Coming good

Advertisers buying broadcast tentpole programs at premiums sometimes 20x the cost of regular programming are being delivered audience makegoods in off-peak and BVOD that they could buy on a given day for the fraction of the budget. 

That’s the view of one big-spending CMO who traded a frank assessment for anonymity as the Future of TV Advertising forum kicks off today – 2023 is the year that may see linear TV take its biggest revenue hit in decades. 

“With TV down 20-25 per cent, depending on what demographic bracket you look at, the market is a flood of makegoods at the moment,” he said. “That's all it seems to be. There's no show hitting anywhere near the numbers that were proposed. So [broadcasters] are getting into this cycle of makegoods. You might get jammed into off-peak but if you want best practice, you build creative for the specific program that you're advertising in. That obviously also gets diluted when you're in a makegoods program that could be off peak or could be a rerun of M*A*S*H* or whatever. We’re in tentpole shows – if you’re getting BVOD makegoods on a linear buy, what’s the dilution on impact? And why if we might be paying thousands per TARP in linear for a premium environment, and makegoods are in BVOD, why wouldn’t I just buy BVOD for what might be a tenth of the cost?”

Still, the resilience of linear in ad pricing despite large audience declines has long been a marvel and already the US TV market is showing signs of life in the lead-up to the upfronts season where much of the US dealmaking for the following year is done.

US TV market picks up – again

“The TV market in the second quarter is looking stronger than originally predicted,” said Kevin McGurn, President of Sales and Distribution at Vevo, who is in Australia this week. “We're getting fewer cancellation options across all the broadcasters and it's leading into the upfronts, which will have a lot of pricing pressure from buyers because of the linear audience decline. So they've lost more audience than they had predicted but the dollars flowing into the industry from a buying perspective are higher than predicted. So there's a real inventory constraint that's out there.”

Vevo’s US audience, McGurn said, rose 40 per cent in the past year and mostly from linear Fast channels which are curated by genre or program franchise. 

Paramount’s digital sales boss, Diane Ho, said Ten had seen strong take-up for its pilots with Fast channels across Survivor, Masterchef and, yes, even Baywatch.  

The premium video and TV inventory constraints faced in the US – Vevo’s McGurn said budgets were partly coming out of social video platforms and not returning – are a challenge facing buyers here. They hope the arrival of ad tiers from SVOD services will help but there remained challenges

Streamers still untapped

“There are opportunities there, it’s probably fairly untapped at this stage given Netflix is pretty light on with the viewing numbers and needs to pick it up now that they’ve got their advertising finally cranking,” said Mediabrands Magna Nationla Managing Director, Lucy Formosa Morgan.

Foxtel’s move to introduce an entry-level ad tier to Binge subscribers had sold out in its launch phase with 20 brands. 

Carat’s Chief Investment Officer Craig Cooper agreed with Formosa Morgan but remained cautious. 

“Netflix hasn't been easy to buy and hasn't been transparent with measurement,” he said. “So until we have that unified [measurement] system, we're sort of shooting ourselves in the foot. That's the measurement piece. But I think from where the linear money is are going, it’s definitely being picked up by BVOD. We definitely see SVOD taking a larger share. But in January this year, we only had Netflix, there wasn't a lot of visibility around even the audience makeup. We didn't know where they were living, what type of age breakdown, socio-demographics, anything like that. So from a Dentsu point of view, if you have a unified metric, it's easy to make the money fluid between all screens, wherever the audiences are.”

Cooper said Foxtel’s Binge was “a completely separate beast” – media agencies could trade programmatically and through their own trading desks  “This is where it gets technical but the way that you had to buy Netflix was through a dedicated trading desk that not everyone had access to. It was meant to control frequency and is restrictive in how clients can come in and out of that platform. That may have been okay ten years ago but now most agencies, and I’m talking about the big five groups, have their own trading desk. The Netflix proposition wasn't congruent with most.”

OzTam ructions

More broadly, if the rumblings are right buyers may just find the VOZ total TV measurement system will launch in May after years of announcements and delays. It comes as a new rupture at OzTam surfaced in recent weeks over duplicated audiences for Foxtel which some suggest will have a contagion effect on free-to-air broadcasters. OzTam was attempting to fix a glitch in the linear ratings methodology before it got to market but a series of leaks from OzTam’s technical committee has stirred rising tension among the networks and their official measurement body OzTam. What transpires in coming weeks should prove interesting.