Spot TV Eyes ’21 Comeback, With Caveats
The spot TV ad market isn’t likely to reach a pre-COVID-19 sense of normalcy until the second half of next year. But there are new clients to local TV — along with some that have returned after spending their ad dollars elsewhere. And a growing number of per-performance, automation and over-the-top transactions is adding further luster.
So said two leading agency buyers and a top station sales executive during a session on optimizing spot sales, which was part of last week’s TVNewsCheck’s TV2025: Monetizing the Future conference.
In all likelihood, the automotive category — which is extremely important for stations — won’t be firing on all cylinders until next year’s second quarter.
And predicting a return to normal isn’t easy, because no one really knows how much longer COVID-19 will continue its dark course. What’s more, the results of the election could impact the economy as well. “Both of these things could stall the rebound that we’re starting to see in spending,” said Jennifer Hungerbuhler, EVP, managing director, local video and audio investment at Amplifi USA.
That said, Hungerbuhler added: “We’ve had three different clients that have been historically national advertisers that — because of the way the states have opened up and the availability of certain things in certain markets — are now testing in spot, which has been amazing. One particular retail client saw an 18% sales growth when they shifted from national to spot. We’re now on our seventh round of buys with them.”
Green Shoots In Retail, Home Improvements, Dentists
Kathy Doyle, EVP, local investment at MagnaGlobal, said that her agency has clients that have come back to spot after a hiatus, specifically in the retail and ecommerce ad categories.
But are they in spot for the long haul? “I hope so. As we continue to evolve local and make it a more compelling option for our clients, we can get people who are trying it out to see the value,” Doyle said.
More green shoots springing out of the ground were cited by Missy Evenson, VP sales, local media at The E.W. Scripps Co. “We’ve got categories like home improvement and services that aren’t that far off from a year ago,” she said, in speaking of their level of ad spending.
Her sales team has also identified new business sectors to pursue. “I’ll give you a crazy example, the dentistry category,” Evenson said. “There’s a lot of folks in the country that are wearing masks eight-plus hours a day. It’s beginning to affect their dentistry, their oral care. It’s a category that we don’t see a ton of, but it’s something that’s popped up.”
Per-Performance Campaigns Growing
The ways that buyers and sellers are conducting business is also affecting spot’s revenue growth. For example, per-performance transactions are gaining much more traction.
In per-performance campaigns, a seller guarantees a certain number of impressions or ratings points for a given flight. And if the spots fail to reach their agreed-upon goal, the seller credits the buyer for the cost of the flight or gives cash back. It eliminates the need for makegoods, which can take years to resolve.
Doyle said that 40% of MagnaGlobal’s spot deals are done on a per-performance basis. “I have a pretty aggressive timeline that I’ve laid out to my team. I hope that as we’re nearing the end of next year, we’re moving to nearly 100%, if not 100%.”
“We have to evolve as an industry, and having that performance model is critical,” Hungerbuhler added. “Clients love it. The post-buy performance is so much better. The level of accountability and stewardship that the stations are delivering is terrific. We’ll continue to spend additional dollars in the space for sure.”
At Scripps, the amount of business that runs through the per-performance model could double before the end of next year, involving more than 50% of the station group’s national business, said Evenson.
The key to per-performance success involves the business rules. “It’s not just a move to impressions, or ‘Let’s not worry about makegoods anymore. We’ll give you control of that.’ It’s a whole melting pot of things that need to go into that formula,” Evenson said. “The speed at which the business moves has to be quicker.”
So far, Amplifi is conducted per-performance deals with “under 20” TV station groups, and at MagnaGlobal, the number is more like 10.
OTT’s Growth Opportunities
OTT transactions are seen as another big growth area by all three panelists. “$70 billion a year is spent on OTT platforms. And we’re spending upwards of 10% on each of our campaigns on OTT,” Hungerbuhler said.
“I see this as a constant growth opportunity. It allows us to capture the ‘cord nevers’ as well as the ‘cord cutters.’ It has advanced targeting, beyond the traditional demo,” Hungerbuhler said. “We can get so much more granular with attribution, brand lift, cross platform measurement. So I definitely think we’re going to see more money move into this space.”
On the downside for buyers, there are issues with transparency and some misinformation, with a lot of new players creating a Wild West environment.
In addition, OTT is cannibalizing some dollars that had once been designated for traditional spot deals, according to Doyle and Hungerbuhler. Evenson didn’t seem troubled by that; Scripps is capturing the migrating dollars with its own OTT transactions. “It’s all green to us,” she said. “We’ve more than doubled last year’s performance [with OTT]. It’s fast growing.”
But there are OTT challenges for broadcasters. “We certainly have to watch the margins. You don’t just put a signal over the air. You have to pay a lot of different vendors small fees to get it served and executed,” Evenson said.
Momentum On Automation
On the automation front, business is moving more smoothly for agencies than it is for stations. “There’s been plenty of momentum. We’ve made great progress over the last three years. And that’s not that long a time,” Doyle said.With the pandemic’s duration uncertain, top ad buyers and sellers say some national clients are shifting buys to local, while per performance, automation and OTT sales are helping towards a recovery. Click To Tweet
At Scripps, more than 60% of national sales is conducted via automation, but the local business is still largely manual. The sticking point for broadcasters largely involves fees charged by various vendors along the pipeline. “It feels at times as if everyone’s got their hand out. And we’re sitting there going, ‘Wait a minute. I’m paying out for my own data? How did we get here?’ ” Evenson said.
“We need the tech companies to put down their swords and say, ‘Okay, there may only be a winner or two, but if we just put some of these fees in the closet, and work with these folks, the long-term gain could be huge.’” Evenson said. “It’s a dance.”
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