Evolution or Revolution?

As streaming and connected TV continue their ascent, how quickly these ongoing changes to the TV media landscape take hold — and solidify — remains anyone’s guess. Leaders from media agencies weigh in on the latest questions.

By Thomas Haire

How many times have you heard the phrase "shifting TV media landscape" in the past three years? The answer is probably somewhere around the number of new free ad-supported TV (FAST) channels introduced in the connected TV (CTV) market in the past 12 months.

This ongoing story commands the attention of performance and direct-to-consumer (D2C) brands and their agencies, who are keen to understand the best new opportunities — and must know where to find the most effective continuing opportunities — on CTV, streaming, and linear TV.

What’s the latest on CTV? When is the streaming market going to consolidate (and will consumers demand it)? What’s the top streamer for performance marketing campaigns? And will there ever again be a single media currency?

Below, seven media agency executives share their feedback to these questions and more — questions that also are likely be addressed in some fashion by media outlet leaders in a special panel conversation at PDMI East on March 22.

What are the top two things that brands/advertisers must consider right now about the evolving television media landscape?

Chris Brombach, senior vice president, integrated media, Cannella Media DTC: First, approaching video with a holistic mindset: effectively and efficiently blurring the line between linear and non-linear. Second, leveraging portfolio diversification: understanding the roles different formats and TV media types play in the overall equation.

Michelle Green, president, Two Twelve Direct: The first is to recognize the increasingly powerful role of video. It’s where you are able to evoke the right emotions. There is always a story to tell. They key is to reach that consumer and evoke that emotion exactly where they are and how they are watching. That means bespoke content must be created for every environment and video customization for every single platform.

Also, to further evolve, it will be key to integrate traditional and streaming data that enables measurement and targeting against the two together. There is still a tremendous amount of viewership that exists in linear channels and will continue to be utilized. But it now co-exists with growing streaming platforms. We have a begging need for these to work together seamlessly. This year should start the move toward true crossscreen, audience, and measurement delivery.

Karen Kluger, founder/CEO, TouchPoint Integrated Communications: It’s projected that by 2024, non-pay-TV households will exceed pay TV households by a margin of 6 percentage points — and continue to increase. If streaming is not currently part of your media mix or planned for this year, you will fall behind competitors and miss reaching the full potential of your target audience.

Creative also needs to adjust to the shorter units preferred and expected by streaming viewers, which may be a challenge for traditional DRTV brands that rely on 60s and 120s. Calls-to-action (CTAs) also will need to evolve with a strong, trackable push to web, QR code, or click-to-call/buy/shop/learn more to continue the selling process.

Martin Melgoza, vice president, CTV and data, Smart Media Tech: TV is no longer just cable and broadcast. Streaming is an essential part of the TV mix now and, as its popularity grows and minutes watched overtake linear, it will be a crucial aspect of any TV campaign.

Second, FAST channels will become the new "cable." This new and free streaming platform will grow massively in popularity because of the high-quality content it provides along with the zero-cost associated with it.

Matt Wasserlauf, CEO and co-founder, Blockboard: First, CTV will become the fastest-growing advertising platform. There are currently more than 1.1 billion CTV devices in use worldwide. As broadcasters and media companies start to invest more in streaming offerings, marketers will inevitably be forced to shift their budgets from linear to streaming and CTV advertising. To take advantage of this growth and scale, CTV programmatic platforms will need to focus on getting rid of wasted ad spend, which has been the industry norm for years. The technology to vet every ad impression and pinpoint campaigns to specific targets and regions will become crucial. This will usher in the era of programmatic 3.0 where platforms are built on the web3 principles of transparency, authenticity, security, and accountability. With its ability to directly reach consumers where they live and view content, CTV will become a critical and leading channel within the programmatic advertising landscape.

Second, the big "R" word to focus on is results, not recession. While fears about a recession are certainly warranted, it won’t be as scary as initially reported. All signs may point toward a recession, and as in any recession, advertising tends to be the first budget cut. While this will be true again in 2023, it will ultimately be short-lived, rebounding by the second half of the year. So, let’s not fear a recession because a recession will ultimately drive innovation. What brands and advertisers should instead focus on is refreshing their strategies. With CTV becoming the fastest-growing advertising platform, linear TV will no longer be the gold standard and priority moving forward. Unlike CTV, linear TV is far less accountable than online media or social media. Digital alternatives provide attribution and a direct correlation to sales and results, which is what’s needed most in a recession.

What type of clients and brands are currently in the CTV marketplace? Has there been a shift or category growth in the past year?

Green: Over the last year, we watched the industry evolve with twists and turns in the world of CTV, TV, linear and video. Connected TV continues to prove it’s on the rise with a predicted 14.2-percent growth from 2022 to 2023. Consumer package goods (CPG) is dominating in the shift to CTV. Pet supply brands also are taking a lead, as well as beauty and household products. CTV has shown to be an incredibly efficient channel for pharma advertisers, also. Programmatic CTV makes it easier to reach the right healthcare provider and target — very specifically and directly — pharma’s patient audiences.

Kluger: While originally more of a branding/upper funnel tactic for brands with significant budgets, CTV is now seeing increased usage by digital-centric brands, or brands that couldn’t afford the investment of traditional linear TV. Most recently, there has been an influx of DTC and traditional DR advertisers due to improved targeting, data capture, shoppable CTV ad formats, and second-screen retargeting that supports lower funnel KPIs. To that end, the channel is now ripe for B2B advertising growth and those B2B brands that capitalize on the channel in 2023 have the unique opportunity to take advantage of the white space.

Melgoza:  Everyone is getting into the mix. The shift to streaming is impacting all viewers, so all brands and advertisers are seeing the need to shift their budgets to streaming so they can reach their full population. With that said, performance clients have been testing a lot in the space, but due to the more difficult nature of tracking/attribution, we have not seen a lot of evergreen streaming campaigns yet. We are making progress as we get more aggressive with rate negotiations, so we expect this to change.

Wasserlauf: CTV is not a "must include" for all types of clients and brands. However, CTV is approached differently amongst the types of spenders. For example, large brands typically see CTV as an extension of their linear buys and categorize the experience as "branding." Yet, for performance marketers, the use case of CTV is much more directly tied to the sales funnel. It can satisfy different appetites and needs because of its big-screen consumption experience along with its inherent digital nature.

NBCU recently targeted small-to-medium- sized brands (SMBs) for its array of advertising opportunities. How should SMBs focused on using D2C methods react to this and what does it mean for the future?

Kluger: Capitalizing on omnichannel opportunities that are consolidated under a partnership with entities like NBCU affords SMBs streamlined access to content adjacencies that deliver borrowed equity and coveted brandsafe environments. That being said, the excitement of potentially combining sponsorship opportunities, live reads, social mentions, and media all under one insertion order, should not supersede targeted reach and measurability.

When approaching omnichannel partnership opportunities, SMBs should ensure that the resulting buy utilizes first- and third-party data to deliver a strong target rating point (TRP). It should also be significant enough in its totality to understand the program’s impact as part of its larger media mix and ideally its program’s budget should not be spread too thin across the various program tactics that the impact of any one component cannot be understood for future planning.

Melgoza: The new offering, which is more of a self-serve option, is great, but for SMBs to be truly successful in the TV space, agencies will be a crucial part of their media mix. Although NBCU has some of the best properties and IP in the market, viewers are watching a lot of other content outside of NBCU. So, while using their new tools is beneficial, it does not solve the larger issue of reaching their full audience.

Studies show consumers becoming more cost-conscious and interested in a consolidated way to reach and view all their streaming options. When will the streaming market begin consolidating and head toward an easier-to-use, easier-to-pay-for model — like the one they gave up when they cut the cord?

Joey Hastie, vice president, media investments and research, Smart Media Tech: From the revenue side of the equation, the industry has figured out how to leverage content to locate the target audience with programmatic ad-tech. From the consumer side, it’s quite the opposite. The user experience is far less exciting when searching for a program. Consumers sit on the couch, excessively scrolling with decision anxiety due to the abundance of available content. By the time you have stalled on five auto-played previews, read four show summaries, and watched three trailers, you have decided it’s too much, and you are better off going to bed.

This moment in time resembles the point before there were program guides and channel-surfing was a thing. The major content providers are already taking note, which is why you are starting to see the consolidation of big media companies. Some prime examples are Disney, Warner, Paramount, and NBCU, which have bundled or are in the process of bundling. However, the next step in consolidation is much more challenging. The ease-of-use side will arrive before the ease-of-pay side with novel AI technologies like ChatGPT and AI-powered Bing search. It won’t be surprising if Apple or Roku integrate these into home screens within the next year. You might write a prompt or say, "I would like to watch a funny movie included in one of my paid subscriptions that had at least 70-percent positive reviews on Rotten Tomatoes, and my kids under the age of 12 will enjoy it."

Combining the assortment of subscriptions into a user-friendly package will require innovation and a model similar to an MVPD. We have seen some attempts at this, but they really haven’t been successful or well adopted. In the future, we will see one or several providers negotiate bundled pricing among various SVOD streamers to deliver a discounted subscription based on the number you opt into. A package of Netflix, Hulu, HBO, Peacock, Paramount+, Starz — and a grouping of FAST channels — may receive more favorable pricing than if you only subscribed to Netflix and Hulu. The ad revenue of AVOD and FAST channels will be essential to offset the discounts on the bundled slower-growing and premium SVOD platforms.

The necessity for innovation is now due to the current media landscape and the shareholder demand for subscriber growth. I expect to start seeing a bigger shift toward larger cross-platform bundles happening over the next two years.

Kluger: Consolidation of streaming options will likely come from mergers and acquisitions versus a change in model for consumers. Amazon purchased MGM for content, WB and Discovery+ merged within WBD; and HBO Max and Discovery+ may or may not be merging. It’s all about content and consumers changing their subscriptions based on the shows they watch and when the new season premieres. As more apps are available to manage a consumer’s multiple subscriptions (per PwC, most consumers subscribe to three to five streaming services), moving back to a pre-cord cutting model isn’t likely any time soon.

Melgoza: This is already happening, and we are seeing the popularity of a potential replacement increase in real-time with FAST channels. FAST channels, outside of sports, have a real opportunity to fill in the gap of cable/bundling up streaming apps. All the platforms are creating their own FAST app to provide consumers with this option. Samsung, LG, Vizio, Roku, and even NBC and Warner are all creating FAST channel offerings.

With that said, I do think there is going to be a massive consolidation of apps, but like with smartphones, new apps are always going to be available as the technology to launch TV apps becomes easier and more affordable to make.

Wasserlauf: Along with the challenge of fragmentation for the end consumer, the ad experience must be addressed. As advertisers work with individual inventory suppliers, the likelihood of, for example, ad frequency management becomes trickier. While consolidation (or bundling) makes it easier for the end user to manage their bills and get what they want from their content, it doesn’t translate into seamless ad management. If advertisers are mindful of their story and frequency to the user across any media, they should work with partners who can manage across the top of all supply.

The launch of an ad-supported tier helped Netflix regain its footing in the second half of the year, causing many analysts to say that it also had regained its leadership position. Which of the leading streamers do you believe is providing the best opportunities for advertisers and why?

Kluger: From an advertiser’s perspective, multiple factors contribute to the "best opportunity" — viewership, targetability, and efficiency. While Netflix has seen an increase in subscribers to its ad-supported tier, it still carries a hefty CPM premium and limited targetability.

As of now, the Disney Bundle (Disney+, Hulu, ESPN) has the most to offer from negotiable CPMs, a strong subscription base, and the opportunity to reach various segments with family-based and sports content, in addition to a loyal Hulu following. Disney also just announced that Disney+ advertisers will soon be able to access Hulu’s audience ad-targeting tools by Q2 2023.

Melgoza:  This is a tough question as it really depends on the goal. If returnon-ad-spend (ROAS) is the key driver for the campaign, Tubi is the best driver from a pure ROAS standpoint. They have amazing reach and scale with very efficient rates for a premium product. If we are trying to associate the brand with the best top-tier content, Netflix is the leader currently, as it has a somewhat untouched audience and limited ad partners, so your ads won’t be as lost in the shuffle.

If we are going for a combo of high-profile content and performance, Hulu has to be the top app. They consistently put out amazing shows with great viewership numbers and associating a brand with these shows can really drive performance — especially if you can lock in efficient rates.

With all the buzz around streaming and CTV, what is linear TV’s role in today’s marketplace — and what will it be in 2025?

Marcelino Miyares, managing director, d2H Partners: To the extent that linear still means "mass," it will always have a role. The ultimate measure of its worth will come with the globalization of media efficiency ratios (MER)/cost-per-order (CPO) and other ROI metrics. From our perspective, linear TV is the only marketing channel that has the potential to lift the tide for all other channels. But if ROI and ROAS measures are limited only to the "time-stampable" results of TV airings, then its role will be reduced to much less than its actual potential.

Brombach: Linear TV is still a viable mass reach medium that drives brand engagement and response, providing marketers with the opportunity to reach more than 70 million households. That said, we reached an inflection point this year: for the first time ever, U.S. adults are spending more time viewing digital video than traditional TV. So, we foresee the scale continuing to tip further towards streaming viewership in coming years.

Hastie: If you know anyone below the age of 20, it’s no secret that linear TV is going to continue to decline. Most of them have never experienced exploring a channel guide or the proliferation of DVRs. We all know the pandemic accelerated the adoption of streaming among all demographics. We’ll see an inevitable and gradual decline in viewership in linear over the next 10 years, but it is still going to be a significant medium to reach a mass audience for now. The Boomer generation is still a substantial audience that engages in the traditional linear experience. Additionally, boomers are sitting on $70 trillion in wealth, which is significantly more than Gen Z and millennials and should not be underestimated. Yes, we will see linear viewership continue to decline, but there are still several more years to tap into the spending power of those participating in that space.

Kluger: While CTV subscription numbers continue to rise, most consumers watch a combination of both CTV and linear TV, depending on age. Linear TV still, and will continue to in 2025, provides mass reach while CTV complements that with stronger targeting and frequency in a less cluttered environment. The balance of usage for each tactic will continue to favor CTV as linear viewership decreases.

Wasserlauf: We are already seeing marketers pull back on spending on linear broadcast TV. Broadcast ratings are down, and the major networks are lacking in new hit shows and premium content. Furthermore, some of the largest broadcast programs are making the shift to streaming, like the NFL agreement to stream all regular season Thursday night football games on Amazon Prime.

Among the top 100 TV telecasts in 2022, NFL games accounted for 43 percent — making it the most-watched category, as well as the biggest ratings driver and revenue stream on TV. As the NFL continues to shift toward streaming, it will continue to destroy significant broadcast TV, which will signal to giants like Amazon, Netflix, Google, and Apple to examine these acquisition opportunities and propel consolidation opportunities. With this momentum, we expect CTV will be the biggest advertising platform by 2025.

Where do you see the ongoing battle in the media currency space to provide measurement and attribution to buyers and brands heading over the next 12 to 18 months? Do we need a single media currency — and why or why not?

Brombach: The additional players in the space can be viewed as a positive for marketers — providing more accuracy and accountability on the audience measurement side and evolving the attribution side to drive a more dynamic understanding of full-funnel and multitouch. Multi-currency on both the audience measurement and attribution sides will likely continue to proliferate, because it’s not a "one-size-fits-all."

Kluger: The challenge with a common currency is that quality scores require a significant amount of historical data to quantify and trend a media’s impact. With the digital space continuing to evolve at a rapid pace, we’ll see devices such as smart home and wearables underrepresented, as well as new social platforms and digital-out-of-home (DOOH) formats. Until the landscape stabilizes, a single media currency will continue to chase the latest media and technology and will fall short on providing insight into the types of new media that require the most testing and analysis. NBCU’s resonance metric, scheduled to deploy in 2024, marries ad recall, media buys, and environment to provide yet another currency for advertisers and agencies to consider and incorporate.

Miyares: Whether the industry consolidates to one or a handful of media currencies, what the industry needs is for the source to more accurately reflect the discrete measurement of key market segments, such as the Hispanic market. This segment is traditionally undercounted or blended in with general demographics to the detriment of us who operate in this space. Clients would like to know where their sales are coming from. Another way to look at this is that the industry cannot move towards the "D" in D2C without accurate measurement of who the "C" is.

Wasserlauf: Media currency needs to be more aligned with the particular business need of the advertiser. We are at an exciting time when not only are new options of currency available, but specific metrics and measurement can be identified and used. As we move into a world of "one-size-does-not-fit-all,’ there will be a new need to think creatively and reasonably about the product and sales funnel while forging partnerships that increase transparency to allow for actionable insights.