THE NEW REALITY OF DIGITAL VIDEO ADVERTISING
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1 THE NEW REALITY OF DIGITAL VIDEO ADVERTISING RMG Networks, Inc.
2 INTRODUCTION: VIDEO AND OUT OF HOME In the ever-fragmenting world of media and advertising, it s the pairing of video and out of home (OOH) that s delivering results greater than the sum of its parts. This is changing the game for marketers eager to reach professional, frequent-shopping, elusive, light-tv-viewing audiences well beyond television and the Web. In this guide, we look at how digital video continues to inform and transform OOH, giving media planners and buyers and their clients an offering that gets more attractive by the day. Today, buyers are less confident in the effectiveness of television and more concerned about online video click fraud than ever before. Meanwhile, instead of reaching people at home on screens, where they expect to be marketed to, OOH video reaches them on the go, where they don t. And it s reaching them more often. In 2013, digital out-of-home media trailed only mobile as the fastest-growing ad medium in 12 of the 15 largest global markets, beating traditional out of home, television, radio, newspapers, magazines, and the Internet. Instead of reaching people at home on screens, where they expect to be marketed to, out of home video reaches them on the go, where they don t. 2
3 HOW VIDEO REVOLUTIONIZED OUT OF HOME ADVERTISING Even before its digital revolution, out of home was a place where marketers could hit above their weight. But it wasn t until the advent of digital formats, notably video, that OOH reached the next level. The average global consumer was exposed to digital OOH media for 14 minutes per week in 2013, a 75 percent increase from just eight minutes in Today, people are spending a record amount of time with media outside the home. Consumers are more engaged with content on OOH screens that are linked to wireless devices, they have longer work commutes, and they enjoy longer leisure travel and shopping hours. When video arrived in OOH, it gave advertisers the best of both worlds. Brands could still leverage the kind of dynamic creative that connects far better than static ads, but they could deliver it in a place where it s not as easily avoided and more likely to be embraced. Today, people are spending a record amount of time with media outside the home. The best out of home advertising gives a kind of street credence and instant relevance to brands that maybe no other medium can. Steve Simpson, chief creative officer, Ogilvy & Mather North America 3
4 10 PROBLEMS WITH TELEVISION AND ONLINE VIDEO Q: Why is the convergence of video and out of home so promising? A: Because television and online streaming video advertising are plagued by intractable problems. TELEVISION ONLINE VIDEO 1. Audience fragmentation, video on demand, DVRs, and multitasking have diluted TV ratings and engagement for years. 1. The online video market is swarming with fraudulent bot traffic, and a large chunk of ads never reach the eyeballs they re promised. 2. Overall TV viewership is down a staggering 50 percent since Still, network and cable CPMs continue to rise. Both TV broadcast and cable TV network CPMs rose 5 percent in 2013, despite ever-falling viewership. 4. About 5 million cord cutters consumers who are ditching traditional TV in favor of watching video online have ditched their cable subscriptions since TV viewership is falling even for some of the live events that have historically made it such a big draw for ad dollars. For example, ratings for the World Series and NBA Finals have been steadily declining for years, and viewership for the 2014 NCAA men s basketball Final Four was down 14 percent year over year. 2. The Interactive Advertising Bureau estimates that more than one-third of online ad impressions including on video are fraudulent, designed to pad websites revenue. 3. Despite this rampant fraud, advertisers continue to pay a 300 to 400 percent CPM premium for online video pre-roll. 4. Pre-roll is widely despised by impatient Web viewers. Research has shown that when they can skip the pre-roll, consumers do so 94 percent of the time. 5. Pre-roll is also a steep tradeoff considering the short bursts of content it interrupts. Putting an unskippable 30-second ad in front of a 60-second video is like running an hour-long commercial before a movie. 4
5 OOH VIDEO IS THE NEW TV, ONLY BETTER So, where can media planners and buyers find video that delivers properly? Nielsen and RMG Networks, one of the largest place-based video media companies, recently announced new audit data that holds its in-flight out of home media network more accountable than ever. Nielsen data for place-based video networks offers auditable measurement that is more like TV and stronger than digital from a click-fraud perspective. This data combined with granular in-depth surveys done bi-annually eliminates the risk of impression fraud by bots or other unseen users. In Nielsen s new Place-Based Video Report data, the largest out of home networks delivered a larger monthly audience than many of the top-rated individual network TV shows. What s more, the largest digital place-based media networks handily out-deliver the leading cable networks and even outreach the networks on an average rating basis for Adults 18 and older and other demos. TELEVISION VS. RMG IN-FLIGHT ENTERTAINMENT RMG averaged more than 9.5 million impressions per video spot in Q3 2013, according to tracking data by Nielsen. (RMG s 30-second slots run for a month on airlines seatback screens.) Only 20 network prime-time TV shows had better numbers than RMG s in-flight Entertainment network average rating (for adults 18 and older). RMG s figure was comparable to spots on the Major League Baseball All-Star Game (Fox) and just above those of Hawaii Five-O (CBS). In comparison to cable, a single RMG unit delivered nearly five times the number of prime-time impressions (adults 18 and older) as spots on either of the top two cable networks, USA and TNT. An advertiser would have to run five spots on USA or TNT to get the same reach as one RMG in-flight spot. And the discrepancy only grows: It would take 10 spots on FX, 14 on ABC Family, or 287 on VH1 Classic. It seems the next powerful TV network isn t on TV at all. 5
6 THE NEXT BIG CABLE NETWORK IS OUT OF HOME Third Quarter 2013 Cable Prime for AD18+; Prime: Monday Sunday, 7 p.m. to 11 p.m. Source: Nielsen RANK NETWORK (000) EQUIVALENT # UNITS PER RMG IN-FLIGHT UNIT 1 RMG Networks In-Flight 9, USA Network 2, Turner Network Television 1, History Channel 1, ESPN 1, TBS Network 1, Fox News Channel 1, A&E Network 1, Home and Garden TV 1, ION Media Networks, Inc. 1, FX American Movie Classics The Discovery Channel Adult Swim Food Network Syfy Lifetime TLC Spike TV ABC Family
7 WHAT ELSE CAN OOH VIDEO DO? As we ve seen, the reach of OOH video doesn t just compare to TV, it can compare to the best TV has to offer. Take a look at the demographics and environment. Demographics: Working Consumers and Travelers Traveling and vacationing consumers (who are targeted in-flight) and working consumers (who are targeted inoffice) are the highest-spending people within the target audiences of most major brands. They are more desirable to marketers and harder to reach on television particular the travelers. Environment: Captive Audience On flights and in offices, the target is a captive audience to a degree that s become rare in recent years. RMG s inflight video spots on Delta, United, and Southwest Airlines often run just before or just after the flight-safety videos, when passengers are not allowed to use their own devices. Likewise, RMG s Office Network gives advertisers one of the few chances to reach consumers during the daytime. 7
8 WHERE IS OOH VIDEO HEADED? The strengths of running video in OOH are clear. It offers broad reach to an attractive, elusive audience. But it gets better. The near future for the medium is about one key factor: measurement. Place-based and OOH video companies are finally conforming to ratings data equivalent to what s used for TV instead of being bundled with the giant, static OOH and billboard companies. Place-based video audience forecasts are more stable than TV forecasts, because airline ticket sales and office worker attendance are so predictable. The near future for the medium is about one key factor: measurement. RMG also uses human-only audience measurement, like airline flight manifests, office security records, etc., so there is no risk of impression fraud by bots or other unseen users. RMG is integrating Nielsen place-based audience data into its In-Flight Entertainment network and will also soon do the same for its shoppingmall network in food courts and in its newly launched Office Network. The In-Flight Entertainment network will soon offer even better measurement, with innovations coming in May 2014 that will use MRI data to enable more precise targeting than age/gender. This will allow advertisers to see even more clearly just how attractive this traveling audience is. 8
9 3 TIPS TO EXPAND INCREMENTAL REACH USING PLACE-BASED VIDEO Some of the savviest marketers (P&G, Ford, Verizon) are looking beyond broadcast and cable or digital video to leverage existing 30-second commercial creative with placebased sight, sound, and motion (SSM) video. The benefits of doing so include extending reach to influential, social-mediaactive consumers and to lighter-tv-viewing audiences. These advertisers are blending digital place-based out of home to extend reach within SSM media platforms. 1. While some brands use video out of home as a primary channel (travel, credit cards, B2B technology) many massmarket consumer brands now apply as much as 2 to 5 percent of their annual broadcast and digital budgets to out of home video, similar to the use of cinema in years past. 2. To achieve a sufficient level of measurable impact, a rule of thumb is usually $3 million to $5 million per brand, per year across in-flight entertainment and other placebased networks. This provides a substantial share of voice and projects a leadership image within the channel. 3. Communications effectiveness improvements can also be gained by running TV commercials in highengagement channels (e.g., in-flight video, online video) early in the launch flight. This ensures that when commercials are reinforced in less-engaging programming like cable TV, the full creative message is being recalled. 9
10 TAKE THE NEXT STEP INTO DIGITAL OOH There is no better way to reach high-value, low-tv-viewing consumers than through OOH video. But for media planners and buyers, clearly it doesn t have to be all or nothing. Adding OOH video to the media mix along with broadcast TV, cable TV, and video pre-roll allows marketers to deliver a balanced audience profile within most demographics and explore a medium whose strengths are underrated and rapidly improving. Contact RMG to learn how to integrate OOH video into your next campaign buy. Scott Pawloski EVP, Chief Revenue Officer scott.pawloski@rmgnetworks.com 10
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