Whole sessions are devoted to answering these questions, and others explore how broadcasters can increase their share of digital viewing time, and what the expansion of SAVOD (Subscription with Advertising VOD, exemplified by Netflix Basic with Ads) and FAST means for the TV advertising market. Early confirmed speakers across the agenda include:

• Pedro Bandeira, Vice President Product and New Business, Europe, Deutsche Telekom
• Aušra Sidaravičienė, Group Chief Technical Officer, TV3 Group
• John Jelley, Senior Vice President, Product and UX, Peacock & International, D2C at NBCUniversal Media
• Ken Morse, Director of Application Delivery, Sky
• Pierre-Adrian Irlé, Head of Play Suisse, SRG SSR
• Jason Briggs, President and General Manager, RDK
• Mehmet Eroglu, Chief Commercial Officer, Foxxum
• Gary Woolf, EVP Strategic Development, All3Media International
• Marcos Milanez, EU General Manager, Rakuten TV
• Ivars Lubāns, Head of Product, Go3, TV3 Group
• Akhila Khanna, VP, Partnerships and Business Development, UK, Paramount.

You can see an up-to-date list of publicly announced speakers here.

There is a session titled ‘Driving D2C and SVOD growth’, focusing on how channel groups, studios and SVOD providers maximise their potential audience reach, convert app availability into paying customers, maintain attention in an increasingly competitive marketplace, guarantee win-win relationships with CE/OS/STB device platform providers, and expand market share during a cost-of-living crisis.

As part of a four-session advertising stream on Tuesday March 21, leaders who are driving the advanced advertising transformation will explore how we maximise the value of free connected TV, and how we make TV a better product for advertisers (spanning the latest thinking on making cross-platform buying easier, improving cross-platform measurement, and attributing TV exposure to business outcomes, among other things.

A session is devoted to ‘Preparing for a larger addressable TV universe’, exploring the challenges (as well as opportunities) as the number of addressable-enabled platforms and homes increases – acknowledging the fact that free-to-air platforms are increasingly ready to join the party, adding to Pay TV and streaming footprints.

The ‘Win-wins in the Television OS marketplace’ session focuses on how TV-OS providers, television set OEMs and content owners work together to increase total household reach, audience engagement and ongoing revenue opportunities for streaming TV. This includes  a look at the Pay TV operator Smart TV model (pioneered by Sky Glass), the role of independent OS/UX providers, and how global OS/UX providers in the CTV/Smart TV space differentiate themselves.

Connected TV World Summit is renowned for delivering smart new thinking and research, and many of the world’s leading analysts are gathering to explore these mission-critical issues:

• ‘The subscription economy in an inflationary era’ – Tim Mulligan, Executive Vice President and Research Director, MIDiA Research
• ‘Content and windowing strategies in the D2C market’ – Jack Davison, Executive Vice President, 3Vision
• ‘The impact of Netflix and TikTok in video advertising’ – Maria Rua Aguete, Senior Director, Media and Entertainment, Omdia
• ‘How broadcasters increase their share-of-time in digital’ – Lottie Towler, Research Manager, Ampere Analysis
• ‘The future of free-to-air aggregation’ – Richard Broughton, Executive Director, Ampere Analysis
• ‘Decarbonising TMT’ – Alice Enders, Director of Research, Enders Analysis
• ‘Technology choices shaping the sports experience of the future’ – Tom Morrod, Research Director & Co-Founder, Caretta Research
• ‘Media & Entertainment opportunities in the metaverse’ – Joseph Teasdale, Head of Tech, Enders Analysis.

‘Delivering an experience: STB & Operator App’ is a session that explores two parallel and closely entwined technology roadmaps: the next-generation TV experience delivered via a set-top box, and operator/aggregator services enabled directly on a television without an STB, whether in the form of ‘Operator as an App’ on a third-party television brand or embedded into an operator-produced television set (as with the pioneering Sky Glass model).

In ‘Cementing the consumer love affair with TV’, 90 minutes are devoted to best practice and global innovation in content discovery. Ampere Analysis is leading a special session dedicated to the future of televised sport, focusing on rights and distribution strategy, while there are parallel sessions devoted to beating the sports streaming pirates and building the sports streaming networks of the future.

Connected TV World Summit has moved to a new venue: Convene, 22 Bishopsgate – London’s second tallest building, next to the Gherkin and minutes from Tower 42. For the first time, the organisers (disclaimer – Videonet is owned by Adwanted Group, which produces Connected TV World Summit) are hosting some Masterclasses, making use of ultra-modern networking and meeting spaces to dig deeper into narrow-focus topics, led by experts in the field.

Nathalie Lethbridge, Founder and Principal Advisor, Atonik Digital, leads the FAST Masterclass, and the consulting/research firm MTM leads the Customer Retention and Acquisition Masterclass. There is a special breakfast devoted to how we decarbonise the television value-chain while ensuring the industry ends the process as large as it started.

The organisers are predicting 100+ senior-level speakers and 600+ (unique) delegates over the two days.

You can find more details about Connected TV World Summit 2023, here.

The registration for this event can be found here.

Connected TV World Summit is produced by Adwanted Events (formerly called Mediatel Events). Adwanted Events also delivers The Future of TV Advertising Global (also with Sydney and Canada editions), The Future of Media, The Future of Brands and The Future of Audio, among others.

Saturation and price sensitivity

During the Future of TV Advertising Global in December, the research company Ampere Analysis outlined what it means for the industry as SVOD majors move into ad-funded tiers. Taking Netflix as an example, Richard Broughton, Research Director at Ampere Analysis, highlighted that global subscriber base growth year-on-year (YoY) dropped from 30% in 2015 to 4% in 2022 — a trend that is being witnessed by many video streaming services.

While increasing levels of competition continue to shape the market, one of the main factors influencing this shift, Broughton explains, is price. “When we look at sign-up and cancellation patterns among different subscriber bases, the main driver is price […] we found that the people who were leaving weren’t necessarily going to competitors, they were just looking at the price and thinking ‘that’s a bit steep, I can’t afford that’.”

Enter the ‘basic’ account’, a response to both consumer and business needs. But what does this mean for marketers? “The ad-tier is available to markets representing 70% of the global subscriber base,” noted Broughton, pointing out that “these are the larger, wealthier markets that Netflix operates in” – a good sign, from an advertising perspective.

Although the general level of discount is roughly $2-3 in most markets, there are differences between tiers that correspond with local levels of ad sensitivity: “If you’re in markets where consumers are more ad-tolerant, like Brazil, you get a lower discount – conversely in markets like Germany and Australia, where we see high levels of ad resistance, there’s a bigger incentive to take the basic tier.”

Unlocking new audiences

In general, the ad load is to be kept low, at 4-5  minutes per hour. While this may not seem like much compared to some broadcast TV ad loads, there’s no doubt advertisers will still be excited at the prospect of working with Netflix, especially considering the streaming giant has now unlocked a pool of consumers which, according to Broughton’s estimates, equates to “up to 34 million homes and 80 million people, or about 15% of subscribers”.

Since these audiences can be quite hard to reach via traditional media, this presents new opportunities for advertisers across the board, who now have the option to integrate ad-tiered SVOD into their media mix.

A path to sustained growth

Netflix’s turn to an ad-funded model — soon to be followed by Disney+ — marks the beginning of a shift in SVOD consumption. While global lockdowns drove a surge in TV screen time and streaming in the UK and beyond, there is now a fierce battle for attention against a backdrop of tighter household budgets.

Providing more affordable plans for viewers while keeping ad-load down is how streaming platforms such as Netflix reckon they can maintain revenue growth, driving their appeal to advertisers and consumers alike.

This creates fierce competition for the multi-billion Euro TV advertising business that was previously dominated by big broadcasting groups. Despite the rise in competition, broadcasters are still in a leading position and remain the driving force shaping the future of TV advertising.

Competition for TV budgets is coming from different angles — and different players

There are three main areas in which new and existing players are refocusing their efforts to provide TV-like offerings — many of which have already become part of the regular mix seen in successful big screen advertising strategies. The combination of scalable reach, data-based targeting opportunities, and digital delivery of big screen video ads are key success factors. In addition to this, social media apps like TikTok, Facebook and Instagram aim to take part in TV advertising budgets with TV-like offerings for the small screen and younger target audiences.

Hardware manufacturers such as Samsung, LG, and Roku are heavily investing in free ad-supported streaming TV (FAST) offerings, which they embed into their user interfaces and thus integrate seamlessly into the TV browsing experience. This method allows them to overcome the boundaries between traditional TV viewing and online video streaming.

Most services are focusing on the aggregation of content, but some are beginning to invest in exclusive content as a way to create unique selling propositions. In addition, automatic content recognition (ACR) technologies embedded on the platforms allow the aggregation of data points, which form the basis for exclusive targeting products within these services.

Some manufacturers use white-label offerings of existing globally active video content aggregators such as Pluto TV and RLAXX.tv that offer their content independently and compose bouquets of local and global video streaming content. FAST services offer newly created linear video channels independent of platform and distribution. These services are available on most devices but are mainly consumed on smart TVs. The growth in this segment can be attributed to FAST’s ability to achieve decent traffic volumes and create an attractive environment for advertisers.

Established VOD services are following suit with ad-supported offerings (i.e., AVOD). In the past, most leading global SVOD services focused mainly on subscription-based business models, but have begun to extend their offerings to include ad-supported services. Recent announcements from Netflix, Disney and Amazon are prime examples of a shift towards ad-supported on-demand streaming services.

Although we are seeing this shift, we should acknowledge YouTube, as it has always focused on advertising-funded content distribution. Additionally, all platforms will continue to attract TV budgets by adding exclusive content rights such as live coverage of major events.

There are also several streaming services focused on one genre of content, which they mostly produce or licence for this specific purpose. These services also fall under the FAST or AVOD labels and are primarily available to viewers free of charge. Music streaming services like Vevo, Xite.tv, and Qwest.tv are available on most major mobile and TV devices but continuously face the challenge of generating relevant traffic volumes. This challenge results in services like these partnering with streaming content aggregators.

For broadcasters, full addressability is key

Many European broadcasters have defined “addressability” as one of their top strategic priorities. Transforming the traditional TV advertising business model towards addressability – with its granular targeting capabilities – is a critical factor for a sustainable long-term product and commercial strategy.

There are numerous methods broadcasters are using to achieve the goal of shaping the future of the TV advertising industry. We have seen broadcasters attempt to optimise targeting methods across different devices and audiences by developing products that enable the unique collection of TV viewing data. Another way that has become very popular in recent years is the growth of external initiatives such as mergers, acquisitions, and strategic alliances between broadcasters, media sales houses, and adtech companies. It is through these methods that broadcasters hope to accumulate a large share of TV advertising budgets.

Three core areas of addressability

There are three main areas of what we call “addressability” in the European TV advertising landscape.

1. Addressability in broadcast TV via HbbTV

 Most relevant for linear TV is addressability within the broadcast TV stream via HbbTV and the emerging HbbTV-TA standard. For most major broadcasters, traditional television still holds the largest share of consumption and thus the largest share of advertising revenue. Therefore, broadcasters are heavily investing in solutions that take advantage of the massive reach traditional TV provides.

In Europe, one of the key drivers is the HbbTV standard. This allows for the combination of traditional TV distribution (e.g. cable, satellite, terrestrial) and insertion of digital ads into the broadcast stream. In markets like Germany, Spain and Italy, insertions of display ads have been the key driver behind the success of Addressable TV advertising. As HbbTV has traditionally been somewhat limited in the quest to substitute the ad break, the development from HbbTV to the new HbbTV-TA standard is a groundbreaking advancement. HbbTV-TA now creates the basis for frame-accurate substitution of ads within the ad break in combination with granular device-specific targeting.

[The HbbTV-TA specification was introduced by HbbTV.org in 2020 and includes specific capabilities that allow advanced targeting advertising (TA). The major benefit for broadcasters, platforms, and operators lies in the opportunity to create a seamless substitution of video ads within a traditional TV ad break. smartclip has already successfully introduced the substitution of the ad break based on HbbTV-TA in Germany. More details on HbbTV-TA at hbbtv.org] 

2. Addressability in broadcast TV via managed platforms

Another form of addressability within the broadcast TV stream is through collaborations with managed platforms. Broadcast distribution in markets like France, Benelux and Nordic countries is mainly executed through proprietary ecosystems of telcos and operators. Another example is the addressable TV solution enabled via the Sky AdSmart platform in the UK. Broadcasters are closely collaborating with telcos and operators to enable addressable TV solutions. In markets like France and Belgium these collaborations have already led to successful ATV advertising propositions.

3. Addressability in linear live stream and BVOD

Given that the big screen remains the preferred viewing method of video content consumption, the final area of addressability is linear live streaming and BVOD. It is no secret that the demand and usage for content consumption on digital platforms is constantly increasing. As consumer habits continuously change, broadcasters are responding by expanding their services on digital platforms. Services may be offered on all digital devices, but the big screen remains king. This is illustrated by a large share of viewers using BVOD and linear TV streaming apps via smart TVs.

These owned digital offerings put broadcasters in a unique position to combine their linear programme with on-demand functionalities and exclusive access to locally produced content. Advertising within these offerings can be delivered via pre-rolls, mid-rolls, or by substituting ad breaks in linear streams through Server-Side Ad Substitution (SSAS) technologies.

Conclusion

As the TV and digital advertising industry react to the momentous news regarding digital SVOD players moving towards advertising-funded business models, we need to keep in mind who the true advertising powerhouses have been and still are. European TV broadcasters generate billions of euros and remain the clear leaders in advertising revenues — providing the perfect position to drive a shift in TV ad budgets towards digital.

Achieving addressability on all distribution platforms is not an easy task, but broadcasters have already proven that their advancements and investments in addressable TV products are paying off. Our sister company and tech partner, smartclip, is already providing major broadcasters like Atresmedia and RTL Germany with comprehensive addressable TV products throughout all their distribution platforms. smartclip’s recent acquisition of Realytics adds the power of TV data analytics and TV data attribution to the product mix.

In the shadow of the public focus on the advancements of Netflix, Disney, and other streaming services towards ad-funded “TV-like” offerings, European broadcasters have already done their homework and secured a head-start in the race for big screen advertising budgets.

References:

^[1] https://www.statista.com/statistics/799762/tv-ad-spend-in-western-europe/

Disney is no stranger to advertising, so this is not the kind of strategic pivot we saw from Netflix in November when ‘Netflix Basic with Adverts’ was introduced after a lifetime aversion to advertising support. Disney+ with advertising should be viewed as part of a big advertising picture, with the Disney+ Basic consumers rolled into a scaled audience offer that spans linear broadcast TV, multiple streaming touchpoints and even social media feeds, sold through a unified team who specialise according to category and business type rather than which screen or platform the ads appear on.

Not surprisingly, given their advertising sales heritage and the premium environment of Disney+, the ad-supported tier attracted 100 advertising partners at launch including all the major agency holding companies like GroupM, Dentsu, Havas, Publicis, IPG, Horizon, Omnicom Group, RPA and Stagwell. Hundreds of creatives covering products and services across retail, apparel, autos, financial services, restaurants, technology, telecom, CPG and travel are being shown to consumers.

Speaking at The Future of TV Advertising Global last week, Rita Ferro, President, Advertising at Disney, inferred that there was a certain inevitability to Disney adopting a hybrid model for Disney+, as she emphasised how Disney has always believed in customer choice and wanted as many people as possible to enjoy the product. Hulu already uses this hybrid model successfully, with ad-supported and ad-free tiers.

Asked what differentiates Disney in ad-supported streaming, Ferro pointed to its experience in that marketplace (especially with Hulu) and therefore an understanding of both consumer behaviour (including correct ad loads) and the technology needed “to drive scale and connect brands with consumers”. Beyond content and environment, she also pointed to a unified ‘Disney ID graph’. Built inhouse, this identifies consumers (in a privacy compliant manner) as a basis for audience segmentation, including advertiser/Disney data matching. There has also been a focus on automation, including a self-service platform for buyers.

Disney is also helping to pioneer cross-platform measurement, working with agencies and advertisers to harness new (alternative) measurement solutions to show de-duplicated reach and frequency across the whole Disney television and streaming portfolio. Like a handful of leading media owners, the company has bought into the idea that no single measurement entity has all the answers in an increasingly fragmented viewing landscape, and it is working with no less than 100 vendors today on this next-generation approach.

She also explained how the unified sales teams would draw upon the exact tools needed for a client, product type or category, with pharmaceuticals and retail being different propositions, for example. So, that could mean different mixes from the automation, measurement, attribution, insights and creative cupboards.

One thing that Disney has in common with Netflix as a new SAVOD (Subscription with Advertising VOD service) is lots of exclusive content. The company has been more assertive than most ‘legacy’ studio/channel groups in repatriating content it owns, putting it behind the Disney+ wall as existing licensing deals run out rather than continuing to license it to third-party streamers.

Disney+ is one of the most successful streaming launches of all time, gaining 164 million paid subscribers (so excluding any free trials) by October this year. After a November 2019 launch, the growth trajectory was boosted by lockdowns, but as with all streamers, Disney+ must now grow in the face of what analysts have called an attention recession (now the lockdown stay-at-home viewing is no longer a factor) and a cost-of-living crisis that is forcing consumers to make tough spending choices.

There is also increasing competition in premium streaming. Other studios are improving their game (e.g., Paramount+ from Paramount) and national broadcasters are doubling down on digital (e.g., ITV has nearly four times as much content in its new streaming service ITVX compared to its predecessor ITV Hub, and is putting some of its best drama into ITVX months ahead of their broadcast debuts).

Disney+ subscriber growth was still healthy even ahead of the ad-supported offer, with the U.S. and Canada clocking 20% growth for paid subs (so excluding any free trials) last year (October 2021 to October 2022). The figure for international excluding India was 57% and there was subscriber growth of 42% for the Disney+ Hotstar collaboration in India. Domestic ARPU for Disney+ did fall slightly in this period.

The Walt Disney Company owns ABC (the American broadcast network giant), one of the world’s major sports broadcasters and streamers in ESPN and ESPN+, and Hulu, which pioneered multichannel streamed VOD/linear aggregation, and the company is now a direct-to-consumer giant, with 235 million D2C customers in total (including the 164 million for Disney+). Revenue streams show the direction of travel: D2C earned Disney £19.6 billion to the year ending October 2022 compared to $28.3 billion for linear networks and $8.1 billion for content sales and licensing.

Those D2C revenues are up 20% year-on-year versus linear revenue growth of 1% (and content sales/licensing growth of 11%). The company expects Disney+ to hit profitability in 2024.

She highlighted one of Netflix’s challenges was to make ads more relevant and seamless with fewer commercial breaks as she stated people did not hate ads, but they hated irrelevant ads. The ad load on Netflix’s ad tier is around four minutes per streaming hour.

She also said that Netflix was going to innovate and add 10-second, 20-second and 40-second ad formats in addition to the current 15-second and 30-second spots. Gorman revealed Netflix was using artificial intelligence to “insert ads in the right places” in shows that were not written for ad breaks, such as at the end of scenes and when the screen fades to black.

You can read the full story on what Netflix said at The Future of TV Advertising Global at our sister publication, The Media Leader, here.