THE CONVERGENCE QUARTERLY REPORT. Insights on the Convergence of TV & Digital Video Advertising
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1 THE CONVERGENCE QUARTERLY REPORT Insights on the Convergence of TV & Digital Video Advertising In this issue of the Convergence Quarterly, we provide perspectives on workflow improvements, better Digital metrics and the impact of Talent & Rights on video campaigns that extend beyond TV. Convergence Perspective Three Steps for Converging Digital Video and TV Advertising, Today Evolving is Key to Success as TV and Digital Video Advertising Grow Together Unless you ve been living under a rock, you re well aware that Digital Video has become one of the fastest growing channels for both media consumption and marketing budgets. In November, Nielsen reported that the audience for online video was expanding by a whopping 60% per month. 1 Last September, emarketer predicted that Digital Video ad spend for 2014 would be 56% greater than If you assume that the extraordinary rise of Digital Video means TV s days are numbered, your assumption would be incorrect. TV isn t going anywhere anytime soon. In fact, TV ad revenues are growing significantly too. 2 In 2014, US TV advertising was on a trajectory to grow 3.3% (more than $2 billion) to $68.54 billion. The point is both are growing, and it s important for marketers to understand that they re not just growing, they re growing together. TV is becoming more like Digital and Digital Video is becoming more like TV every day. It s time to step back and look at TV and Digital Video advertising together. Now is the time for TV advertisers to integrate, or expand the use of, Digital Video in their video advertising strategies. Internet-connected devices are no longer just for marketing experiments. They re absolutely a necessary part of an impactful video marketing mix and must be treated as such by any marketer who wants to connect with consumers where they actually watch video. The time has come to plan, execute and measure a single video strategy across all screens in US$ billions $ (actual) $2.19 $1.81 $ % Growth in Digital Ad Spend in 2014 (Source: emarketer) $2.06 $ $3.18 $ TV $ $1.67 Digital Video $2.66 $ TV and Digital Ad Spend expected growth year-to-year (in billions). US TV vs Digital Video Ad Spend Annual Increases, (Source: emarketer) The Convergence Quarterly Report Copyright 2015 Extreme Reach, Inc. 2/15 1
2 So how exactly do you stop treating Digital Video as if it s the same as other Digital media (it s not) and begin integrating it with traditional TV strategies and operational workflows? Here are three steps marketers and agencies can take that will get things moving in the right direction, today: Step 1 Tear Down the Walls Media agencies have been working in silos for decades. Broadcast teams rarely communicate with their Digital counterparts and, for the most part, that made sense until very recently. For several years, the content and ads consumed online were very different from those consumed on television. The resulting media strategies, operational execution and measurement have been very specific to their respective environments. Different objectives and metrics meant different approaches. The lines have blurred for consumers video media consumption, and marketing organizations must follow suit. It s time to get the Broadcast and Digital Video teams in the same room. There will be immediate benefits such as significant savings in operational costs and time as well as massive long-term positive impacts across entire agencies, holding groups and the marketing departments of brand advertisers themselves. Step 2 Simplify Workflows 90 % of Digital Video ads also air on TV While some advertisers and Digital media vendors may occasionally use or recommend custom video creative or native formats for specific placements or screens, the fact remains that 9 out of 10 video ads that appear in Digital environments are originally created for and air on TV. It s simply not cost-effective to produce unique creative for every screen or media outlet, so this will likely continue to be the case. Digital Video Ad Operations teams should work in lockstep with Broadcast Traffic and Operations teams to ensure the fastest, smoothest possible workflow and the highest possible video quality 100% of the time on every screen. There s only one master version of each video ad that comes from post-production. Consider synchronizing your Ad Ops teams around that creative and utilize smart technologies that enable them to work together in a single streamlined workflow. You can do this today. Step 3 Measure Everything According to a study conducted by Nielsen, media campaigns that include both TV and Digital Video are more effective than media plans that only include one or the other. 3 The study cites increased ROI that can be quantified with at least four key brand lift metrics: general recall, brand recall, message recall and likeability. The sequence in which a campaign s creative is viewed makes a difference, too. Being exposed to an ad creative in a Digital environment first enhances the impact of the TV exposure and vice versa. In short, the most effective video campaigns are not focused on Digital or TV, they re focused on both. So, advertisers should measure everything and communicate so everyone involved understands the campaign s goals and that the appropriate tools are used to achieve and measure them. The Convergence Quarterly Report Copyright 2015 Extreme Reach, Inc. 2/15 2
3 There will, of course, be challenges as video advertising converges. Brand marketers and agency leaders must invest in the education of their employees to ensure that they understand new technologies and systems. The inertia that has been created by the traditional approach to media planning, buying and measurement must be overcome. Media buyers and sellers must create and maintain new standards. As always, consumer behavior lights the way that our industry must follow. We must evolve to ensure we are constantly maximizing ROI as we follow the consumer down their path. Avi Brown is Chief Digital Officer with Extreme Reach. The most effective video campaigns are not focused on Digital or TV, they re focused on both. 1 Nielsen Total Audience Report, November Digital Perspective Publisher VPAID Compliance Will Deliver Better ROI for Advertisers (and that s good for Publishers) As Digital Investment Increases, so Does the Need for Improved Metrics Out of the billions of Digital Video impressions that we measure each year, about 1 in 4 are stuffed inside of display banners, muted, or presented below the fold. These impressions represent millions of wasted dollars across our industry. In some cases, even with huge media vendors, certain video campaigns have fallen victim to the practice of in-banner serving, which runs directly against advertiser and agency plans, due to the lack of VPAID (Video Player Ad-Serving Interface Definition) adoption. Campaigns under-deliver as a result of missing or inaccurate data that could have otherwise affected a change in strategy. The reality is that the media has failed the advertiser. The solution to this issue is simple. Publishers and media vendors should adopt and support the VPAID standard. The benefits for advertisers would be immediate with stronger and more actionable analytics including brand lift, brand safety and brand effectiveness. Issues like viewability and unsafe impressions can also be addressed with VPAID compliance. For publishers, it creates a trusted and accountable environment, where advertisers can see their creative flourish, with transparency and clarity. Until recently, the technology didn t exist to detect this kind of misrepresentation. Now that it does, there is no reason not to leverage the VPAID standard to hold media vendors more accountable, especially when the technology saves you much more than it costs to use. 25 % of served in-stream no value video ad impressions have decreased or The Convergence Quarterly Report Copyright 2015 Extreme Reach, Inc. 2/15 3
4 The VPAID Advantage The best way to guarantee measurability and transparency is to use third-party measurement and demand VPAID support from your media vendors. VPAID, introduced at the end of 2008 (and now on Version 2.0) is the IAB s most effective standard for how video players and video ads talk to each other. VPAID enables a rich, interactive in-stream ad experience and the ability to fully measure your ads. As an advertiser, you decide with your media dollars, and choosing to enlist media partners that support VPAID ensures that you get to see the whole picture. Savvy media buyers are even writing into their insertion orders that they will not pay for impressions deemed in-banner, too small, or below certain viewability thresholds by third-party measurement. Enlightenment Through Metrics It s not just about holding the media vendors accountable it s about helping them do better. Third-party measurement is used by advertisers to provide a feedback loop to media vendors so they can optimize away from poorly performing placements and domains, and deliver better inventory. Our clients often see 100%+ improvement in key metrics like viewability, player size and completion rate with the help of the daily automated reports we provide to media vendors. Advanced measurement solutions are at their best when used to measure video ads in VPAID-supported environments. Advertisers can take full advantage of the added transparency that comes with VPAID to truly measure the ROI from their media investments, including viewability and brand safety. It even enables brand effectiveness studies through interactive surveys that can be served within the videoplayer. And thanks to VPAID, the response rates are orders of magnitude higher than typical in-banner surveys. The Takeaway With VPAID support and video measurement solutions like Extreme Reach, you can quickly and easily identify what is working, contractually protect yourself from undesirable inventory and hit your targets with precision like never before. Strategic and data-leaning advertisers will benefit significantly by creating a new dialogue with their chosen online publishers about the importance of VPAID compliance. VPAID adoption by reputable publishers and media vendors is essential for establishing a Digital ecosystem in which all parties are ROI winners. To dramatically improve the ROI from your Digital Video campaigns, be sure to use measurement solutions that take advantage of all of the VPAID measurement capabilities, work with publishers and media vendors that support VPAID and encourage non-compliant media vendors to adopt the VPAID standard. Ryan Pamplin is Vice President and Digital Evangelist for Extreme Reach. VPAID enables actionable analytics that are essential for campaign optimization, including brand safety, viewability and brand effectiveness The Convergence Quarterly Report Copyright 2015 Extreme Reach, Inc. 2/15 4
5 TV Perspective Internet Talent & Rights Rules Aren t the Same as TV Business Affairs Expertise Isn t Just for TV Anymore As more and more video ad campaigns run across multiple screens, the management of commercial talent contracts and payment, and of rights in general, is becoming more complex and often quite costly. It s time for agencies and brands to consider a new, unified approach to managing talent and rights for all video advertising, not just Broadcast and Cable TV. TV Evolved The advertising industry is constantly transforming to catch up with technology and consumer behavior. Nowhere is this more evident today than in the recent evolution of TV. TV audiences, TV content and TV commercials have all expanded beyond Broadcast and Cable to a new world of Digital viewing options. Advertisers and agencies are now realizing that they too must bridge the gap between TV and Digital Video advertising when it comes to commercial talent contracts, payment and compliance. But even some of the most forward-thinking agencies still see Business Affairs particularly commercial talent and rights management as a classic television model and department. As a result, the terms of talent contracts are mysterious territory for Digital Video ad teams and agencies and Business Affairs teams are often left out of the loop on Digital campaigns. Today, that is a problem. One Commercial. Every Screen. More than 90% of the video ads that run online also run on TV. In fact, most of those ads start out as Broadcast TV commercials. The use of those ads online is sometimes a secondary concern and in some cases, repurposing a spot can be unplanned, with little communication. For years, TV advertisers worked with TV agencies (both creative and media) on their Broadcast campaigns and worked with a Plan ahead: TV talent contracts and licensed rights rarely include use on digital screens. different digital agency (or a separate Digital team) for planning and buying Digital media. Digital video budgets and inventory were scarce, so most advertisers would just have their Digital team get a TV ad from their TV people and send it to a couple of websites to serve it up. But Digital Video has grown up. And although it s grown up in a Digital family, it s matured into a completely TV-like experience: TV commercials are now presented in TV-like ad breaks to Digital audiences who view Digital Video an extension of TV. However, it s very important to understand that a commercial running on both Broadcast and online media will have different payment and compliance requirements that must be considered for each. Different Screens. Different Rules. It s a mistake to assume that commercial talent contracts and licenses for rights necessarily include use on digital screens. This is rarely the case, especially with licensed rights. Separate payment to union performers for Internet, and sometimes Industrial, usage must be made to secure the rights for those media types. TV, Internet, Industrial and other The Convergence Quarterly Report Copyright 2015 Extreme Reach, Inc. 2/15 5
6 Usage rates for Union Commercials are distinctly defined in the SAG AFTRA Commercial Contract, whereas Non-Union ads are based on negotiated fees. In addition, the duration of permitted use online is different than the typical 13-week cycles long-established for network, Cable and other Broadcast use too. It s important to understand the differences between the length of time an ad can run on TV vs. online media, in order to ensure that the use of the commercial remains within the various durations outlined in the actors contracts. Sometimes it s tricky to know for sure that a particular ad is no longer running. Tracking where and when an ad ran on Digital media, for the purposes of talent payment and compliance, can be an additional concern as well. This is frequently the case because Internet talent and rights lack the maturity and infrastructure of TV and often the digital data is handled separately by a Digital team. These data disconnects frequently delay, hinder or further separate the availability of Digital data for Business Affairs. As a result, Talent Managers are at the mercy of late or incomplete reporting of uses. There are similar issues involved when securing the rights to use licensed music and images in commercials that may run on the Internet. As Digital Video ads have become more visible, the Internet terms of these talent and rights contracts have become more enforceable. So, it s prudent to plan for compliance upfront rather than ask for forgiveness if an ad runs where it wasn t permitted. Manage Risk. Control Costs. According to SAG/AFTRA (the commercial actor s union), when a commercial featuring union talent runs online without paying Internet usage, the infraction may warrant a late fine of up to $90, plus wages due, per performer. The late penalty of $90 per performer is small compared to the standard usage fees of $3,000. However, late fees for a cast of 10 or more performers get expensive, quickly. In more severe cases where the commercial has been released, the costs can be dramatically higher, and the headaches of contracting new terms for each actor can be major. And now, talent has quite a bit more leverage and the power to Willful use of music, images or footage online without a license that covers Internet use is copyright infringement. negotiate higher usage fees. In addition, willful use of music, images or footage online without a license that covers Internet use is copyright infringement, which can be a very expensive matter if litigated. And damages can include attorney fees and/or statutory damages. The Takeaway 1. Evolve: Think of the role of Business Affairs as a true multi-screen discipline that extends beyond traditional TV. Establish a workflow that facilitates complete transparency, knowledge and control of all commercial usage rights across Broadcast, Cable and Internet. 2. Gain Expertise: If you re part of a Broadcast-centric Business Affairs team, round out your team with a trained expert on Digital advertising. Or, if you rely on other Digital teams or agencies, identify experts within those groups whom you can work with to establish a safe and efficient multi-screen workflow. If you re on a Digital The Convergence Quarterly Report Copyright 2015 Extreme Reach, Inc. 2/15 6
7 team and don t have access to talent and rights details, connect with a knowledgeable ally who does. 3. Know Early: Rather than think of TV first and Internet as an afterthought, understand the various uses of each commercial before it s even cast. Early transparency from square one will enable you to think more strategically, manage risk more effectively and keep costs in check. 4. Lock It Down: If there is a chance that a Broadcast commercial may run online, report use, pay related fees in a timely manner to secure the rights to run on the Internet and lock down Internet licenses in music and footage agreements too. Be mindful of expiring rights to ensure compliance and you will eliminate significant unexpected costs and issues down the road. 5. Track Usage: Take advantage of available tools that enable greater transparency and the automatic tracking of commercials and expirations across all screens and against contract terms. That way, you can be apprised of potential compliance issues, not just on traditional TV, but across every Digital screen as well. Courtney Allen is a Director of Client Relations with Extreme Reach. If you have questions about advanced video advertising metrics or how to unify traditional TV and Digital Video advertising with a convergence workflow, we re here to help. Just drop us a note: convergence@extremereach.com About this Report The Convergence Quarterly Report is the go-to resource for the converging worlds of TV and Digital Video advertising. To learn more about video advertising convergence and find additional resources, visit our Convergence page: convergence About Extreme Reach Extreme Reach is the leading provider of video advertising management and delivery solutions that span TV, Digital and Mobile. Thousands of brands and agencies, including nearly all of the Ad Age 100, look to Extreme Reach to activate, measure and optimize video advertising campaigns across screens and devices. The Extreme Reach video platform is the first to streamline the video advertising workflow and unify cross-platform analytics for the converging worlds of TV and Digital Video advertising. Extreme Reach is headquartered in Needham, Mass., with offices in 15 cities across North America. CORPORATE HEADQUARTERS extremereach.com 75 Second Avenue Suite 720 Needham MA sales@extremereach.com All rights reserved. Extreme Reach is a trademark of Extreme Reach, Inc. Atlanta Boca Raton Boston Chicago Dallas Detroit Los Angeles Louisville New York San Francisco Seattle Toronto The Convergence Quarterly Report Copyright 2015 Extreme Reach, Inc. 2/15 7
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