The Mavericks of Media Reveal the Big Opportunities of the Future

With a changing and transforming media landscape, the tried and true approach to business issues no longer works. What are the Mavericks of Media doing to meet the demand and harness the opportunities that this new media ecosystem presents?

“We are survivors, not just of Covid. We have adapted, adjusted and multi-tasked our way to 2021,” noted Audra Priluck, Vice President, Business Development, Media & Entertainment at Maru/Matchbox, and host of the annual Mavericks of Media event.  The past year has shifted the way we do business with effects that can impact years ahead. What are the trends and opportunities?

The Biggest Drivers

Evan Shapiro, Founder of eshap.tv, warned that while we may have our eye on the usual big media players such as Disney and WarnerMedia, there are “trillion dollar death stars” at the edge of the media universe such as Facebook and Apple, who are poised to overturn the business model. There will also be increased tension between the advertising and single unit sale business model to the recurring revenue subscription business model. And a dramatic shift from a Boomer and Gen X dominated world to Gen Z Gen Y. We will see this in not only, “The way media is consumed, the devices on which it is consumed,” but also the artists and content that, “reflect this complex, digital first and the two most diverse generations in western culture’s history,” he stated.

The Importance of Diversity

Tiffany Smith-Anoa'I, Executive Vice President, Entertainment Diversity & Inclusion, ViacomCBS and Kay Hill, Vice President, Brand Research, WarnerMedia, shared their insights regarding diversity in media. For Hill, “2020 really highlighted this subject and put it at the forefront because people were at home and were paying more attention to news.” For Smith-Anoa'I, “The narrative hasn’t changed. We want to have greater representation in front of and behind the camera.” Essentially we need to rethink how we are doing business, who we are and who we are not doing business with.

Hill explained that when conducting diversity research, “You ask, What does this audience want? What are they looking for? What do they enjoy? The answer always comes back – they want to see some form of diversity and representation on the screen in front of them.” Smith-Anoa'I noted, “Education is paramount. Equality doesn’t mean extra or more. It means equal - The same opportunity to fail and succeed,” and added that it had to be authentic and not mere tokenism.

Post Pandemic Predictions

Jack Myers, Media Ecologist and Founder of MediaVillage, shared his industry predictions for 2021. “The upfront will see record CPM increases, growth over last year’s upfront revenues in the double-digits and overall 2021 ad revenue for the national TV business will be up an estimated 8%, enough to return it to the 2019 levels,” he shared.

Myers predicted that radical industry transformations occur every 30 years and we are now at the threshold of the next 30 year cycle. “Marketers may be facing shifts in consumer communications patterns for which there is no precedents and for which they are ill prepared,” he predicted 30 years ago. We see it happening again today with the end of the great internet upheaval.  “The pandemic has accelerated the trends already in place and 2021 represents the first year of a new 30 year cycle that requires accelerated shifts in revenue strategies for the television industry,” he stated. This requires a reorienting of priorities and ways of doing business. Going forward, growth will occur through education and diversity.

Guilty Pleasure Programming

Maybe because of the pandemic, viewers are seeking out comforting and nostalgic programming. The trend towards guilty pleasure viewing has, as Jeremy Lejeune, Vice President Content & Consumer Insights, NBCU, noted, “A sense of indulgence in it. It satisfies a need. The benefit is escapism and the need for escapism is higher than ever,” with the pandemic. For Suzanne Persechino, Senior Vice President, Head of Insights Group, A+E Networks, “We can all relate to the great amount of anxiety and tension in our day-to-day lives through a pandemic. We have found that there has never been a more ripe time for content that has a clear and satisfying ending.” The big takeaway is that guilty pleasure content transcends boundaries – it can be scripted or unscripted, comedy or drama. But it must be of high quality with compelling, complex and well-crafted storytelling.

The Next Big Opportunity

Guilty pleasure programming is only one content type that has been successful this year. Other formats such as news also are highly popular and are expected to remain so, post-pandemic. For Eliza Jacobs, Director, Consumer Insights & Analysis, PBS, her company is committed to building out their brand by focusing on digital to grow their audience and expand their base. “We have a digital approach going forward on our own platforms as well as partnerships and building out a PBS News brand on a digital platform,” she revealed.

With a distribution source of 110 newsrooms nationally, Sean Fassett, Vice President, Research & Insights, WGN America & Antenna TV, sees his company as able to leverage strengths in both linear and digital. “News is a guilty pleasure,” he explained, “but it is also a necessity. There is still a need for news to know what is going on and how to keep their families safe. We focus on niche stories that give voice to the voiceless.”

Conclusion

The pandemic has changed the paradigm for our business in a myriad of ways. In some cases, it has accelerated an already predicted transformation and expanded the role of certain business models. In other ways it strengthened certain programming types and clearly defined the need for diversity. What the Mavericks of Media all have in common is their thirst for knowledge that will help the media industry not only survive but thrive. 

This article first appeared in www.MediaVillage.com

 

 

 

Jack Myers and Michael Nathanson Read the Media Tea Leaves

As difficult as it is to predict media industry trends in normal times, it is especially difficult to predict them now during a pandemic. What can we expect to happen financially in the 4Q when the virus may or may not be under control? How long will it take the media marketplace to rebound? To read Jeff Minsky's commentary on Jack Myers' update and forecast, link here.

That is why sitting down with two financial experts like Michael Nathanson, Senior Research Analyst at MoffettNathanson and Jack Myers, Founder of MediaVillage, helps to put the future of media spend into a manageable perspective. This MediaVillage Leadership Conversation took place last week where they delved into their previous forecasts earlier this year and revised their predictions with the most up to date data. (View the full video Leadership Conversation on-demand here.)

A Look Back At Past Forecasts

While Nathanson was surprised at the market upside and noted that the data points were better than he expected since his predictions in April, Myers was less sanguine. “The caveat being,” Myers stated, “that we were anticipating a shorter term downturn with maybe less of a long tail.” But maybe, he averred, the long tail is longer than we expected.

Back in April, Myers had taken, “a more contrary point of view to most of the consensus regarding the economy, based on a more pessimistic view of how the government and nation would respond.” His more pessimistic forecasts have, unfortunately, proved prescient. Consumer confidence which drives the economy needs reassurance that a vaccine is imminent but the path to a vaccine is a long one with the best case, according to Myers, occurring in the second quarter of 2021. “So any recovery between now and then would be dependent on actions like this and a more aggressive use of masks and social distancing- things that have not been happening successfully around the country,” he explained.

The Unclear Future of Sports

“Sports seem to be such a pivotal issue for the industry,” noted Myers. Is it possible for sports to return in the third or fourth quarter of this year? For Nathanson, sports may start but it is unclear whether it may finish the season. For Myers, the challenge in predicting spend is that, “Sports advertising budgets are based on the need for flexibility and cancellation options and not reallocating budgets to other dayparts that are non-sports. Those are big concerns for the networks.”  Myers is, “Seventy percent sure that sports are unlikely to happen. I agree that it will start. I am not sure where the leagues will wind up.”

After to speaking with educators across the country, Myers is also sure that colleges will reopen in the fall but, “as of Thanksgiving they are anticipating and planning for a shutdown.”  So the start and stop schedule for college, in addition to the unpredictability of pro sports, does not bode well for the remainder of 2020. “There are so many uncertainties and the risks are so high  that we are more likely to see delays into the second and third quarter of next year before we see any meaningful return to sports and until there is a vaccine. And I projected that we would not see an Olympics until 2022 which has a major impact across the ecosystem. I am still holding on that,” he concluded. Because sports programming covers the range of media from national to regional to local and across all media, the revenue impact of a lost season for sports programming is especially worrisome.

Ad Spend Performance Going Forward

In reviewing his forecasts from earlier this year, Myers reiterated that his forecasts, “have certain assumptions and predictions that are not consensus views around sports.” Referring to his chart mapping the economic impact of the 1919 pandemic, Myers noted that the same tactics that we are experiencing today from the lack of Federal action to a reliance on the states to manage the outbreaks,  resulted in a four year long recovery into the Roaring Twenties. Of course medicine today is more advanced and the hope for a vaccine in two years is not unreasonable today. But Myers sees a, “two years downturn in the economy. I believe we are going to see increasing negativity coming.”

Myers compared a best case and worst case scenario in July to his original forecasts in January which were generally positive. Looking at July, market prognosticators appear to be more optimistic than Myers who noted that, “The consensus view seems to be in the low (negative) teens in terms of the overall advertising, in the mid-teens  for the legacy linear advertising and flat to negative … or even the plus side for some forecasters for digital.” But Myers himself believes that best case, Total Advertising will be off -14.3%, Legacy -20.8% and Digital (which does not include Facebook) -7% while worst case is -20%, -29% and -9.3% respectively.

Examining individual media sectors such as Cable, Broadcast, Local, Print and Audio, best case worst case, “we are continuing to see downturns, anticipating minimal sports revenue. I’m anticipating a 20-30% of what some other forecasters are anticipating in terms of sports revenues. That is a primary reason for my more negative best case scenario.” Some digital sectors can expect upsides such as Search Marketing, Online Originated Video, Video Game advertising, “Overall,” Myers said, “continuing a downturn in the Digital media economy with strength around Interactive OTT and Addressable.”

And Yet, Some Bright Spots

There is a bright spot in the area of content creation. Myers noted that the logjam between Writers Guild and top agents seems to be breaking down, “which is good news,” for the industry, enabling fresh material for content-starved viewers. And reality shows, game shows and even movies are in production. “In Hollywood they have begun casting couples and roommates. So they are beginning to cast people who are social distancing with each other and finding a path towards original production,” he explained, which could help with ratings performance.

Not Facing Reality Bites

"In times like these, plans are useless but planning is essential," noted Myers, referring to a quote by Winston Churchill. “We need to plan with best case and worst case scenarios,” he stated. “The message that I communicate is - be prepared for the downturn in the economy. Be prepared for some of the realities. As we look at the upfront, the scatter markets and some of the realities across the media ecosystem and agencies, I’m feeling a sense of complacency. A sense of ‘it’s not as bad as we anticipated or feared so let’s move forward business as usual.’ That, frankly, scares me - move forward business-as-usual and not preparing our businesses for the potential downturns,” he concluded.

This article first appeared in www.MediaVillage.com

Is It Now or Never For Advanced TV?

Changes in the media ecosystem didn’t start with the pandemic. In fact, some aspects of media buying and selling have been in discussion since the 1990s including Advanced advertising, according to Research futurist Bill Harvey, who has been touting the concept of advanced advertising since then.

Harvey participated in a recent Myers Collective Leadership conversation on the future of Advanced TV with a panel that included Kevin Arrix, Senior Vice President, Dish Media Sales, Jamie Power, Chief Operating Officer, Cadent, Marcien Jenckes, President of Advertising, Comcast and moderated by Jack Myers, Founder of MediaVillage.

The Addressable Market Landscape Today

Myers launched the panel with an opinion that I believe many of us share in the industry. “I have been studying the advanced, interactive, VOD, addressable market for a long time,” he began, “and truthfully, I’m not all that clear on who’s who and what’s what.” There is a litany of companies in the media space, who seem to offer opportunities that can overlap or conflict or split the market.  “Help me understand the dynamics,” he asked.

For Powers, one of the reasons that there might be some confusion is, “because we over complicate it.” In looking at the current set top box addressable marketplace with the MVPDs, she explained that there is, “Ampersand that has about 60% of the addressable households … then you have Dish and then Xandr,” which, combined, rounds out to the rest of the 40% of the country. She then noted that they have expanded to IP addressable to get their clients full reach in television. Cadent’s role is that they have, “created a platform to make it easy to execute across all the different screens and channels with consistent workflows and universal data, to get measurement aggregated all in one place” she stated.

“It’s worth noting,” added Arrix, “Advanced television is a holistic category. I would define it as anything that is data driven. I think Addressable is a part of the Advanced television marketplace. From my point of view addressable is defined as deterministic. That is the line that makes something addressable or not.” Ampersand, Dish and Xandr all have deterministic, set top box data, he noted, adding Sling, ATT TV Now, YouTube TV, Google Live and Fubo TV that are also subscriber based MVPDs.

Jenckes believes that the competitive set within advanced television is complementary because, “different distributors reach different households. So in order to reach the full US market you have to figure out ways to work across them.” He agreed with Arrix that, “there are other new forms of distribution that are emerging, like Roku which is a virtual distributor in some sense and there are others with addressable capabilities out there.” He added that once the national networks are enabled, we should expect significant growth in the amount of addressable inventory available in the marketplace.

“I agree with everything that has been said. Addressable is the umbrella term and the one type we have not called out yet is data-driven linear,” explained Harvey who added, “All of this is aimed at better results for advertising. That’s the whole point.” For Harvey, the topology maps out as such: MVPD addressability through a switch from the set top box and the Connected TV which can be a Smart TV or a connected device. The challenge from a data standpoint (which is something Nielsen and Project OAR is tackling) is how to best combine different data streams (such as from a smart TV in a local household or from terrestrial and satellite sources) that may have different latencies, delay times and black screens.

The Addressable Market Marketplace

So where is addressable headed? Forrester predicted in 2000 that addressable advanced television would be a $30billion industry in 2020. “Well here we are in 2020,” Myers noted, “and it’s significantly less. It’s a fraction of that.” He added that, “our forecasts are that in 2025 it will represent about 8-10% of the television ad revenues which will be significant growth but not the $30billion that Forrester recommended we would have today.“ Considering how off predictions were in 2000, one could be forgiven for being a bit skeptical about the robustness of addressable revenue growth in the next few years.

And yet, Jenckes believes that the biggest barrier to addressable growth – the technological challenge of switching from programming to ads - has now essentially been solved. But, he added, “the limitations we are having right now are around the amount of inventory we have available,” which is the two minutes an hour for addressable but even then, this inventory is often used in other ways. “So the challenge is how you improve inventory and how you manage yield. You can sell the inventory in a lot of different ways. I can sell a full spot at a set CPM or a much narrower sliver of that spot for a higher CPM but as the owner of the inventory I have to figure out which is best and how I optimize the value of that.”

The final challenge, Jenckes added, “is measurement and the biggest issue around measurement has been the historical restrictions that Nielsen has imposed on us as an industry,” Addressable is easy to measure because it is impressions based. The challenge is to measure, “the under addressable part of the campaign. What happens to the rest of the spot? Since Nielsen is panel based, if one of the panelists happens to get a different ad it breaks the model because Nielsen doesn’t know if that is one impression or a lot of impressions represented by that one panelist. There is a lot of work that needs to happen on that front,” he concluded.” But,” he then added, “these hurdles have been coming down. There has been a lot of progress around standards, around enablement and even on the measurement front although I think that will be the last frontier.”

For Powers, “the opportunity of addressable has been around for years. But agencies haven’t done it because we haven’t invested in the ad tech,” to facilitate the consistent measurement across platforms and services. In addition, “as a marketplace we are not articulating what the value-proposition is. We are over-complicating it. Advertisers and agencies are not understanding it.” She advocates for the creation of standards and a common currency. "If we cannot even agree … it makes it really confusing and there is not trust in the marketplace to try it.”

According to Arrix, “The key to the future is all about interoperability. The technology is getting better, the process is getting better. There has been a significant amount of progress made in the last few years.” That, with the recognition by the industry that, “data-driven advertising is just smarter,” is leading the industry to a growth surge for addressable.

The Future of Addressable

Propelling a robust future for addressable is data and measurement. In the past, the industry was wedded to the Nielsen panel. “But,” as Harvey pointed out, “right now there is more data each individual party has. The data is now disaggregated into these silos and if we put them all together we have the measurement system of the future. We don’t need panels except for nuances like co-viewing projections and stuff like that. Eventually that goes away too.” He admonished the industry to, “work together. Not just say it like we used to do but actually do it.”

That is the underlying structure for the business. “The big money comes when we get the network inventory. The two minutes an hour is not going to make it a big business. The $30billion comes as soon as you start switching to network addressable,” Harvey concluded.

“It is at the beginning of the game,” Arrix noted. “We see two paths right now. There is the true addressable path where you are breaking up the linear spot into impressions and you end up having the 80/20 rule with the 20% as the target and the 80% is the underlying impressions that you have to figure out how to monetize. That is how we operate now in our addressable business. The other initiative is creative versioning where you are not breaking up the linear spot but you are using deterministic data to deliver the right creative to the right household.”

But the stakes are high and the future is not assured if we all can’t come together as an industry to create standards and work together. “My fear is that unless we do that, we will be relegated to … the weakest player within television,” Jenckes warned. “And if that’s the case, we can all start the clock right now for the full and predictive demise of TV folks have been talking about for a long time. The good news is that because of the progress we’ve had, I don’t think that is going happen. There is a path and it requires collaboration.”

When it comes to business during the pandemic, “is business a bit little softer than usual? Yeah. But I don’t think COVD has a major effect on this,” Powers stated, “The same problems that existed before COVID, exist now. One thing that has happened is that there are more eyeballs watching the television and we know that we will pass the threshold (of 50%) at the end of this year from linear to non-linear viewing. Data is the only thing that is going to win in this marketplace.”

This article first appeared in www.MediaVillage.com

Let’s Work Together as an Industry. Jack Myers Reports On the Future of Media

For 35 years, Jack Myers has presented an annual media industry financial assessment report called The Myers Report Industry Update  that is culled from data and conversations with national and local media, agency and marketing executives from across the spectrum. In previous years, the report was shared only with MediaVillage member companies. But this year, the study was released to the public via a fascinating webinar this week that reached over 1,000 global participants. 

Like many small companies, Myers’ MediaVillage has been greatly impacted by COVID-19. His young team, he explained, “really stepped up. And that is a core message for all of us during this time. To step up, to lead and to show what we can do as individuals, as teams, as organizations and as an industry.” For Myers, looking at where the industry is going requires us to, “look at the realities as we move forward into the next stage of growth, renewal and recovery for the media, advertising, marketing and entertainment community.”

Advertising and Media Community COVID-19 Renewal Fund

To that end, Myers has launched a series of Leadership Conversations that will serve, he explained, “as a navigational intelligence tool and resources to lead through this turbulent time that will lead to renewal and growth.” Another aspect of these conversations is to better understand the challenges of COVID-19 on a range of non-profit organizations in the media business. “They are struggling now,” he explained, “so I’ve made a commitment and MediaVillage has made a commitment to support thirty of those organizations in partnership with the Advancing Diversity Council of forty industry leaders.”

His Advertising and Media Community COVID-19 Renewal Fund is seeking donations which will be used to support those thirty organizations that are, he noted, “leading the charge for not only supporting diversity in our community, supporting non-profits that are helping families, helping small companies, helping local restaurants and restaurant workers.” Donations can be texted to GIVE 8604064919 or at https://www.mediavillage.com

Benchmarking Economic Projections

Forecasting future revenue potential for any industry while a global pandemic cripples the economy is not an easy feat. The last major pandemic was a century ago at a time of different medical capabilities, media platforms and public sensibilities. So a direct one-to-one comparison may not be ideal. However, what happened in the years following 1919 could be used as a rough benchmark. Myers pointed out that the negative economic impact of the 1919 pandemic was felt for three years, rebounding during the Roaring 20’s (a time of Prohibition, the Great Depression and the rise of autocracy.) Taking into account the realities and facts of today, he projected a modest decline in the advertising sector by 2021 with certain areas of the business faring better or worse than the industry as a whole.

Myers Economic Projections for 2020 and Beyond

Advertising spend sectors cratered in April and May with the advancement of the pandemic. Myers, in his Industry Update report released this week, still projects declines (although much lower) in 2021 due to a slow start to sports and less political advertising in a non-election year. Myers’ first post-COVID economic update on April 15, 2020 saw Total 2020 Marketing Investments decline -16.6%, and by May, -22.6%. Total 2020 Advertising, which saw a +6.2% gain in January, fell hard in April (-20.0%) and May (-22.6%). By 2021, Total Marketing Investments and Total Ad Spend should pace at -4.7% and -3.8% respectively in anticipation of a second pandemic wave in September or October.  

Notably, the beneficiary of a new post-COVID normal looks to be Legacy/Linear advertising which was pacing as flat in January 2020 (-0.3%), fell hard in April (-29.0%) and May (-32.0%) but is projected to gain +11.4% in 2021. Digital, which was pacing at +13.1% in January, declined -9.3% and -12.1% so far during the pandemic and is estimated to post a +3.1% by 2021. Notably, the two worst performing categories, Out-Of-Home (-52.6% in May) and Digital Place Based Media/Cinema (-65.0% in May), depend on consumers venturing out into larger venues and will understandably take longer to recover.

Moving From Share to Growth

Myers warned that, as an industry, we are headed in a self-defeating downward spiral.  He noted that, for, “Total Marketing Investments above and below the line, advertising plus shopper marketing plus promotion that includes event, PR all below the line, we’ve lost as an industry $100billion in the last ten years. We are below where we were in 2000, at the 1990 level.”

He attributes this to increased competition in the space where more media companies are all competing for the same media pie. Certainly there has been growth in certain sectors such as shopper marketing money moving into Facebook, Google and other commerce based solutions. But, he stated, “this is a false growth. The reality is that there are 60,000+ media sellers, companies, organizations, brands who are competing for advertising dollars… all focusing on taking share.” He added that, “as an industry we are in a share game. We need to move from a share game to a growth game for the whole industry. Compete while raising the tide.” And it is all the more important to do so as we move through COVID-19. He concluded that, “It’s really important to think, act and look to our stakeholders as one community, standing together focused on serving their needs.”

Annual Sales Organization Industry Leadership Honors

Myers shared the results of the latest Annual Leadership Honors for those companies who have demonstrated excellence in sales service, innovation, research and effectiveness. He noted that the study recognizes, “forty companies in the advertising industry across nine performance metrics in ten industry categories… surveying 700 advertiser and agency executives on their perceptions of eighty media companies,” in television, digital, audio and out-of-home in nine categories. And he offered a spoiler alert: The top performing media sales organizations for 2020 based on field research from February 1-March 15, 2020, which he posited was, “the perfect pre-COVID snapshot,” went to Hulu and Pandora.

This year’s study offered some tantalizing insights into the future of media. Past years have seen the dominance of legacy media outlets. This year, the top performers were for the most part digital properties that are comparatively new to the media space.  Also, in some areas, the parameters of success this year were generally lower than in past studies.  

Best In Class and On-The-Rise Honors

This year’s study offered an overall best in class honor as well as an on-the-rise honor for those companies that performed well among industry executives with less than 7 years in the business. The chart below is a quick recap but certain aspects of the study are worth mentioning here.

One of the interesting aspects of this year’s study, aside from the relative dearth of legacy media companies making top grades, are the declining median scores. On a scale of 1 to 100, the general median score has been 65, “and we rarely saw media scores below 50,” Myers stated. But this year saw no category at the historical 65-as-passing median and some categories such as Innovation, Proactive Impact, Advanced Technology and Trade Communication, woefully low. More needs to be done industry-wide to bolster the efforts in these areas for advertisers and brands.

                                                    Median score    Best in Industry                         On-the-Rise      

Trust and Reliability                   61.3                   Spectrum Reach/Pandora        Vudu/Sinclair

Client Support and Services       59.1                   Hulu/Xandr                              NYI/Vudu/Tiktok

Communicating Value                58.6                   Hulu/Pandora                    SiriusXM/Vudu/Roundel

Client Satisfaction                      57.1                   Pandora/Hulu                            Vudu/Cumulus

Data and Measurement               53.5                   Google/Pandora                      Samsung Ads/Twitter

Innovation                                   47.5                   Xandr/Hulu                              Roku/Viacom/Tiktok

Proactive Impact                         47.8                   Pandora/Xandr                          Intersection/Vevo

Advanced Technology                 45.6                  Verizon Media/Samba TV            Dish Media

Trade Communications               35.4                   Google/Hulu                             Twitch/Crackle Plus

Finally, the Best in Media category across the nine performance metrics were:

Advanced TV                     Hulu/Xandr/Effectv

Audio                                    Pandora

Broadcast TV                      NBCU

Cable TV                              Viacom Ad Sales

Commerce                          YouTube/Amazon

Major Digital                      Google/Verizon Media

Local Media                        Spectrum Reach

Out-Of-Home                    Intersection/Outfront

Conclusion

The major takeaway from this report as well as the full economic picture in the webinar encompasses several themes. “What can you do as an individual company, as a business category and as the whole media and advertising industry learn that we begin acting on during this period, as we move towards recovery and renewal,” Myers stated and added optimistically, “Then, as we move in 2021, 2022 and beyond into true growth periods, hoping that we hit a boom cycle as the Roaring 20s reflected, beginning in 2023.”