GroupM’s video future: A television lens with a digital backbone

Rosie Baker
By Rosie Baker | 17 November 2017

The user is now well and truly in the driver's seat when it comes to the evolution of television and video, according to the latest GroupM report into the global market.

Not new news, but there’s more.

“Television has always had three masters: distribution, advertising and user experience. For 60 years, the user came third,” it states. But that’s changing with innovation “liberating” the user from schedules, devices, locations and commercial breaks,” says the report.

“Almost none of these changes benefit the original advertisers who helped build the television economy … the 70-year symbiotic relationship between advertisers and television is threatened.”

The State of Video report, authored by GroupM’s global chief digital officer Rob Norman and futures director Adam Smith, looks at the many trends affecting the video market, including consumption habits; the evolving economics of television; addressability and the application of data to linear and over-the-top TV audiences; trends with sports and other appointment viewing and of course, measurement.

While written ahead of the successful acquisition of Network Ten by CBS and the changes to media laws in the local market, the report observes that “In Australia, the rot may have already set in”, highlighting a 2.8% decline in TV ad revenue between 2015 and 2016 along with a 10% decline in audiences.

Bold and conservative

More broadly, it gives a capsule review of the threats and opportunities the “pretenders to television’s video advertising crown” offer traditional TV broadcasters and advertisers.

It views YouTube as “a great complement to television but rarely a replacement,” and describes Facebook’s definition of video as “unique and unconventional”.  

It also calls Facebook’s recent moves into more traditional TV-style content through 'Watch', its platform to view video content, as both “bold and conservative”.

Amazon is viewed as increasingly a challenge to YouTube, while SVOD player Hulu, which doesn’t operate in Australia, is seen as “particularly interesting to advertisers” because it offers a two-tier subsection including an ad funded, and ad free, model.

Twitter’s live video products, GroupM says, are “among the most attractive in-feed options” particularly in sport, and Snapchat’ video is “highly attractive to advertisers”.

When it comes to sport, GroupM proffers that “perhaps the single greatest threat to the leading incumbents in the current television economy is the choice between heavy price inflation to keep live sports, or risk losing them to Amazon, Facebook, Google…

“Brand marketers are critical to the economics of live sports, so must figure out their place in the new ecosystem.”

Addressability serves advertising better

On addressable advertising, which is starting to kick in locally, GroupM sees it as changing the definition of prime time because it “picks out people, not programs” meaning that the value of an audience to an advertiser is less about reach and frequency, but about targeting the right audience.

“TV advertising still serves advertisers well, addressability just serves them better,” it says.

It predicts that OTT viewing may become the dominant form of television distribution within the next decade and gives content producers new distribution channels, consumers more choice and provides advertisers with new inventory opportunities.

“When executed properly, this presents advertisers with a premium platform for reaching audiences in broadcast-quality content across a brand-safe, live and ondemand environment. Proper execution requires looking at the creative opportunity through a lens of “television,” while taking advantage of the digital backbone for ad serving and real-time campaign optimization,” it says.

“Forecasts for TV range from the optimistic to the apocalyptic,” the report offers, but GroupM sees three paths ahead:

1. Identify and leverage “the still-significant” value in scheduled linear television.
2. Embrace the evolution of the most compelling consumer experience from broadcast to addressable and on-demand, and use data and targeting to compensate for declines in reach.
3. Actively embrace new forms of content and new channels of distribution which foster deliberate consumer choice and engagement.

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