Month: April 2024

Why isn’t my CTV/OTT investment working as hard as other media channels?

Consumers are shifting their viewing from broadcast and cable to streaming services at a breakneck pace. Total viewing of steaming services is now approximately 36% of total TV viewing – more than total broadcast or total cable. Share of viewing to streaming services is even higher among younger audiences, representing approximately 60% of total video viewing among people under 35 according to Nielsen.

The pandemic accelerated the migration of viewership. The recent writer’s strike further accelerated the shift as well as increasing cord-cutting, as the traditional networks were handicapped by a shortage of new, original scripted programming.

U.S. OTT subscription revenues are on a path to overtake pay TV (cable) revenues by 2025. According to eMarketer, OTT subscription revenues are forecasted to be approximately 53% of all TV subscription revenue by next year.

There is no debate that consumers have embraced streaming services as their preferred source of video entertainment viewing. The main force slowing down the demise of linear television is live sports and news, but even that is changing. Three of the major network groups (Disney, Fox, and Warner Brothers Discovery) recently announced the formation of a new sports-focused streaming service. Peacock set a new record for the largest streaming audience for NFL football with the AFC wild-card playoff game between the Miami Dolphins and Kansas City Chiefs in January with 23 million viewers. Viewing to Amazon Prime’s Thursday Night Football was up +24% year over year this past season.

Advertising dollars are shifting from linear to streaming at an even more rapid pace than viewership is shifting. While viewership is increasing by approximately 7% in 2024, advertising revenues for streaming services are forecast to increase by 16-17% according to eMarketer.

On top of overall macro trends in viewing and advertising spending, CTV/OTT offers much more precise targeting opportunities than linear TV. Virtually all the same targeting data that is used for digital display and digital video campaigns can be applied to CTV/OTT when activating programmatically.

Shifting ad dollars from linear to streaming, following consumers as their viewing habits evolve, seems like an obvious move for major marketers. And yet many advertisers are asking the question “Why am I not seeing a better ROI/ROAS for my CTV investment?” The expectation is that following consumers as their media habits change and applying better targeting SHOULD result in better results.

Measuring CTV/OTT impact is a challenge.

There are many attribution models in the market being applied to CTV/OTT. Unlike digital display and OLV, we can’t rely on standard digital metrics to evaluate success. There is no click-through rate or cost per landing page visit to gauge what’s working in streaming video. Some advertisers are starting to incorporate QR codes into their ads on CTV to provide some form of response.

These approaches may work for eCommerce or direct-to-consumer digital campaigns. But the bulk of video spending by major advertisers is more focused on driving upper-funnel metrics such as awareness and consideration. The campaigns are designed to change perceptions of the brand or service which ultimately leads to sales.

Many “brand building” marketers rely on marketing/media mix models to determine the relative ROI or ROAS of each channel in the media mix. What many marketers who use these models are shocked to discover is that the model shows lower ROAS for CTV than for good old-fashioned linear video. They are asking the question “Why isn’t it working?” When they look at their competitors increasing their spending, they wonder “What do they know that we don’t know?”

CPMs matter.

To fully understand why CTV isn’t performing as well as other channels, it’s important to deconstruct the elements that go into the ROAS estimates in a media mix model. In simple terms, ROAS is made up of two components: lift and cost. These need to be evaluated independently from each other. How much lift or incremental sales are attributed to CTV, without regard to cost? How much lift are you getting PER IMPRESSION? How does the lift compare to other channels?

What many marketers discover when they look at it this way is the lift for CTV is as strong, if not stronger than linear TV. What brings down the overall ROAS is the cost (CPM) they are paying for CTV relative to linear TV. In many instances, especially if their CTV investment is skewed towards the most premium, high-profile streaming services,they are paying 3-4x the CPM of linear. In that situation, CTV would need to work 3-4x as hard to deliver the same ROAS as linear TV.

CPMs have come down significantly in the last several years as supply of advertiser supported streaming inventory has increased, even on the most premium platforms. The CPMs of a “backward looking” media mix model may not be reflective of what can be achieved going forward, even with the same vendors. And of course, there is not only a wide range of streaming platforms to explore to improve CPMs, but CTV can be done very efficiently programmatically, acquiring inventory via exchanges and various private marketplace deals.

It’s important to consider what the most premium platforms are delivering that can’t be achieved through more efficient platforms. Less familiar platforms such as Tubi and Pluto are capturing a significant share of overall viewing and growing. Based on Nielsen data, viewing to Tubi, which is 100% ad supported, has surpassed Max, Roku, and Paramount+. And some marketers overlook the fact the YouTube is the biggest streaming TV platform, bigger than Netflix, Amazon, or Hulu, capturing 8.6% of total TV viewing according to Nielsen.

Shifting dollars to more efficient options can significantly improve ROAS for CTV.

Reach matters.

CPM is not the only “lever to pull” to improve performance of CTV. Reach is an important consideration and deserves scrutiny at a granular level. In the increasingly fragmented (some would say “atomized”) video landscape, cobbling together the right mix of linear and digital options to maximize reach is one of the biggest challenges.

Optimizing reach is one of the issues at the heart of the discussion about new measurement options. Historically, it has been difficult to look at reach across all video platforms holistically, including not only linear and streaming services but also YouTube and video on social platforms such as Meta. But recent developments in alternative measurement platforms have made more holistic reach and frequency possible.

Just looking at the overall subscriber base or reach potential of each platform doesn’t provide the insight needed to understand the contribution of each element of the video mix. In addition to the fact that those figures include NON-advertiser-supported viewing on some platforms, advertisers need to understand how their specific mix delivers from a reach perspective.

Marketers need to ask what unduplicated/unique reach is each component of the video mix contributing. Looking at the level of frequency within each component is important as well. Often, to reduce/control CPMs, dollars get shifted to the most efficient options (networks, platforms). This can result in excessive frequency within a single platform or network. Excessive frequency can actually reduce the lift and ROAS of individual components of the video mix.

The incremental reach of CTV can be further improved using ACR data to ensure that consumers already reached with sufficient frequency via linear video are excluded from the delivery for the CTV elements of the mix.

Linear TV is not dead.

For all of the headlines about cord-cutting and the shift of ad dollars and viewing to streaming, it’s easy to lose sight of the fact that linear TV (broadcast and cable) still captures more than 50% of total TV viewing. And in many instances, depending on the target audience, linear is still more efficient than streaming, even with some of the suggested shifts discussed above. Marketers with very modest budgets should try to maximize reach within the most efficient view options before investing in more premium price options.

Examine closely and ask the right questions.

The CTV/OTT landscape is still “the wild west” of the video world, but it should be part of the mix for most video advertisers. Careful, ongoing scrutiny of the video investment is essential, however. The landscape continues to evolve rapidly. New entries coming on board and seismic shifts, such as Amazon Prime converting all subscribers to an ad-supported model overnight, are happening throughout the year. What worked successfully last year may not be as effective this year. But with the right “due diligence”, CTV should be an increasingly valuable part of the media plan. As usual, caveat emptor.

AUTHENTICITY IS A WAY OF LIFE

Every quarter I’m going to dive into a favorite topic of mine, Authenticity Is the Key to Success, and viewing this topic through many lenses, as this really is a multi-faceted topic. This quarter I’ll focus on brand authenticity and how brands succeed when they truly show up as their authentic self. These brands are maniacal in their beliefs and stick to these foundations religiously, even if it goes against profitability, modern day trends and even common business practice sense! In a nutshell, Authenticity is more than just a buzzword – it’s a way of life. It involves being true to yourself, your values, and your intentions. So why wouldn’t brands (and people) be authentic to their true selves? Simply put, greed.

FOR BRANDS INAUTHENTICITY IS USUALLY DRIVEN BY GREED (OR SIMPLY POOR JUDGEMENT!)

Consumers are quick to spot brands trying to be what they are not, all to join a specific trend or jump on a bandwagon. Greed drives much of why brands deviate from who they truly are, even if it doesn’t tie to their business, mission, or previous manner of how they showed up. Taboo examples of this range from green washing, all the way to extremes of supporting activism (we sadly saw a lot of this during COVID and The Black Lives Matter protests!) Authenticity is earned and not created or fabricated.

AUTHENTICITY HAS A DEEP NEUROLOGICAL IMPACT TO CONSUMER BEHAVIOR

According to Edelman’s trust barometer, a whopping 81% of consumers say trust is a deal-breaker when it comes to buying. Authenticity becomes the glue that seals the deal, fostering trust between brands and consumers. When a brand is open, honest, and doesn’t play hide-and-seek with information, it builds a rock-solid foundation for a lasting relationship. But it’s not just transparency, brands need to be relatable to create resonance, and to do this, you need to lean into personal moments which your audience cares about. This is the reason behind the rapid rise of the creator economy, as brands leverage “real people” who they believe are a human manifestation of their brand, to connect with “real consumers”. For example, a brand like Corona has found a nice playful way of marrying Eli Manning (stiff preppy jock) and Andy Samberg (edgy comedian) with Snoop Dog (laid-back) to provide a nice balance and contrast for its “la vida mas fina” campaigns—to slow down and enjoy “the finest life”. Although we won’t talk about the Solo Stove fall out, I still don’t understand the drama from that campaign! Did people take Solo Stoves product too literally to appreciate the tongue and cheek “no smoke’ campaign?! Why did it work for BIC but not Solo Stove?! Could it have been a timing problem? Or inauthenticity. Without a strong brand persona established by Solo Stove, consumers may have felt “tricked” instead of delighted by the Snoop stunt. People shrugged it off without making a purchase.” Personally, I felt this campaign was witty play on the brands, but possible it missed the mark for the above reasons. The reason I harp on about the importance of authenticity is that brands who own a moment, otherwise known as Fluency have a far greater recall rate. Nielsen’s Consumer Neuroscience team found that authentic brand stories are a jaw-dropping 22 times more memorable than dry facts. So, when a brand weaves a narrative that resonates, it’s like inviting consumers into their own personal adventure. It’s not just about selling; it’s about creating an emotional connection that lingers.

THE OG OF AUTHENTICITY

We can’t write a piece on brands being authentic without referencing the true OG who basically brought the premise into the mainstream: Patagonia. A story which reached its pinnacle on September 14, 2022, with Yvon Chouinard, the founder of Patagonia donating his 3 billion US dollar company, which he had built from nothing in 1970 to $200MM a year in 2023, to a climate change organization—effectively committing his business to protecting Earth. This legacy did not happen by chance, it happened through Yvon making a clear stance on what he believed and ensured his business and product manifested this same belief no matter the impact to the bottom line. Some of his actions were revolutionary, some might say one step shy of playing Russian Roulette with his brand. But this is the definition of authenticity. Standing firm on what you believe, even when those around you are drawn to the new shiny object, they can latch their brand to, to make a couple more bucks. Some of the most Avant Garde actions Yvon took included:

• In 1985, Patagonia pledged 10% of its profit to conservation groups. They felt they weren’t bold enough, so they took it one step further and committed 1% of sales, profit or not.
• Entering a new decade, the company took steps to reduce the influence of its business on the environment and began using 100% organic cotton exclusively, increasing product and labor costs, cutting into profits consequently.
• In 2011, they made a bold statement with their anti-consumerism Black Friday ad, “Don’t buy this jacket.”
• In 2017, Patagonia sued President Trump following his proclamation to reduce the territory of Native American national monuments in Utah.
• In 2018, the company’s mission changed to a very clear and simple statement: We’re in business to save our home planet. The company’s revenue for 2022 is estimated at 1.5 billion US dollars which goes to show that having a solid commitment to its brand-driven activism is also good for business.
• In 2020, the company launched a collection of Patagonia shorts with tags that said Vote the A**holes Out as a response to politicians denying the reality of climate change but looking to get elected that year. It wasn’t a brand campaign, the media and the wider public found out about the message when a photo of the tag was posted on Twitter. Needless to say, the line sold out immediately and now they are a collector’s item.

Patagonia laid the foundations for other brands to follow. They set the bar on what truly being authentic means, with many others having followed, but in my opinion, none have come close to the absolute values which Yvon created and instilled in Patagonia. But we need to ensure we don’t associate authenticity-based marketing with “doing good”. Whilst Patagonia was singularly purpose driven, but you don’t need to be purpose driven to be highly authentic. You just need to live by your values, even if those values represent fearlessness without apology! 

THE NEW DAWN OF BRAND AUTHENTICITY

To bring this into the 2020’s, a quick straw poll: What product does the brand “liquid death” sell? If you are under the age of 35, I fully expect you to know and likely to have a smile on your face when you reveal the answer. If you are above 40, you may well not know, but you want to read further as this will likely nicely bridge some nostalgia from your Led Zepplin, ZZ-Top and Fleetwood Mac days! Liquid Death sells WATER. Yes, WATER. “Water in a bottle?” I hear you ask, NO! “Water in a can” … “A Can?” I hear you scream with a confused voice. “Yes, in a can. Originally a Black Can with Gothic Writing and a Melting Skull as the brand image” …. insert blank stare. I’m going off on a tangent, but you get the point. A brand with such a basic product, with a perplexing name and packaging which is better suited to a heavy metal-based beer brand announced a record $750MM valuation in 2022. But how?! I’m certain every investor and their mothers wrote them off and said no to their proposals when brought a black can of water with gothic writing and imagery and yet it proved everyone wrong. One word: Authenticity. It didn’t deviate from how it wanted to be seen and perceived.

A whirlwind summary of how the brand came to be is that Mike Cessario was living in Denver and watching some friends perform with their band at the Vans Warped Tour music festival. Monster energy drinks were a sponsor on the tour, so the musicians were drinking out of Monster cans, but they’d replaced the energy drink with water to stay hydrated during their sets. Mike stated, “It started making me think about: Why aren’t there more healthy products that still have funny, cool, irreverent branding. Because most of the funniest, most memorable, irreverent branding marketing is all for junk food.” And this is still incredibly true today. Superbowl, the home of some of the most irreverent brand marketing is still driven heavily by the “junk food” category, with 20% of all brands marketing in the Superbowl 2024 being classified as junk food brands (high sugar, high calorie, high fats). So Cessario leant into that idea, creating whimsical metal and “death” centric ads, designed to “murder your thirst”. They haven’t deviated from this script and continue to broaden their brand via their marketing ecosystem, staying true to the authentic self which launched the business. Marketing programs which include:

• Partnership with Epic Games and Fortnite (which is the litmus test for if you irreverent in pop culture) to create “Murder Man” and “Murder Mountain” map.
• Tongue and cheek influencer campaigns featuring an adult entertainment star, cracking jokes at the adult entertainment industry to get the brand’s anti-plastic point across
• Tying its brand back to its roots by hosting and sponsoring events that align with its brand identity, such as punk rock concerts and extreme sports competitions.
• Social campaigns which lean heavily into its tag line “murder your thirst” in unconventional settings, such as how Liquid Death “murders your hangover” by having 6x the number of electrolytes for vs standard soda when making your cocktails!
• The pinnacle of being a cult brand is selling merch to extend your product line (just look at Tesla!) But Liquid death doesn’t just sell branded Merch, it teams up with notable individuals to create limited edition items, which create a heightening buzz around the brand. For example, selling a limited range of skateboard decks painted using real blood from skate legend Tony Hawk.

All this…. and it’s just water.

Today, Liquid Death has more than 250,000 followers on Facebook and 1.4 million on Instagram. In 2020, the brand expanded into Whole Foods stores, and it had roughly $10 million in sales for the year. That number jumped to $45 million last year, as chains such as 7-Eleven and Publix joined in. Earlier this year Liquid Death launched a line of flavored carbonated waters, with irreverent names such as Berry It Alive and Severed Lime. Now, the brand is sold in more than 60,000 retail locations nationwide, including Kroger and Target, where the cans retail for $1.89 apiece. Liquid Death is Amazon’s top-selling still water brand and second-bestselling sparkling water brand. The brand now has some deep-pocketed investors such as Live Nation Entertainment and Science Ventures, and celebrity backers including comedian Whitney Cummings and members of music group Swedish House Mafia. Collectively, investors have pumped about $195 million into Liquid Death, valuing the brand at $700 million.

YOU DO YOU BOO BOO

I’ve rambled on for too long, so I’m going to wrap with Kevin Hart and simply say “You Do You Boo Boo”. Find a white space you truly believe in, lean in and don’t stop leaning, and find new and exciting ways of unpacking that position. If done right, consumers will naturally gravitate to a brand which is authentic to a specific area. Consumers want to relate. They want a product and a brand to be an extension of themselves and their personality. If you create a clear position which people can latch onto and build an ecosystem and product base around the authentic self, as Kevin Costner said in Field of Dreams, “If you build it, they will come.”

WALKEN FOR CELEBRITY ADVERTISING MVP?

Sunday night, Patrick Mahomes made his fourth career Superbowl appearance. Not bad. But not as good as Christopher Walken, he’s been appearing in Superbowl’s for two decades.

Why? Because like quarterbacks, celebrities bring star power. And when they are properly aligned with their brand (or team), they win. Hence, Mahomes 3rd career title, and Walken’s 3rd Superbowl ad for three different car companies in his career

CELEBRITY POWER OUTSHINES CREATORS ON SPORTS BIGGEST STAGE

It’s not just Walken, by now everyone has read about the star-studded appearances in this year’s commercials. It’s still effective – ads with a celebrity have 25% more brand engagement online during the game (according to measurement platform EDO), 68% of consumers say a “celebrity-led Superbowl ad made the most likely to purchase” (UTA IQ research) and it’s damn refreshing to see.

While some may lament that brands are going back to the tried and true, typical high-cost production ads and more of the same, in fact they are wrong. Because for 364 days a year, marketers demand their ad agencies find “lightning in a bottle” or catch the next trend (Stanley) and license their brand representation to a 20-something influencer with 4 million followers and no inkling of what the brand they are pushing is all about. In fact, Sunday it was UberEATS, T-Mobile, Paramount and others who fearlessly bucked the trend of farming out their brand to the cavernous creator marketing nexus and took control back to establish why they exist.

They utilized celebrities because they work, they are recognizable, and they can act. But the brands also used celebrities because they strategically made sense. Arnold: “like a good neighba” for State Farm, Boston-based Dunkin casting the three most well-known Beantown celebrities, and of course CeraVe tapping into brand name recognition, I applaud these marketers for making a stand not just creatively, but strategically and for one day, to mind their brand house.

BRANDS USE THE SUPERBOWL TO OWN BUILDING THEIR BRAND, NOT OUTSOURCING!

I do not have a luddite aversion to creator marketing. The data supports that it is impactful, and it can be a tool to build brand growth. But it is one tool in the box, and as we have for decades superficially checked for the “most liked” Superbowl ads in AdWeek or USA Today Ad Meter, each day brands check the number of their views, impressions and likes of their paid and boosted UGC.

If only, on a daily basis, marketers treated each ad as a Superbowl ad and rather than absolve themselves of the responsibility to build their brands by punting it to the creator class, they had the confidence and fearlessness to create killer creative briefs and executing them flawlessly by utilizing every play in their playbook.

SO, KUDOS TO THE BRANDS THAT TAPPED INTO THE POWER OF THE CELEBRITY, CONGRATULATIONS PATRICK MAHOMES (AND YOU TOO, MR. WALKEN), AND BARRYMORE, SHUT YOUR FACE!

The FOX/WBC/ESPN sports streaming merger is the latest in a long line of fragmentation of sports in the media landscape. It used to be easy, Prime Time cable covered the based on ALL of your sport’s needs, with ESPN8 The Ocho needed if you wanted to catch the latest round of the Quidditch World Cup! But as streaming services became mainstream, sports became the battleground for subscriptions and engagement. The consumer decision went from “which cable provider is in my area and the best option for my needs”, to needing to weigh up the multitude of options and permutations in the fragmentation of the sports lumascape. A lumascape which includes options such as Cable Networks extensions  (YouTube TV & Hulu) Streaming only prime time  (Amazon and THF, Netflix and Monday Night WWE Raw and Peacock’s first streaming-only NFL play-off game), not to mention the potential of this becoming fragmentation being even more complex with regional networks like Sinclair potentially launching their own sports streaming service. This compounding fragmentation leaves both consumers and advertisers in a quandary, with consumers asking “where do I put my income to pay for the right services to get my sports fix” and for advertisers, it becomes “where is my next best dollar spent in this fragmented landscape to connect with my target audiences?” As an agency, we need to address these needs/challenges by assessing where do we put my bigger bets of investment/partnerships and how we can create efficiencies in his fragmented marketplace”?

For us, it starts with considering our client base and what the collective need is. Big Pharma and Telecom brands have a vastly different media needs than a regional retailer or a local QSR brand. We consider details such as the consumer profile, geography requirements, and sports fan bases, to name just a few. Once we have these, we are able to identify where we go deep with partnership. As you highlighted this fragmentation of the marketplace means we cannot be everywhere at once for our clients due to the fact that advertisers across the board are mindful of their media budgets in 2024, given the inflationary marketplace driven by the Olympics and especially in local and regional markets by the election, not to mention the fact that sports has the highest CPMs in the marketplace! So, we pick where to go deep in order to extract more value from these partnerships which goes well beyond pure cost! We curate these partnerships to of course aim to lower our clients’ costs through economies of scale via upfront commitments (where possible) but we believe the true value comes more from the unique integrations that can be created for our clients. For example, there is often a requirement to spend on other properties in their portfolio if you want the good stuff. If you want a spot in the championship game, you may have to spend on other properties you aren’t as interested in.  We always explore the level of flexibility with our clients to understand the goal so we can bring various options that might include an ad in the big game or less expensive options that can reach the same audience but in more creative, out-of-the-box ways that can maximize limited budgets – still embracing the sports ecosystem. That out-of-the-box thinking continues as we explore creative ways of integrating our brands into these preferred media properties. Whether this be second screen takeovers or on-show integrations or custom content and amplification through partner talent and IP.  We always look to leverage the full breadth of the value our partners can provide vs going straight to cost only.

In summary, with sports being of the few remaining programming types that garner large amounts of live, engaged audiences, it is mission-critical for our clients that we are not only up to speed with the rapid evolution of this space, but we are creating future-facing partnerships and value knowing what’s likely coming next.  Synchronous viewing and reaching a large audience at a specific moment in time, who deliver high attention and engagement is increasingly rare in today’s fragmented and on-demand world.   The sports eco-system can burn through budget quickly given the complexity and fragmentation, but if you put your clients first to understand their collective consumers viewing behavior, you can deliver truly unique integrated media experiences to both integrate into prime-time moments and elevate your brand above the competition via deeper and richer engagement opportunities.