YouTube Rebounds with Connected TV Ad Spend

YouTube Rebounds with Connected TV Ad Spend

by Tim Colucci YouTube

The conversation about connected TV (CTV) advertising often focuses on the major streaming platforms such as Hulu and Netflix. But YouTube belongs in that conversation, too. YouTube has seen a remarkable surge in CTV ad spend for the most recent quarter, surpassing its competitors. As reported in Insider Intelligence, while YouTube experienced a 31 percent increase in CTV spending, streaming services like Max and Netflix only saw a growth of 6 percent.

In addition, the quarter marked the first time since Q4 2021 that platforms such as YouTube, Google Search, Amazon, Instagram, and Facebook all witnessed spending increases.

The CTV sector has seen a boom due to a rise in cord-cutting and increased time spent on these platforms. Consequently, it has become one of the strongest areas for ad spending in 2023. Presently, CTV spending in the United States amounts to $25.09 billion, while traditional TV spending remains higher at $61.31 billion. But by 2027, this gap is expected to close, with CTV spending projected to reach $40.90 billion and TV spending forecasted at $56.83 billion.

The transition to CTV may gain momentum soon, as industry giants like Disney contemplate selling off some TV assets to focus more on digital video. Such moves from major advertisers could attract more investment into the digital video space.

YouTube stands as a frontrunner in the digital pivot, owing to its TV viewership and content model, which gives it an edge over streaming services and other CTV platforms entering the market. The platform has seen a steady increase in viewership on TV screens, with users spending 15 minutes on CTVs, matching the time spent on mobile viewing. YouTube has capitalized on this growth by incorporating user-friendly features and introducing Shorts to TV screens.

In addition, the ongoing Hollywood writers and actors strikes position YouTube to attract more ad revenue. Competitors will have limited new content to entice advertisers, whereas YouTube’s user-generated content model remains unaffected, even weakening arguments against treating such content as “premium.”

According to forecasts, YouTube is expected to secure $2.89 billion in U.S. CTV ad spending this year, second only to Hulu, which Disney is actively seeking full ownership of.

The rise of CTV ad spend is a welcome development for YouTube, owned by Google (which, in turned, is owned by Alphabet). YouTube’s ad business had posted losses for three consecutive quarters (an unprecedented downturn following years of double-digit gains) before experiencing a rebound in the most recent quarter.

In a call with investors, Alphabet CEO Sundar Pichai said, “The Living Room remained our fastest growing screen in 2022 in terms of watchtime. We’re reaching more than 150 million people on Connected TV screens in the US, and seeing growth and momentum internationally. And on subscriptions, there’s good growth. Late last year, we announced over 80 million YouTube Music and Premium subscribers.  Signups for NFL Sunday Ticket kicked off in April, and we look forward to hosting our first football season on YouTube this fall.”

Advertisers should watch closely emerging ad formats that YouTube is rolling out specifically for CTV. For instance, non-skippable ads are coming soon to YouTube Select on connected TV. This means that viewers will see one 30-second ad instead of two consecutive 15-second ads. YouTube is also bringing new Pause experiences to CTV, so that advertisers can drive awareness or action by owning that unique interactive moment when people pause a video. Learn more about these developments on YouTube’s blog.

At True Interactive, we partner with our clients to manage CTV campaigns that deliver ROI. We work with all the major platforms, including YouTube. Learn more about our CTV work on our website and contact us to discuss how we can help you.

Why Barbie Is a Connected TV Star

Why Barbie Is a Connected TV Star

by Tim Colucci Connected TV

I’ve written a few times about Roku’s marketing innovations in 2023, and for good reason: with more than 70 million active accounts, Roku is the leading streaming platform in the United States, and it is a bellwether for the rise of connected TV (CTV). Roku’s ability to create branded content illustrates the marketing possibilities of CTV, an area where True Interactive has deep experience.

The latest sign of Roku’s leadership: the company has successfully acquired the rights to the highly anticipated Barbie movie. The deal, which has generated considerable industry buzz, underscores Roku’s commitment to expanding its original content offerings and capitalizing on the growing popularity of streaming services.

The Barbie movie, a joint production between Mattel Films and Warner Bros., is expected to be a major draw for viewers of all ages. As part of the agreement, Roku has secured exclusive streaming rights for the film, which will be available only to Roku’s extensive user base. This maneuver is set to not only attract new subscribers but also solidify the loyalty of existing Roku users.

The Barbie movie is taking over Roku devices, including a Barbie Dreamhouse in Roku City; a takeover of the Roku home screen (where users access the apps to watch their shows and movies); and the ability to watch a trailer for the movie or buy a movie ticket directly on their TV sets.

Barbie, which stars Margot Robbie and Ryan Gosling, is present on the Roku home screen. When users pause what they’re watching up through July 23, the Barbie Dreamhouse and Barbieland take over the Roku City screensaver, as do Barbie-themed billboards and movie theaters. When users click through, they are brought to a landing page to watch a trailer for the movie, and with a QR code that will let them instantly buy tickets.

Roku’s move towards producing original content represents a shift in its business strategy. Traditionally known for providing a wide array of streaming options from various content providers, the company is now positioning itself as a creator of exclusive, premium content, setting it apart from its competitors, which include Apple TV, Amazon Fire TV, and others.

Industry analysts speculate that this acquisition is just the beginning of Roku’s plans for expansion. With the rise of streaming services and cord-cutting becoming the norm, Roku is keen on establishing a strong position in the market by producing engaging original content.

As streaming wars continue to intensify, Roku’s focus on content creation may set the standard for the entire CTV industry. By leveraging its massive user base and constantly growing digital ecosystem, the company is poised to make a significant impact in the entertainment industry.

At True Interactive, we believe it’s important that businesses understand the growth of advertising on streaming platforms in context of the rise of connected TV. If you’ve not done so already, take a closer look at why connected TV is growing and how it could expand your audience. (True Interactive can help you with that.) Connected TV is enjoying 60-percent growth, driven by a public’s appetite for streaming that continues unabated.

Contact True Interactive

True Interactive can help you navigate the connected TV landscape. Our services range from media strategy and planning to automated performance reporting. Learn more about our services here, and contact us to learn more.

Why Roku’s Relationship with Shopify Matters to Advertisers

Why Roku’s Relationship with Shopify Matters to Advertisers

by Tim Colucci Connected TV

Roku has announced a partnership with Shopify that provides viewers the ability to purchase products from Shopify merchants directly from their TV through Roku Action Ads. This announcement is significant because it demonstrates the potential convergence of connected TV (CTV) with e-commerce.

When viewers see an ad for a Shopify merchant, they can simply press OK on their Roku remote to learn more about the product and purchase it. Viewers can use Roku Pay to complete their purchase. Once the transaction is processed, purchasers will receive an email confirmation from the merchant.

This integration is the first commerce integration for independent Shopify merchants on TV streaming. It creates a new advertising channel for Shopify merchants to reach a wider audience. Men’s apparel brand True Classic, the game-based connected rower Ergatta, and wellness brand Olly have signed on as initial partners.

With this new integration, viewers can now purchase products directly from their TVs after seeing an ad for a Shopify merchant. Here is how the experience looks, courtesy of Roku:

Although the partnership is just coming out of the gate, it offers some potential benefits, including:

  • Shortened advertising funnel: viewers can now purchase products directly from their TVs after seeing an ad, which shortens the advertising funnel and gives Shopify advertisers more data about their customers.
  • More customer data: Shopify advertisers can now collect more customer data, such as purchase history and shipping information, which can help them better understand their customers and target their advertising more effectively.
  • Point-of-sale access: Shopify merchants can now reach a wider audience by advertising their products on Roku devices. This gives them point-of-sale access to Roku’s audience, which can help them increase sales.

This new partnership is a win-win for both Roku and Shopify, and it’s a sign of the growing importance of commerce on TV streaming devices.

Roku and Shopify have been partners in commerce for years. In 2021, Roku launched a marketing app for Shopify merchants, allowing them to build, purchase, and measure TV streaming ad campaigns. This was the first TV streaming app available in the Shopify App Store.

Also worth noting: two months ago, Roku revealed new ad products at the 2023 IAB NewFronts presentation. These products include AI capability searches that match a brand’s message and place their ads in real time, as well as an interactive Roku screensaver where businesses can advertise.

Roku is a major player in the fast-growing connected TV industry. For the first time, streaming viewership topped cable in 2022, and this trend is not going to reverse course as cord cutting continues. As reported in Axios recently, traditional television companies and major media firms are bracing for further declines in the ad market and yet another increase in cord-cutting this year. At True Interactive, we believe it’s important that businesses understand the growth of advertising on streaming platforms in context of the rise of connected TV. If you’ve not done so already, take a closer look at why connected TV is growing and how it could expand your audience. (True Interactive can help you with that.) Connected TV is enjoying 60-percent growth, driven by a public’s appetite for streaming that continues unabated.

Contact True Interactive

True Interactive can help you navigate the connected TV landscape. Our services range from media strategy and planning to automated performance reporting. Learn more about our services here, and contact us to learn more.

How Roku Plans to Generate More Ad Revenue

How Roku Plans to Generate More Ad Revenue

by Tim Colucci Advertising

Roku screensavers are becoming fertile ground for advertising.

Roku makes streaming devices that allow users to watch TV shows, movies, and other content from the internet on their TVs. Roku also offers a variety of content, including channels from Netflix, Hulu, Amazon Prime Video, and many more. As of 2023, Roku has over 60 million active accounts. Its competitors include Amazon Fire TV and Apple TV.

When people watch content via their Roku devices, they invariably see a screensaver, which appears when a user has been inactive on their device (this is true for users of other streaming TV devices). Roku has been using that digital real estate to generate advertising revenue.

Roku’s screensaver consists of “Roku City,” a playful urban landscape first introduced in 2017. Roku is experimenting with different ways to turn Roku City into a playground for brands. For instance, at the 2023 SxSW festival, Roku created a real-life Roku City via an interactive, multi-level attraction with Best Buy. The pop-up Roku City featured a Best Buy Home Theater Experience, a rooftop diner destination, a style shop, and hidden Hollywood references throughout the Roku cityscape.

Now, Roku is turning the screensaver into a place to buy ad inventory. At the annual IAB NewFronts, Roku unveiled a number of advertising initiatives, including plans to give ad space on billboards within the screensaver, which Roku says reaches 40 million homes. McDonald’s this summer will be the first brand to appear within the Roku City skyline. The fast food giant will have an animated restaurant with its Golden Arches inserted straight into the screensaver.

And that’s not all. Roku is also relying on AI to incorporate brand messages into an “iconic plot moment” in its content library. Head of Roku U.S. Brand Sales Julian Mintz explained that AI will search for “iconic plot moments” within shows and match them up with a brand’s message. For example, an apparel ad could appear when Tim Gunn makes a critique during “Project Runway.”

As streaming giants such as Netflix embrace ad-supported content tiers, Roku also stressed at NewFronts that the company complements but does not compete with streaming businesses.

“Netflix, Hulu and Disney+—50% of all Super Bowl streaming took place on Roku this year,” said Charlie Collier, president of Roku Media.

Roku is not the first business to turn interstitials into ad opportunities. For instance, Peacock’s Pause Ad is something of a “younger brother” to Roku’s interactive screensaver. Pause Ad offers an ad initiated by the viewer when they pause what they’re watching. A static brand advertisement takes over the screen after a video has been paused for more than five seconds, typically with messaging that is contextually relevant and calls attention to the pause.

Why the News Matters

This news matters because Roku is a major player in the fast-growing connected TV industry. For the first time, streaming viewership topped cable in 2022, and this trend is not going to reverse course as cord cutting continues. As reported in Axios recently, traditional television companies and major media firms are bracing for further declines in the ad market and yet another increase in cord-cutting this year. At True Interactive, we believe it’s important that businesses understand the growth of advertising on streaming platforms in context of the rise of connected TV. If you’ve not done so already, take a closer look at why connected TV is growing and how it could expand your audience. (True Interactive can help you with that.) Connected TV is enjoying 60-percent growth, driven by a public’s appetite for streaming that continues unabated.

Connected advertising is similar to linear TV advertising because both formats rely obviously on video. But connected TV is different in many important ways. For one thing, advertisers need to understand how to create video content that will reach viewers across a variety of viewing devices in addition to TV screens, and connected TV ads are competing with multiple content streams.

Contact True Interactive

True Interactive can help you navigate the connected TV landscape. Our services range from media strategy and planning to automated performance reporting. Learn more about our services here, and contact us to learn more.

Three Takeaways from the YouTube/NFL Streaming Deal

Three Takeaways from the YouTube/NFL Streaming Deal

by Tim Colucci YouTube

While all eyes were on Amazon’s streaming deal to broadcast NFL Thursday Night Football, YouTube waltzed in and pulled off an upset. YouTube signed a seven-year deal worth an average price of $2 billion a year to secure rights to the NFL Sunday Ticket franchise.

This is a big move for YouTube. Sunday Ticket is a subscription-only package that allows customers access to all Sunday afternoon games for out-of-market teams. DirecTV currently pays the NFL an average fee of $1.5 billion per season for both residential and commercial rights. Its deal expires after the current season.

Sunday games represent peak prime football. NFL Thursday Night Football (TNF), by contrast, typically features subpar games largely because the Thursday timing does not give teams enough time to prepare after their previous Sunday games. Amazon’s ratings for TNF broadcasts have been spotty although four games rank among the Top 100 most viewed telecasts of 2022 according to Nielsen.

YouTube reportedly bested Amazon, Apple, and ESPN to secure the rights. YouTube will offer Sunday Ticket as an add-on to YouTube TV (a subscription streaming service that lets you watch live TV from major broadcast and popular cable networks) and in the video platform’s main app through a service called Primetime Channels that allows viewers to subscribe to individual channels.

Here are some takeaways from the agreement:

  • The deal is another sign that connected TV (CTV) is the future. For the first time, streaming viewership topped cable in 2022, and this trend is not going to reverse course as cord cutting continues. As reported in Axios recently, traditional television companies and major media firms are bracing for further declines in the ad market and yet another increase in cord-cutting this year. “The migration of the country’s biggest sports rights packages from linear TV networks to streaming will expedite the inevitable collapse of the cable bundle,” Axios noted. At True Interactive, we believe it’s important that businesses understand the growth of advertising on streaming platforms in context of the rise of connected TV. If you’ve not done so already, take a closer look at why connected TV is growing and how it could expand your audience. (True Interactive can help you with that.) Connected TV is enjoying 60-percent growth, driven by a public’s appetite for streaming that continues unabated. Connected advertising is similar to linear TV advertising because both formats rely obviously on video. But connected TV is different in many important ways. For one thing, advertisers need to understand how to create video content that will reach viewers across a variety of viewing devices in addition to TV screens, and connected TV ads are competing with multiple content streams. You can watch Amazon’s TNF on a laptop, mobile phone, or gaming console with multiple screens open. The same will hold true for watching NFL Sunday Ticket via YouTube TV. YouTube offers a number of connected TV ad units including its Masthead ad format. YouTube has added more CTV formats recently and will certainly offer more as its competitors such as Amazon do the same.

  • This a victory for first-party data, which is the information that businesses collect directly from their customers. YouTube will use first-party data to sell targeted ads to help drive revenue for the games. Right now, third-party audience data is withering away thanks to Apple’s and Google’s privacy measures. Businesses that figure out how to monetize first-party data enjoy an enormous advantage. YouTube is the second-most popular search platform in the world (behind Google). The company will be well positioned to us first-party data to sell targeted ads to NFL viewers.

The 2023-24 NFL season seems a long way off. YouTube still needs to deliver on investor expectations for parent company Alphabet between now and then. Look for YouTube to expand even more into the lucrative live sports field, which is still up for grabs among streaming platforms. Meanwhile, Alphabet’s next earnings announcement is February 7, 2023. Let’s see how YouTube’s advertising revenue delivers.

Contact True Interactive

True Interactive can help you navigate the connected TV landscape. Our services range from media strategy and planning to automated performance reporting. Learn more about our services here, and contact us to learn more.

An Early Take on the Netflix Advertising Tier

An Early Take on the Netflix Advertising Tier

by Tim Colucci Connected TV

Netflix disclosed the details of its highly anticipated ad tier at a time when the streaming industry faces intensified competition and economic headwinds. Under pressure to shore up revenue and a loss of subscribers, the company has fast-tracked the roll-out of its ad tier in partnership with Microsoft. Known as Basic with Ads, this lesser priced option will cost $6.99 a month in the United States and launch on November 3 at 9:00 am PT. Here’s how the ad-free Netflix stacks up against the competition:

Netflix Ad Tier

(Image courtesy of The Wall Street Journal)

In one sense, the launch is well timed. Inflation continues to be a problem affecting consumer sentiment, making a less expensive option more appealing.

Here are more details:

  • If you like your current Netflix’s ad-free tier, nothing will change for you. Basic with Ads complements Netflix’s ad-free Basic, Standard, and Premium plans.
  • There will be an average of 4 to 5 minutes of ads per hour.
  • At launch, ads will be 15 or 30 seconds in length, which will play before and during shows and films.
  • Advertisers will be able to target ads by by country and genre (e.g., action, drama, romance, sci-fi). Advertisers will also be able to prevent their ads from appearing on content that they find unsuitable for their brand.
  • To enable advertisers to understand how Netflix can reach their target audience, Nielsen will use its Digital Ad Ratings (DAR) in the United States. This will become available sometime in 2023 and eventually be reported through Nielsen ONE Ads.

My Take

This approach looks to be pretty standard and in line with other streaming services that include ads in programming.

I was a little surprised to see 4-5 minutes of ads per hour, though. I didn’t think Netflix would come out of the gate with that many minutes devoted to advertising. I also was thinking they would only serve ads before a show started to try and differentiate themselves from someplace like Fubo Tv Online, an American streaming television service serving customers in the United States, Canada, and Spain that focuses primarily on channels that distribute live sports.

To put the volume of ad minutes in perspective: The Stranger Things Season 4 finale was 2 hours and 20 minutes in length. This means a viewer might see upwards of 10 minutes of ads throughout the show. This amount feels like it could detract from a person’s binging experience.

The fact that measurement is coming to Netflix via Nielsen should bring more clarity to just how well Netflix programming performs. For years, Netflix was tight-lipped about reporting performance data. Only recently did the company begin to report on its most popular shows. Third-party data from Nielsen will provide a much-needed lens.

Netflix probably needed to lay down its pipes quickly because its competitors are moving fast. The ad-supported tier of Disney+ launches in November, and Apple is rumored to be launching an Apple TV+ option with advertising in 2023.

The big picture is just as important as the specifics of Netflix’s tier: It’s important that businesses understand the growth of advertising on streaming platforms in context of the rise of connected TV. If you’ve not done so already, take a closer look at why connected TV is growing and how it could expand your audience. (True Interactive can help you with that.) Connected TV is enjoying 60-percent growth, driven by a public’s appetite for streaming that continues unabated.

Meanwhile, the Netflix tier has attracted the interest of roughly half of Netflix subscribers who would consider switching; and if the program succeeds, Netflix will gain more subscribers. For another perspective, here are the results of a poll that Ad Age conducted recently on LinkedIn:

Poll

Bottom line: the movers and shakers of the streaming world are paving the way for something much bigger: connected TV advertising.

Contact True Interactive

True Interactive can help you navigate the connected TV landscape. Our services range from media strategy and planning to automated performance reporting. Learn more about our services here, and contact us to learn more.

 

 

Why the NFL on Amazon Prime Is a Victory for Connected TV

Why the NFL on Amazon Prime Is a Victory for Connected TV

by Tim Colucci Amazon

For decades, watching NFL games on television has meant gathering in front of a TV set and watching a game on one of the major networks. NFL games have been events that vanquish the competition. Featured programming such as Sunday Night Football, Thursday Night Football, and Monday Night Football have dominated viewer ratings. All of this is still the case. But how we watch football is changing.

On September 15, the NFL officially entered a new era of television broadcasting when the Kansas City Chiefs and Los Angeles Chargers took the field for Thursday Night Football. Instead of televising the game on an established linear TV network, the NFL streamed the match-up on Amazon Prime as part of a $13 billion, 11-year deal with Amazon.

The game marked the NFL’s official embrace of streaming. It also meant that to watch TNF going forward, football fans would need to sign up for Amazon Prime, which is Amazon’s premium service costing $139 annually. And so far, it looks like fans are willing to pony up. According to an internal Amazon memo, the September 15 broadcast drew a record number of Prime sign-ups for a year-hour period.

Given the popularity of the NFL – easily the most dominant brand on TV based on viewer ratings – the streaming agreement has significant ramifications for advertisers. Notably, this is a victory for connected TV, which means watching TV content through a device such as Roku or Amazon Fire. Many people refer to connected TV as over-the-top (OTT) TV, which refers to streaming content directly over the internet instead of cable, broadcast, and satellite television platforms. Although technically the two terms differ – with connected TV referring specifically to the device people use to stream content – for all intents and purposes, they are the same. Whatever you want to call it, connected TV has arrived: streaming is now more popular than cable. It’s no longer optional for businesses to have an OTT advertising strategy.

Connected advertising is similar to linear TV advertising because both formats rely obviously on video. But connected TV is different in many important ways. For one thing, advertisers need to understand how to create video content that will reach viewers across a variety of viewing devices in addition to TV screens, and connected TV ads are competing with multiple content streams. (You can watch TNF on a laptop, mobile phone, or gaming console with multiple screens open.)

And each streaming service and connected TV device (ranging from Amazon Fire to Roku) offer their own ad units. For example, Amazon Ads, which is Amazon’s fast-growing advertising business, offers ad units such as inline ads (which appear as selectable rows in each major browsing section of Fire TV) and feature rotator (a carousel-like ad placement appearing above the fold of the screen).

Ahead of the launch of TNF on Amazon Prime, Danielle Carney, Amazon Ads’ Head of NFL Sales, said:

We’re offering myriad opportunities to get involved with TNF, catering to brands’ range of needs. Our premier sponsorships give advertisers the ability to elevate their brands during the pre-game, pre-kick, halftime, and post-game shows. But that’s not all. We’re continuing to innovate and explore other potential sponsorships and packages that will enable brands tell their stories in unique ways through our surround, alternate feeds, and ancillary programming. Our newly built creative sports team will help customize the experience for our partners.

Outside of sponsorships, brands can use Streaming TV ads to reach fans throughout games on Prime Video and Twitch. Like our sponsorships, these video ads are backed by Amazon’s first-party insights, bringing more value and insight into campaign performance for brands.

To succeed, though, Amazon Prime needs to deliver viewing numbers to advertisers. Reportedly, Amazon has told advertisers that it expects to see nightly viewership of about 12.5 million people for its inaugural season of TNF. We’ll soon see. Amazon agreed for Nielsen to track ratings for TNF, and ratings for the September broadcast are still forthcoming.

Amazon Prime also needs to deliver a desirable experience. Amazon promises alternative ways to watch TNF, including Dude Perfect, a popular trick-shot comedy group. Amazon Fire TV and Alexa are bringing new features to NFL fans as well, such as trivia and real-time access to statistics (which should appeal to Fantasy Football devotees). Early fan reactions to the September 15 broadcast were mixed, and it looks like Amazon has some technical issues with content buffering to fix. Of course, no one can predict the quality of an actual NFL game, but Amazon can certainly deliver on the overall experience. Let’s see how Amazon adapts.

The broadcast is also significant for another reason: a victory for first-party data, which is the information that businesses collect directly from their customers. Amazon will use first-party data to sell targeted ads to help drive revenue for the games. This is huge. Right now, third-party audience data is withering away thanks to Apple’s and Google’s privacy measures. Businesses that figure out how to monetize first-party data enjoy an enormous advantage. Amazon has already become the third biggest ad platform in the world (behind Google and Meta) by using first-party data to sell targeted ads. The ascendance of first-party data is one reason why retailer-based ad networks have become so popular.

Bottom line: what is your advertising game plan for connected TV?

Contact True Interactive

To succeed with connected TV advertising, contact True Interactive. We have deep experience with this format.