May Thirteen
This is your midweek Fix, going deeper on our core topics. This week newTV, next week Merchants and we will alternate. We will get this onto a separate database so people can opt out of this if they want - but if you unsubscribe now you lose Fix Friday too. Would love your thoughts on how we make this better  - hit reply.

Double Whammy

I have long argued that the future of TV is ad funded and that the ad model is more resilient than relying - solely - on subscriptions. I think the current crisis supports this - but it has also shown the fragility of ad spend.

ITV shared that their April revenue was down 42% and the US market is seeing revenues plummet too. Having seen a lot of money move out of March and April, big brands are now using a get out clause to pull Q3 money.

The reasons appear obvious but are actually quite complex - and paint a picture of the Perfect Storm facing the industry. Brands wonder whether their customers will have money to spend as the virus disrupts the economy. That same factor suggests that cord cutting may accelerate - and the absence of sports limits audiences too. As does the fact many shows are still in production and may not be ready this year. Any brand has to consider what they are going to get for their money. Let’s look into these issues.

Fragile Budgets

This WSJ article goes into detail on how big brands are looking to reduce ad spend later in the year too. And because of the way the US industry works, commitments for 2021 are usually agreed in September - so uncertainty is likely to continue. Some brands are talking of moving money into digital - Chipotle talk up the great returns they have had from Facebook and Instagram whilst General Mills is shifting some TV advertising dollars into digital video and e-commerce, areas where it is seeing people spend an increasing amount during the pandemic. Pepsi are said to be reducing TV spend - I guess they face similar problems to Coke where a huge proportion of sales are through outlets now shuttered due to the Virus. Pepsi did announce a major push into ecommerce this week - is that where the TV budget gets spent now?

Cord cutting is accelerating as closed businesses drop their subscriptions. Many hotels are canceling as their rooms are empty and even as bars reopen there are few sports events. Analyst Craig Moffett says PayTV subscribers dropped by 1.8m in Q1; At 63% of occupied households, traditional pay TV penetration has reached a level not previously seen since roughly 1995,” 
As with most Virus things, do we expect it all to go back to normal at some point? Probably not. It’s worth reading the Matthew Ball essay on the end of Pay TV from a couple of months ago
But it’s not like streaming services are immune to these issues - if you are short of money any subscription will get questioned. And lots of people don’t pay; they share someone else's log in.  Whenever I do a talk on newTV I ask who shares a Netflix login and at least a quarter own up. This research puts the figure at 15% - down as Amazon have been very effective at stamping it out - but think nearly half would pay if they had to. That’s nearly $3bn extra revenue each year!
When Disney announced the deal to make a Hamilton movie it was positioned as a movie release to be in Cinemas in Oct 2021. So the announcement that it will be on Disney plus in July is a real surprise. At $75m it wasn’t cheap and I wonder what maths now justifies missing the box office revenue? 
With 54m subscribers Disney doesn't appear to have a marketing problem. And given they, like everyone else, have closed production and hence worry about when they will have new content it seems odd to play this ace right now.
One content strategy that Netflix is doubling down on is discovering foreign language content they can make popular globally. Money Heist is a good example and this interview with the show's writer is interesting.
I am surprised by the negative press and sentiment on Quibi, which picked up after this interview with Jeffrey Katzenberg. He blames the problems on the Virus but does seem to be actively trying to change things around. Many people seem to use TikTok as a comparison which i think is a mistake. As I argue in my piece for Contagious the best model is Snap and Quibi can learn from them - and make that model work for a very different demographic.
The IAB have weighed in on the key issues in newTV with a good new initiative, marred slightly by a poor name; Tele://Vision. I agree with much of the comment and one issue stands out; measurement. 
Currently most research is incompatible with others and hence gets reduced to ammunition for one medium being better than another. For example new Magna research shows that most viewers are present for digital video ads whilst 29% of TV ads are aired to an empty room. And digital metrics can show attention waning after seconds, whilst TV doesnt have that granularity.
With newTV we have to get measurement approaches that make the most of the medium - and help us compare to legacy TV and to digital. It’s interesting to see Amazon step up - as they have the unique ability to look at really robust sales data. Their 5 ways to measure an OTT campaign are good and as they grow their Measurement team we can expect their contribution to this debate to grow too.
Better ads
Long conversation this week with one of the pioneers of AVOD on why the ads are the thing everyone complains about. People that accept ads in broadcast often find them unacceptable in the same programming delivered on AVOD. Yes the ad load and lack of frequency capping can exacerbate the effect. And bad ads irritate wherever they are. But when they are unskippable….
I think personalisation has a role to play here - remember Sky tell us that channel hopping drops by a third in breaks where the ads are more relevant, through their AdSmart tools. As we get more granular data can we learn from the constant optimisation that typifies the best online ads? And it's easy to be sniffy about DTC ads using the AIDA model but revisiting old thinking works and trad ad agencies have no exclusivity over making TV ads.
This is a hot topic; NBC are looking at ad load and the Hulu pause ad seems to be working. What’s next? Shorter ads? Are 6 second ads gaining traction? - did the fairy tales inspire people? In the meantime product placement is being boosted by tech innovation.
Social & TV
We use newTV as a term to avoid the jargon and acronyms and to celebrate the fact that a few seconds of TikTok is just as much Telly as is the Irishman or watching Natural People on iPlayer. The connected device makes all video content available and people choose to spend their time with whatever they like - on whatever screen works for them at that time.
So Social video is clearly part of this space. The size and velocity of the creative community making content (and the audiences making that content famous) means things change and develop quickly.
This long piece on how TikTok is going Hollywood is a great read. And if you want to better understand TikTok, a Fix friend has an excellent online course covering every aspect of the TikTok platform -- including how advertising works on there. Anthony wrote the seminal piece on Old Town Road and understands this space so well.
Twitch is also part of this ecology and is looking at Talk shows and Dating programmes,
Could Amazon be about to take over your local cinema?
 Roku debuts its OneView Ad Platform
(The IAB have collected some good insights on video audiences in the UK - from Kantar, Dentsu Rakuten and Roku)
Interpublic Group Launches Addressable-Advertising Agency Matterkind
Niantic eyes lead role in AR ‘gold rush’

newTV is an area with huge potential - if there is value for you in this space lets talk about how I might help - hit reply

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