Connected TV

Dual writer and actor strikes will not only shut down Hollywood productions and delay the release of new TV and film content: The labor actions are also likely to have a trickle down effect on an advertising industry that is already struggling to adapt to new business models and increased competition, according to industry experts.

The actors' union SAG–AFTRA went on strike on July 14, joining the Writers Guild of America (WGA), which has been on the picket line since May 2. Both unions have an ongoing labor dispute with the Alliance of Motion Picture and Television Producers (AMPTP), generally over ways that streaming has affected residuals but also how AI will be used by Hollywood moving forward. Advertising has served as an important foundation for the industry, especially as streaming services like Netflix, Max and others increasingly look to free ad-supported subscription tiers to finance their businesses.

"While video advertising and subscription revenues are expected to grow by double digits this year and next, the dual strikes could threaten that economy, especially if the standoffs run deep into the fall season," said Insider Intelligence principal analyst Paul Verna, in emailed comments.

High alert

The shutdown comes as the linear TV industry prepares for the fall TV season, which features new entertainment programming and typically delivers the highest levels of ad revenues. The industry is on "high alert" as a lack of new content could put a dent in those revenues, according to Darrick Li, vice president of sales for North America media owners at media planning company Guideline.

"There is a ripple effect where over time there is less content for media owners to deliver audiences, advertisers that see less impact from their advertising investments, and less capital for media companies to put back into new production, technologies, and development, creating a vicious cycle where nobody wins," Li said in emailed comments.

To counter the possibility of lower viewership and lower revenue, broadcasters could focus on unscripted television, particularly live sports, as was the case during the 2007-08 writers strike. While live TV could prove to be a sustainable channel throughout the strikes, the proliferation of streaming TV platforms in the last few years make this a significantly different landscape since the last Hollywood labor action. The dual strike could widen the divide between linear TV and connected TV (CTV), said Britt Augenfeld, vice president of advanced TV and video at search intelligence platform Captify.

"Connected TV loyalists will still tune in to their favorite shows and watch when and where they watch in the moment — content aside. Network television unfortunately doesn’t have the same luxury," Augenfeld said in emailed comments. "Overall, studios are positioned to suffer the most at this moment, as a lack of content could result in a loss of thousands of subscribers, millions in potential advertising dollars and an over reliance on re-runs and reality shows, which consumers have plenty of access to."

Delayed commitments

While the strikes could alter the CTV landscape, they are unlikely to upend it. Many streaming services are loaded with content that customers are already unable to exhaust, to say nothing of content they have hoarded for a rainy day. The lack of new content could slow subscriber growth that was already slowing as streaming services reached maturity, but the services still benefit from ongoing trends that the strikes will not halt.  

"I don't think folks are getting any vasectomy reversal when it comes to cord cutting," said Hunter Terry, vice president of solutions consulting and CTV commercial lead at data solutions company Lotame, in emailed comments. "The viewers are here to stay, they just need to find their next Truman show now that their favorites may be coming to an end." 

As the strikes continue, advertisers face yet another wait-and-see scenario as uncertainty surrounds how a closed content spigot will impact ad spend. 

"While the Writer’s Strike hasn't yet made a notable dent in advertising plans, the addition of the much larger and higher profile SAG-AFTRA membership to the collective cause may cause advertisers to further delay upfront commitments and add another layer of pressure on the studios and streamers to negotiate with more speed and willingness," said Erin Firneno, vice president of business intelligence at Advertiser Perceptions, in emailed comments.

While the Writers Guild of America strike that began on May 2 is a headline-generating development likely to disrupt programmers' dealmaking with advertisers, the changing measurement landscape was another pressing topic at this year’s upfronts, one with the potential to reverberate across the industry and reset the way business is done for the entire premium video and television ecosystem.

What measurement should look like for the multibillion dollar industry was the focus at a several events and will likely stay in the crosshairs in the weeks and months ahead as stakeholders push to change a status quo that has been dominated by Nielsen for years. Some executives have not been reserved about what a new measurement paradigm means for the ad industry.

"Make no mistake, this is going to be a massive change and a reset to all the business models that have, quite honestly, been forced fit to legacy measurement for way too long," said Kelly Abcarian, executive vice president for measurement and impact at NBCUniversal, at an Advertising Research Foundation (ARF) conference. "The future is not going to fit in the business models of the past."

Progress and plans from the JIC

ARF's AudiencexScience event gave Abcarian and her peers a chance to showcase and stump for the Joint Industry Committee (JIC), which on April 27 hosted a measurement summit that represented its first upfront presentation. Launched in January, the JIC is working to enable multiple currencies and establish cross-platform measurement solutions for streaming video in time for next year's upfront presentations.

Member organizations span big-name programmers and agencies as well as advanced advertising company OpenAP and the Video Advertising Bureau. At the JIC upfront, OpenAP CMO Brittany Slattery attempted to "mythbust" the idea that the committee is only sell-side, insisting it also encompasses media buyers.

"We would not be here without the support of our agency partners, who have helped us roll up their sleeves — and probably have gotten way too many emails from me over the past four months — to really define what this future looks like together,” Slattery said. 

Agencies have embraced the JIC — despite any reservations or mixed feelings about definitions of video or other issues — due to an inability to tell clients a unified story about ad frequency, brand client concerns about measurement standards and the need to work with industry partners to find a way forward, according to Bharad Ramesh, executive director of research and investment analytics for GroupM.

"If I'm outside the tent, I have no idea what's going on inside, let alone the ability to influence it," Ramesh explained at the ARF event.

While the JIC has quickly grown its ranks, several major players have not signed on. Ramesh said that adding YouTube, Netflix and Disney to the JIC would make him "fairly happy." But even without several dominant streaming video companies, the JIC is making impressive progress — and quickly — according to several speakers.

"There's still plenty more to accomplish, but I'm super excited about I think how quickly we're moving," said Dan Aversano, senior vice president of data, analytics and advanced advertising at TelevisaUnivision, at the ARF event, pushing back against critics who claim the JIC has moved at a "breakneck" pace. "Consortiums are notoriously slow, and the fact that we've done as much as we've done in four months is wild."

The group’s work so far includes drafting initial requirements for premium video cross-platform currencies that were announced in March. The JIC plans to define how programmers will enable data for buyers and measurement companies, unveiling use cases at Cannes Lions in June. After measurement companies are engaged on data, the JIC will do a beta release of its streaming data service in Q1 2024 that is a key part of the JIC's promise to advertisers.

"The marketers … they want the data," said Jackson Bazley, executive vice president of the ANA, at the ARF event. "It very simply comes down to measure it all, put the attributes in place and let us have the data so we can evaluate campaigns, we can evaluate performance and we make decisions." 

Elephant in the room 

Despite buy-in from several programmers, agency holding companies, measurement firms and other industry organizations, one major player is, not surprisingly, absent from the JIC: Nielsen, the embattled legacy measurement company that the group's members are, by various degrees, trying to bypass with alternative currency development.

Nielsen's many legal, operational and scientific reasons for declining to participate in the JIC were outlined in a letter dated April 21 and sent by Karthik Rao, Nielsen's CEO for global audience measurement, to OpenAP CEO David Levy and the JIC. These issues include the JIC's preference for big data over panel data, the definition of "premium quality," the absence of key streaming platforms and other anti-competition and intellectual property issues. 

Rao also noted a "lack of clarity" on the need for accreditation and not just certification from the industry watchdog the Media Rating Council (MRC). The MRC is a neutral, not-for-profit organization, stressed George Ivie, the organization’s CEO and executive director, at the ARF event.

"We're not actively supporting multi-currency as an environment, but we are actively seeking to audit and validate products that might participate in a multi-currency environment in a neutral manner," Ivie said.

For their part, JIC members poured water on Nielsen's claims about MRC accreditation. Nielsen in April received reaccreditation for its National TV Audience Measurement service after losing the organization's seal of approval in September 2021 for undercounting TV viewership. Nielsen in May acknowledged similar problems that affected its measurement of the Super Bowl, again drawing attention to the miscounting issue. Additionally, several of its products, including Nielsen One ads and its panel-plus-big data integration, do not have accreditation. For some panelists, Nielsen seems to be conflating the functions of the JIC and the MRC.

"To say that they want JIC certification to require MRC accreditation, in my mind, is sort of weaponizing the MRC — there's no other way to look at it," said John Halley, president of Paramount Advertising, at the JIC event.

OpenAP CEO David Levy was "disappointed" by the Nielsen letter and noted that the JIC won't weigh its requirements in a way that benefits only one participant (e.g. putting an emphasis on Nielsen's long-utilized panel data over big data from other sources).

"Anytime you have an opportunity to lean in and listen to your client's needs, you should really take that opportunity," Levy said of Nielsen's decision not to participate. "We hope Nielson will continue to engage; we're going to keep trying to get them at the table."

At the table or not, Nielsen isn't going anywhere, for now at least. Even programmers that have opened their doors to alternative measurement firms will still be transacting with Nielsen as they look to meet the needs of advertisers and their agencies.

"We're open for business in this upfront on both VideoAmp and Comscore," said Jon Steinlauf, chief U.S. advertising sales officer at Warner Bros. Discovery, at the JIC event. "Not to say we're not open for business on Nielsen, but we have agencies that are asking to negotiate this upfront on big data, so we would like to take them up on it."

Questions about the size, stability and median age of the panel data favored by Nielsen were raised by Steinlauf, who stressed the need for innovation, better measurement and a stable sample base in measurement. But he also entreated the industry to avoid "dance partner syndrome," where each player dances with the one that brought them.  

"We should go for the best alternatives we have, including Nielsen. If Nielsen is the best alternative, let's give Nielsen some of the business," he said. "As a collective, we've got to think about who's doing the best work out there and support the best work."

The JIC is ready to continue working, with or (more likely) without Nielsen's participation, to solve for true cross-platform measurement. At the JIC event, NBCU's Abcarian noted double- and triple-digit deficiencies in CTV datasets that could make the fast-growing channel a house of cards where programmer, advertiser and consumer needs are misaligned and unmet.

"It's going to destroy the value of what the premium video marketplace deserves," Abcarian said. "We cannot operate as an industry moving and transacting billions of dollars in this way any longer."

Consumers are faced with more streaming entertainment options than ever. However, despite the variety of choices — or maybe partly because of it — what was once perceived as a major benefit of streaming, namely its ad-free nature, is increasingly disappearing.

With the introduction of more free services and an influx of ad-supported programming, it is clear the streaming landscape is in flux. While some bundling options remain, the current state of entertainment media cannot sustain itself. User-supported business modeling has seemingly failed from the consumer, marketing and creative industry standpoints. The ongoing Writers Guild of America strike, which is happening in part over the lack of residuals paid out by streaming services, is indicative of such.

“People said for decades, ‘...We don’t want to have to pay for channels that we don’t want…’ Well, we’ve given them what they wanted, right? Now, they can get a la carte streaming services, and it’s getting out of control,” said Adriana Waterston, executive vice president of insights and strategy lead at the Horowitz Research Division of M/A/R/C Research. 

However, whatever new model that emerges from the current turmoil may require an old solution.

Bye-bye ad-free programming

A common complaint about the current streaming landscape is the overwhelming number of options. The mounting cost of subscribing to multiple services has encouraged consumers to unsubscribe to those they don’t use as often. Services have responded by providing less expensive ad-supported tiers, and there has been an increase in free services as well.

“The rise of consumption of free streaming services has really been dramatic over the past number of years,” said Waterston.

The percentage of the population subscribed to subscription video-on-demand (SVOD) services, such as Netflix, has remained stable at 67% since 2019. However, those using over-the-top (OTT) services, such as YouTube, have skyrocketed from 42% in 2019 to 69% in 2023, while those using multichannel video programming distributors (MVPD), such as Fios, have rapidly declined, according to a recent report by Horowitz.

The March 2023 report, “State of Media, Entertainment & Tech: Subscriptions 2023,” compared subscription rates for traditional providers with the newer providers and found that 39% of consumers — the largest portion — subscribe only to subscription video services while 22% of the population subscribes to an MVPD alone. Thirty percent of consumers combine the two, while just 9% of the population pays for neither. Those subscribed to traditional MVPD platforms have fallen from 82% in 2019 to 52% in 2023.

Netflix, Amazon Prime Video, Hulu, Disney+ and HBO Max (now branded as Max) remain the most popular paid streaming services, according to the research. On the flip side, YouTube, Tubi, Peacock, Roku and Pluto are currently the most popular free streaming services.

The survey was conducted in both English and Spanish and consisted of a nationally representative sample of 2,200 content viewers ages 18 and older. Those surveyed were also head of household. Data collected included demographic, life stage, behavioral and subscription habits.

A paradox of choice

The breakdown of who gravitates to which streaming services is divided. Latinx and Black consumers are more likely to have access to SVOD services, in general, at rates of 86% and 87%, respectively, according to the report. These rates are slightly higher than the 83% seen in Asian and White consumers. While this gap may not seem large, it gets much more expansive when looking at the rates of use for free services. Eighty percent of Black consumers and 78% of Latinx consumers are more likely to use free streaming services, compared to 68% of Asian consumers and 65% of White consumers, according to the report.

The insight into viewer habits also shows consumers find content representative of themselves and their experiences important. Over half (58%) of Latinx consumers say Spanish-language content is important to them, with 46% of Asian consumers saying content in Asian languages is important to them. For 60% of Black consumers, having access to Black-focused content is a priority.

Are you there cable? It’s me, the consumer

As streaming has grown and matured as a channel, the user experience has evolved and increasingly lines up with traditional ad-supported linear programming, an evolution that could benefit legacy providers more than streaming’s relative newcomers. 

“When we asked consumers if they were interested in a bundle of streaming services from one provider, two out of three consumers said they were interested. And then when we asked those people that said they were interested, which provider they would want to subscribe to… And what was really interesting was the current telecom and cable providers are still very much in consideration for being the preferred provider for that kind of bundle,” said Waterston.

It’s important to note that this doesn’t mean streaming is going to go away, said Waterston. The industry is at an inflection point right now, and it has yet to be seen who will emerge as the winner of this debate, whether it be traditional cable companies or Big Tech, such as Google or Amazon. What is clear, the big benefit of streaming services — that they are ad-free — is no longer the status quo.

“Ad-free was a huge benefit of streaming when streaming first came out... Because what it was was Netflix, and Netflix was always ad-free,” said Waterston “So that sets the expectation that consumers have that, ‘Well, streaming is great, because I don't have to watch ads.’ Well, that’s not true anymore. And it’s not going to be true. So the consumer just has to get used to it.”

Bot fraud on connected TV (CTV) grew 69% year-over-year in 2022, according to a report from measurement and analytics firm DoubleVerify. The variety of CTV schemes detected by the company annually has tripled since 2020.

This encroachment follows a surge in advertiser investments in the channel, which became more popular with consumers amid the pandemic-driven shift to streaming.  DoubleVerify’s findings were released following the spring upfronts season, where brands and media buyers focused more on CTV with new offerings on the market. Netflix, for instance, held its first-ever upfront in May, though the presentation pivoted to a virtual format at the last minute due to the entertainment writers strike. 

Well over half of this year’s total upfronts market is forecast to be made up of digital media buys, according to Insider Intelligence. The researcher expects brands will commit $8.66 billion to CTV ads.

DoubleVerify’s insights dig into an ugly truth that has long dogged digital advertising channels: The greater the popularity, the more likely the space will be targeted by bad actors. A need for CTV to clean up its act could become pressing as the channel climbs in priority for advertisers, with a higher volume of marquee programming making the jump to the streaming arena.

Still, CTV has emerged as a rare bright spot in an otherwise down ad market. Consumers have expressed a strong preference for streaming, ditching linear TV in droves. Streaming platforms and traditional networks, meanwhile, have increasingly turned to ad-supported plans as the focus shifts from growth to profitability in an oversaturated market.

Even with investments flowing in and interest on the rise, CTV remains a relatively immature channel with vulnerabilities that could be off-putting to advertisers that are watching their budgets closely and looking to cut down on wasteful spending. 

“[With] growth come growing pains,” said Mark Zagorski, CEO of DoubleVerify, in a press statement. “As CTV becomes a top channel for consumers and advertisers alike, it also becomes a target for fraud, making measurement and protection a critical part of validating the efficacy of campaigns."

DoubleVerify provides verification and brand safety solutions and used the research to trumpet its products. The firm compared the results of a “protected” campaign to one where verification was not in place and found the unprotected campaign experienced fraud rates roughly 18 times higher, or at about 11.2%. The report’s broader findings were based on an analysis of over 5.5 trillion media transactions conducted by 1,000 DoubleVerify customers across the globe.

Walmart Connect, the U.S. advertising division of the big-box store, is enhancing its connected TV (CTV) capabilities through a new partnership with Innovid, a press release announced.

The deal integrates Innovid’s Dynamic Creative Optimization (DCO) solution with Walmart DSP, a demand-side platform built on technology from The Trade Desk. DCO relies on artificial intelligence to better tailor CTV messages to be more engaging and interactive in real time. Innovid will also help with ad delivery services through Walmart DSP to ensure a high-quality video experience. The tools are immediately available to Innovid customers that are using Walmart DSP.

The move sees Walmart ramping up its CTV ambitions as it continues to scale the Walmart Connect business and associated ad-tech offerings. Further, the deal with Innovid offers another sign that maturing retail media networks are eyeing premium offsite channels like video as they diversify beyond sponsored search and display advertising on their own websites and apps.

Publicis Media’s Spark Foundry is already taking advantage of the new alliance. The media agency in a statement cited data-driven personalization and more precise audience targeting as some of the benefits of Walmart Connect and Innovid’s pact, which integrates the latter’s DCO tool into Walmart DSP.

Walmart Connect has gained momentum as the pending deprecation of cookies puts a higher premium on first-party data. Walmart’s global ad sales were up nearly 30% in 2022, generating $2.7 billion in revenue, according to a company earnings statement. Growth was largely driven by Walmart Connect and FlipKart Ads, an India-based unit.

Walmart Connect has focused on partnerships with media platforms and ad-tech firms to round out and scale its services. In the TV arena, it’s piloting shoppable ads with CTV giant Roku. The retailer is also working with TikTok and Snapchat to extend its reach further into social media apps preferred by young audiences.

Retail media has continued to attract spending from categories like consumer packaged goods despite an uncertain economic environment. The channel is forecast to grow 25.8% in 2023 in the U.S. to reach $51.36 billion in revenue, according to eMarketer data cited in the Innovid release.

While Walmart has a few irons in the fire, rivals are also betting bigger on CTV to capture more marketing dollars. Best Buy teamed with Roku in March to help advertisers improve their CTV campaigns using the consumer electronics store’s first-party shopper data. In 2022, Kroger added CTV and video ad inventory into its private programmatic advertising marketplace.

Nielsen on June 14 introduced its own Media Data Room (MDR) in order to better position itself as a data leader within the measurement industry, according to a press release. The MDR is a cloud-based platform which allows customers to obtain and share large data sets in a privacy-forward way. The technology was built with Snowflake, with the Media Data Cloud product serving as the underlying technology.

First-party data has become of increased importance to advertisers, especially as Google moves forward with its plans to phase out third-party cookies. The unveiling comes as Nielsen continues to struggle to maintain its hold on the measurement landscape.

Nielsen’s MDR is the first step in the firm’s data modernization strategy and builds on the foundation of its Media Data Lake, a cloud-based repository that stores all of data used by the company for audience measures. The first data set made available under the initial implementation will be the Nielsen Respondent Level Data, a modeled subsample of 35 million homes for U.S. national linear TV. 

The use of Snowflake for the new data tool will allow for minimized set-up by existing Snowflake users, as the company’s technology is already frequently embedded in client workflow, per release details. Nielsen will continue to enhance data delivery though its forms of data distribution, including FTP and custom applications, will be replaced by MDR.

The MDR is meant to play a central role in Nielsen’s transition to its Big Data+Panel National TV measurements, with an end goal of Individual Commercial Metrics, per release details. The firm has been working on ways to improve its metrics for years, meant to coincide with the launch of Nielson One. Notably, the launch of One Ads came just two days after four of the largest TV networks came together to form a committee meant to explore multiple streaming measurement solutions.

As streaming continues to be a major player in the media consumption landscape, Nielsen has been in the crosshairs of updated viewership metrics. While Nielsen has not been entirely shut out of discussions surrounding the future of measurement, its future role remains unclear. Earlier this year, it was revealed that the measurement company miscounted the viewership of Super Bowl LVII.

Best Buy and Roku are looking to combine their respective strengths in retail media networks and connected TV (CTV) through a new partnership, per a press release. Ads running on the Roku platform can now be targeted, measured and optimized against first-party data from Best Buy to increase relevance and improve performance. Best Buy operates a Best Buy Ads network that draws on both brick-and-mortar and e-commerce shopper information. 

Roku and Best Buy see the opportunity to secure more brand dollars by wedding their data skill sets together. Through the agreement, Roku has a potentially stronger pitch for advertisers that are hungry for first-party data with the deprecation of cookies on the horizon. Meanwhile, Best Buy gets access to a scaled CTV network and inventory. Roku currently reaches about 70 million active accounts, according to the release.

As part of the deal, the consumer electronics giant will also be the exclusive retailer for the first TVs designed and manufactured by Roku, called Roku Select and Plus Series. The collaboration could help both companies capture more spending as marketers ramp up their bets on retail media.  

The collaboration comes as 82% of advertisers were expected to increase their investments in retail media last year, per eMarketer data cited by the companies. That momentum isn’t expected to slow in 2023 despite an uncertain macroeconomic environment that’s led to pullbacks elsewhere. Researcher WARC forecasts that retail media will be the fastest-growing media channel globally this year, reaching $122 billion in revenue.

Roku has turned more frequently to collaboration to bolster its business, which has expanded into areas like original content. Last year, it struck a partnership with Walmart — another major retail media player — to pilot shoppable streaming ads. Roku viewers served Walmart ads can press a button on their remote to be sent to a checkout screen, with orders fulfilled by the big-box store.  

On the retail end of the industry, more mature media networks are making the jump from basic sponsored search and display formats into premium areas like video. The grocery giant Kroger in September added CTV and video inventory into its programmatic advertising marketplace.

Roku and Best Buy teaming up comes as both encounter headwinds. Roku has been contending with tightening ad budgets and reported flattish revenue growth in the fourth quarter. Best Buy has felt a pinch as consumers cut back on spending. The retailer saw revenue down 10% in Q4, a key window that includes the holidays.

Roku and Best Buy promoted their partnership with an in-person activation at the SXSW conference in Austin, Texas. The pop-up brought to life a heavily memed Roku screen saver depicting a fictional city, with a home theater experience supplied by Best Buy.