPS, in particular, placed display ads everywhere from Jezebel to The Economist. 

Recently, a LinkedIn Marketing Solutions blog by Sean Callahan reported that these major companies are all part of the rapidly growing $6 billion B2B digital advertising market in the US. According to Callahan, the expansion into digital advertising has been triggered by several factors, including increased popularity of both account-based and people-based marketing within the B2B space, the advancement of programmatic platforms, and the increased power of personalized content sequencing.

What’s next? 

While B2B companies are certainly making strides when it comes to following digital trends, there are still areas left to improve. Most B2B brands are still focusing their advertising spend on print. According to our July 2019 data, 56% of B2B advertisers are spending on print only, consistent between both 2018 and 2019. However, now that it is clear where the industry is headed, we can only wonder how both these brands and publications will soon adapt, and grow the share of B2B companies using both channels. 

The B2B industry must take stronger leaps in digital advertising to fully reap its benefits. However, they are moving in the right direction and, as the space continues to transform, so will it’s advertising tactics.

Industry-Research | Perspectives

Native advertising had a great 2018 and it shows no signs of slowing

Native advertising has quickly become one of the most popular and effective forms of advertising, particularly for B2B brands. 

According to a Sharethrough and IPG Media Lab study, which surveyed 4,770 consumers on their responses to native ad formats (with some of the participants agreeing to have their eye movements tracked as they looked at different arrangements of ads and content) consumers are 25% more likely to look at a native ad than they are a banner ad. In fact, they look at them 53% more frequently and check them out 4.1 times per session on average, versus 2.7% for standard banners.

With numbers like that, it’s no surprise that native advertising is considered one of the top ad formats by most companies. In fact, eMarketer recently estimated that U.S. advertisers will boost spending on native ads by 25% this year, reaching $43.9 billion. 

My company, advertising intelligence and sales enablement platform MediaRadar, took a close look at B2B brands advertising online with native content. For the study, we analyzed our own data and spoke with our B2B clients for unique insights. 

Here’s what we found. 

More B2B brands advertised with native content in 2018

As we analyzed B2B brands advertising with native content in 2018, our deep dive revealed that native content was a high-growth area for the B2B space. In fact, we found that the number of advertisers buying native ads on B2B platforms increased quarter-over-quarter, every quarter throughout the year.

Comparing native, mobile, video and display ads 

When compared to mobile, video and display advertising, we saw that native experienced the highest rate of increase, with a growth rate of more than 50% year-over-year. In contrast, mobile only saw a 20% increase year-over-year. That was followed by video with a jump of 13% and display with just an 11% bump. 

However, even though display ads saw the lowest year-over-year rise in the number of advertisers, it remains the most common ad format used by B2B. More than 95% of brands advertising in B2B media were buying display ads in both 2017 and 2018, according to our findings.

Even with the high growth rate, native ad buying remains a rare behavior for the B2B advertiser, with only 7% of companies buying the format in 2018, leaving plenty of room for growth.

Who’s buying native advertising?

The analysis also identified the industries which bought the most native placements in 2018. According to our data, media, finance, and technology companies bought the most. And the B2B space saw the highest increase in the number of buyers of all online ad formats. In addition, realtors, legal services, and technology recruiting companies were the top categories to drive increases in native B2B advertising. 

Native advertising is here to stay

Native advertising reached an apex in 2018, particularly for B2B brands, serving as one of the highest-growth areas in the space. But there is no end in sight. Based on the study, native advertising currently serves as one of the more stable and reliable forms of advertising, especially when compared to mobile, video and display. 

Native content has developed and matured over time, experiencing its highest growth rate year-over-year, increasing purchase intent. Its performance only proves that native is thriving and here to stay.

Advertising | Industry-Research | Perspectives

DTC brands are disrupting ecommerce—and advertising

Direct-to-Consumer (DTC) businesses are a unique class of company, and they’re changing the way we consume products of all kinds. They’re often referred to as disruptors because they use mobile and digital channels to sell directly to the buyer. By eliminating the retail “middleman,” DTCs bypass traditional sales models and re-think otherwise staid markets.

MediaRadar recently conducted an analysis of DTC companies’ ad spending across digital, TV and print, as well as their CMOs, physical stores and funding practices. The analysis offers insights for all brand marketers.

How do they advertise?

According to our study, for the past five consecutive years, DTC ad spend has increased by seven to 20% annually and has continued to grow across almost every product category.

DTC brands typically focus their ad spend on social media in their early years. Instagram is the primary channel for these companies because the platform allows for very specific targeting and a seamless purchase feature from within the app, that few other platforms offer.

The data also shows that as DTC firms scale their businesses, they begin to shift ad spending. Many come to rely more heavily on TV to create broad, top-of-funnel awareness. For example, Casper spent over $30 million per year on TV over the last couple of years. Warby Parker started TV advertising in 2016, stopped in 2017, only to return again in 2018.

Our analysis also found that DTC companies place branded content pieces three times more frequently than traditional brands, with the top beneficiaries being Yahoo! and Buzzfeed. Buzzfeed has won a large portion of the IAB’s top 250 DTC brands, as the brand pairs well with DTC advertising due to its strong Gen Z and Millennial audience.

How did they start?

Some of the most well-known DTC brands include Uber, Casper, Brooklinen, Warby Parker, and Tesla. Outside of these well-known companies, there are thousands of DTC startups across the U.S., according to the Interactive Advertising Bureau (IAB). For example, we counted 387 DTC brands advertising in the apparel and accessory category alone.

These companies are not only numerous, but well-funded. According to data gathered from Crunchbase for the top 20 DTC advertisers, the companies raised an average of $230mm in funds, through six rounds of funding, and from over 20 unique investors.

When it comes to the leadership behind these companies, the CMOs are sophisticated, experienced marketers. Looking again at the top 20 DTC brands, their CMOs bring an average of 16 years of prior work experience to their positions. 75% have past experience with at least one “household name” company. Half (50%) of the CMOs hold an advanced degree, most commonly an MBA, while other common degrees were in either economics or finance.

How do they sell?

DTC companies are usually mission-driven, rather than solely focused on the product itself, and they often start by targeting the Millennial and Gen Z customer segments. DTC brands are typically available for sale exclusively online and usually specialize in one specific product category. About one-fourth have a subscription revenue model. For consumers, the brand’s authenticity and quality matter much more than price—and the brands know this.

As these firms mature, many begin to explore other selling routes outside of just online. Of the top 20 DTC companies, 30% had their own stores, 25% sold products in other retailers, and another 15% used both their own stores and other retailers. Interestingly, many DTC firms have partnered with only one retailer on an exclusive basis. For example, Quip is only available at Target and Leesa mattresses are only available at West Elm.

Growth plan

DTC firms have emerged as disruptors across multiple industries. These companies exhibit young digital-first personas, that sell their products directly to customers via social media. However, as these companies grow larger, they begin to take on characteristics of older brands; whether it’s opening retail stores of their own, employing leadership with years of experience, or pouring ad budgets into national TV.

Advertising | Perspectives

Are YouTube video ads getting longer?

When YouTube first introduced the six-second video ad in 2016, it seemed like the future of the industry would be all about shorter ad content. At the time, Google linked the launch to the rise in mobile viewing, saying that “many people prefer to watch on their smartphone – for the control, personalization and ease it offers.” Everyone expected to see more snackable inventory and ad formats.

Among advertisers, these six-second “bumpers” quickly became a commonly used format. A number of marketers claim to love them, and for good reason. The six-second video seemed to address the problem of some viewers ignoring ads outright or complaining about an extended intrusion on their viewing experience.

Quick Success Story

Google was quick to tout the success of six-second campaigns as well. A blog post from April 2017 titled “Say It in Six: Why marketers and creatives are embracing the newest video ad length,” reports that they analyzed 122 six-second US campaigns and “found that 70% drove a significant lift in brand awareness, with an average lift of 9%. On ad recall, they perform even better – over 9 in 10 drove ad recall globally, with an average lift of over 30%.”

To keep up with the industry leader, YouTube’s competitors focused on shorter video advertisements, too. Facebook, for example, rolled out six-second ads almost two years after YouTube’s initial launch of the format. Per this Facebook blog post, “in a mobile-first world, shorter video ads drive results” as consumption patterns have shifted, with people not “watching ads for as long as they used to, on any medium.” However, there is some evidence that the market is recalibrating – at least on YouTube.

Room for Growth

Here at MediaRadar, we analyzed all online video ads that ran in January and February of 2018 and 2019. In doing so, we were able to compare the ads that ran on YouTube to ads appearing on other video and streaming platforms year-over-year (YoY).

Surprisingly, the data shows that, for 2019, longer video ads are becoming more common again. Only 16.5% of YouTube ads at the start of 2019 were six-second ads (down from 20% in 2018) and 30-second videos made up 24% of YouTube ads in 2019 — up from 19% in 2018. This is a statistically significant shift for the site and could even signal a category-wide change

Additional data about video length mined in the study supports the longer-ad trend:

  • 15-second ads were the most commonly used format, accounting for approximately 40% of all video ads running during the study and 47% of ads on YouTube; this was consistent YoY. There is some nuance involved here, however. Fifteen-second ads were previously not available for auction to all advertisers. Only recently has YouTube opened up the supply from a reserved model.
  • There are almost no 0-5 second ads. The format made up only 3% of all online video ads and 1% of YouTube ads.

So What Time is It?

Is this signaling the death of the short six-second advertisement?

I’m not so sure.

However, it does show that long-form digital video content still has a role to play, as it allows for more information to be conveyed and has proven more effective than videos six seconds or shorter. According to analysis by Teads, “six-second ads have an average view-through rate (VTR) of 55% on mobile devices but have an EmotionAll score of 3.6 compared to 5.1 for 30-second ads.” They are viewable, but not always resonant.

However, I wouldn’t count out the six-second video altogether. It has a place in the attention economy, especially when a younger demographic is targeted. Research time and time again finds that Gen Z, for example, which watches YouTube the most – and does so primarily on mobile devices – is more receptive to shorter ad formats. This might be why we’re seeing the 15-second video ad as the house majority. It just may be the video advertising sweet spot, balancing the desire to keep things short but long enough to drive an emotional impact.

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