Thanks to MNTN for sponsoring Digiday’s Future of TV Week coverage and presenting this edition of the Digiday+ Future of TV Briefing, normally available exclusively to paying subscribers.
This week’s Future of TV Briefing recaps the top talking points from yesterday’s Future of TV Week Town Hall.
- TV Talk
- Disney’s quarterly earnings report
- Netflix’s live sports interest, Apple’s TV ad plan, Roku’s original programming play and more
When it comes to today’s TV and streaming ad market, there’s plenty to talk about.
During the Future of TV Week Town Hall on Nov. 8 — in which attendees were granted anonymity in exchange for candor — buy-side and sell-side executives across the TV, streaming and digital video landscape gathered virtually to discuss topics spanning programmatic problems, identity issues and the state of the ad market at the moment. Here’s a sample of what was said.
“We execute programmatically, and we’re having a very difficult time to even get a sense of how many viewers had we reached within specific targets.”
“We use our first-party data, and we expand our reach using CTV, and we buy through various DSPs by exporting the data sets. And when we are trying to figure out where has this [ad] run or even getting information about how many unique viewers we had reached has been an issue.”
“Even though we think of CTV as a lot more data-driven that traditional TV has been, there’s definitely a bit of a mirage about how much data is available and how much granularity is available.”
“The unique reach aspect is really coming down to how it’s being bought, if it’s being bought by one partner or multiple partners. Some app platforms don’t work when it comes to playing nice with others. If you’re buying via Roku’s OneView, when you’re only buying that one way then usually you get unique reach from that platform. But if you layer in a Hulu via [another partner], they won’t let you do a one-to-one add, and you’ll need another trigger to project what the overlap is.”
“A lot of DSPs will work together, but some of them just don’t.”
“My bigger issue when it comes to transparency is you don’t know know what you run on unless you’re buying YouTube, for the most part, where it actually tells you by channel how you’re getting viewership.”
“As a publisher, we [say] that we have full transparency. We can offer metadata, which gets down to the episode. If there’s certain content clients are trying to avoid, we can do that. The onus does fall on the buyers, and they should be working with publishers who offer these types of benefits, especially transparency, brand safety, brand suitability.”
“Because everything is so new and the audiences have grown so quickly across these platforms, where you’re getting the overlap between platforms, from a planning perspective, it gets a bit murky, and it’s very hard to say. That’s why programmatic looks more enticing to some extent, but then you run into the issues of identity resolution and being able to find unique reach.”
“I feel like a lot of the [streaming ad sellers] aren’t really prepped to handle the influx of dollars for TV into [streaming]. We’re having issues just activating some campaigns where things would be more streamlined, but there’s so many more buying partners getting inventory that, from the inventory planning side all the way to trafficking, it’s been a little bit of a mess this year.”
“I think it’s just not having the people with the experience needed to handle the volume of dollars that are coming in and the number of advertisers who shifted over. Going through the trafficking process this year has been exceptionally painful versus previous years.”
“We’ll go back and forth [with streaming ad sellers], and until we have our ad ops teams talk, we won’t realize that they’re not accessing the right links we sent them.”
“Frequency management has gotten better this year. We’re seeing a lot more partners let you set daily, weekly, monthly or campaign[-level] frequency caps. I feel like that’s almost gotten not fixed, but it’s definitely on the way to being solved.”
“The data for CTV is on the challenging side when you’re layering in audiences. Let’s say you’re buying a household with a login. You’re buying that login user, not really the user you’re necessarily looking for. [If] I’m targeting women 18 to 34 [years old], you get the household with that woman, but when it comes down to how they roll and wrap, you won’t know if you’re buying the impression that’s targeting that female or if you’re buying that household.”
“The more sophisticated your data set is that you’re trying to execute against, the less choice you have with whether to go with IP [address] vs. household. If you have a more deterministic type of match between something you’re trying to do, you’re a little bit more tied to IP addresses.”
“One of our partners is [Google’s DSP] DV360. They have certain projections of have you reached the household versus the number of people in a household. They actually do measure that, but they say it’s a very imprecise type of science. It’s projection.”
“Given the prevalence of third-party cookies, I feel like we’re so not there on the CTV side [in terms of the development of CTV’s identity infrastructure]. Obviously email is a potential solution, but it will expose itself to a lot of privacy issues. It’s very much unsolved, and I have not seen a ton of solutions outside of email, which will not work for a lot of different situations.“
“Given login sharing, I don’t think [the email address] is going to be a very good solution. Even YouTube TV where you can have six different accounts attached to it, you might have different email addresses that you need to be attached, but it gets funky. And then those who share logins via HBO Max or Hulu or Netflix, you’re going to have the same issue where an email is going to go to the wrong viewer if there’s any sharing going on.”
The ad market at the moment
“We haven’t really seen a slowdown [in ad sales]. Things are picking up for fourth quarter as we get into holiday spend. Some of it is driven by political spending because we do have some news properties. But in general, we definitely saw an uptick over the last couple of weeks.”
“Fourth quarter is usually firm [with respect to ad dollars committed in upfront deals]. What [advertisers] didn’t do is committed as much upfront in streaming. They’re placing those dollars on more of a scatter basis. So that’s a lot of the money that we’re seeing coming in.”
“It’ll be interesting with the next upfront how much of the linear dollars [shift to streaming]. We’re anticipating that shift to continue into streaming, but are they going to be committing upfront or it it going to be more of a scatter basis?”
“One thing we are seeing is not a lot of direct IO or even programmatic guaranteed. It seems like advertisers, to the point with flexibility, don’t even want to commit to a certain spend level. They just want to set up PMPs and be done with it.”
“Everyone wants money in hand, which is the beauty of a direct IO or PG [deal]. But the reality is clients are looking for that flexibility, and direct IO and PG are being used in very specific circumstances. It’s publishers who can’t accommodate programmatic. They don’t have the tech to do it, or it’s special programming sponsorships [around] sports or some of the more high-profile, premium-type stuff.”
The Netflix question
“I wonder if anybody on the buy side would be willing to share how deliveries are looking.”
“We’re advising my clients not to think about Netflix too much until Q3 next year. By then there’ll be more targeting layers; there will be a better understanding of what the audience is for adoption.”
What we’ve heard
“We are seeing signs that Q4 is going to be worse in terms of the ad market than Q3 was.”— Roku CEO Anthony Wood during the company’s quarterly earnings call last week
Disney’s quarterly earnings report
Disney’s streaming subscriber growth held steady from July through Oct. 1, while its traditional TV business shrunk in the period, according to the company’s quarterly earnings report released on Nov. 8.
The key numbers:
- $20.2 billion in total revenue, up 9% year over year
- $6.3 billion in revenue from linear TV networks, down 5% year over year
- $4.9 billion in revenue from direct-to-consumer streaming services, up 8% year over year
- 164.2 million subscribers to Disney+, up 8% from the prior quarter
- 24.3 million subscribers to ESPN+, up 7% from the prior quarter
- 47.2 million subscribers to Hulu, up 2% from the prior quarter
Streaming subscriber growth
Disney+ added 12.1 million subscribers in the quarter to outstrip the subscriber growth among its primary rivals by a pretty hefty margin. Among Netflix, Warner Bros. Discovery’s HBO Max, Paramount’s Paramount+ and NBCUniversal’s Peacock, none added more than 3 million subscribers in the period.
Meanwhile, both ESPN+ and Hulu saw subscriber growth accelerate compared to recent quarters. After adding 500,000 subscribers in the previous quarter, ESPN+ tripled its additions with 1.5 million, whereas Hulu doubled its growth rate by adding 1 million subscribers.
Traditional TV troubles
Disney’s quarterly traditional TV revenue declined year-over-year for the first time in 2022. The company attributed the decline primarily to lower ad revenue; affiliate revenue — from the fees pay-TV providers pay to carry Disney’s TV networks — “was comparable to the prior-year quarter,” the company said.
The TV ad revenue decline was symptomatic of both lower ad prices and less ad inventory. Disney chalked that up to an unfavorable year-over-year comparison as this period last year featured the NBA Finals broadcast on ABC.
Streaming money pit
Disney keeps adding streaming subscribers but is losing more money in the process. In the most recent quarter, Disney’s direct-to-consumer business reported a $1.5 billion loss in operating income. That’s more than double the $630 million that it lost in the year-ago period.
Disney+ was primarily to blame for larger loss as its programming, production, marketing and technology costs increased. Hulu didn’t help matters as that service also saw its programming, production and marketing costs increase, with an increase in the affiliate fees paid to TV networks carried by Hulu live TV service being one factor.
“We expect our DTC operating losses to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate,” said Disney CEO Bob Chapek in the company’s earnings release.
That’s a pretty big caveat considering all the talk of a potential recession.
Numbers to know
-5%: Year-over-year percentage decline in NFL viewership through the first eight weeks of the season.
94.9 million: Number of streaming subscribers that Warner Bros. Discovery has across HBO, HBO Max and Discovery+.
46 million: Number of subscribers that Paramount+ has globally.
12.3 million: Number of streaming subscribers that Starz has in the U.S.
11.1 million: Number of streaming subscribers that AMC Networks has.
1.2 million: Number of subscribers that FuboTV has in North America.
30,000: Number of pay-TV subscribers that Dish Network gained in the third quarter, thanks to Sling TV adding 214,000 subscribers.
What we’ve covered
Drama-packed midterm showdown sees sharp political ad uptick for connected TV as voters head to the polls today:
- Political advertisers have become a growing vertical for connected TV ad sellers this year.
- CTV ad pricing for political campaigns can range from $40 CPMs to single-digit CPMs.
Read more about CTV political ad spend here.
Roku reports continued ad slowdown in third quarter and predicts a fourth-quarter downturn:
- Roku’s ad revenue growth slowed in Q3 because of its exposure to the scatter ad market.
- The connected TV platform owner expects ad revenue to decline year over year in Q4.
Read more about Roku’s earnings report here.
The woman behind making TikTok tick for creative agencies:
- Krystle Watler is the North America head of TikTok’s creative agency partnerships division.
- In the role, she works with creative agencies and brands to understand how to use TikTok.
Read more about TikTok’s Krystle Watler here.
What we’re reading
Netflix’s live sports interest:
Netflix is in the market for airing live sports on its streaming service, having bid for streaming rights to professional tennis tournaments and held talks to acquire World Surfing League, according to The Wall Street Journal.
Apple’s TV ad plan:
Apple will sell ads against Major League Soccer games that it will stream on its paid Apple TV+ streaming service and free Apple TV app next year, according to Bloomberg.
Netflix’s ad-supported pushback:
Some people who make TV shows and movies for Netflix are not happy about the streamer’s ad-supported tier featuring mid-roll ads that interrupt their programming — and probably about Netflix not cutting them shares of the ad revenue too — according to CNBC.
Roku’ s original programming play:
The premiere of “Weird: The Al Yankovic Story” marked Roku’s biggest effort yet to assert The Roku Channel as a original programming outlet and attract viewers to the free, ad-supported streaming TV service, according to Vulture.
Pluto TV’s popularity:
Paramount’s Pluto TV has become the most popular FAST service by watch time despite refraining from getting into the original programming game, according to The Hollywood Reporter.
Comcast’s and Charter’s connected TV contender:
The telecom companies have dubbed their upcoming connected TV platform Xumo and plan to launch a Xumo-branded devices in late 2023, according to Variety.
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