Analysis of broad industry trends occurring in television. The presentation suggests that while TV CPMs are increasing, television is also becoming increasingly targetable.
6. 2015: The year of change in
Impressions growth? Summary
• Impressions have been going up...
• However Jan 2015 shows the first inkling of a
shift in the market.
• Deeper analysis: The impression increase that we
were observing 2010-2015 hasn’t been fueled by
viewership! Instead networks have been printing
more money!
7. Trend 2: More Ads
• Networks are inserting more ads. This is
distorting the TV ecosystem and eroding
viewer experience and quality of
programming.
12. Commercial Pod Ads per break
(Average all television networks)
4.6
4.8
5
5.2
5.4
5.6
5.8
6
6.2
2011 2012 2013 2014
commercial pod approx ads per
pod
commercial pod approx ads per pod
15. Longer Breaks Equals Squished
Programs
• When Stephen Cox was watching “The Wizard of Oz” on
TBS last November, something didn’t sound quite right to
him about the Munchkins, who are near and dear to his
heart.
• “Their voices were raised a notch,” said Mr. Cox, the author
of several pop- culture books including one about the
classic 1939 film. “It was astounding to me.”
• He wasn’t imagining things. Time Warner Inc. TWX -0.48 %
’s TBS used compression technology to speed up the movie.
The purpose: stuffing in more TV commercials.
• Joe Flint, (2015), Wall Street Journal, Feb 2015.
• http://www.wsj.com/articles/cable-tv-shows-are-sped-up-
to-squeeze-in-more-ads-1424301320
16. Longer Breaks Equals Truncation of
opening and closing credits
• Reruns of “Law & Order” on TNT have a 24-
second opening, in contrast to the original 1
minute, 45-second opening when it aired on
NBC.
• senior executive at one major cable
programmer said the speeding up of shows,
which is done by removing repetitive video
frames, is usually a last resort.
18. Trend 4: The Rise of Blipverts (15s ads)
These ads aren’t your grandfather’s ads!
19.
20. The Rise of 15s
YOY % 2011-
2012
YOY% 2012-
2013
YOY% 2013-
2014
Diff between
2014 and 2011
seconds 1.0% 2.1% 2.0% 22.52
adoccurrences 1.4% 2.6% 4.9% 1.40
m15 2.5% 5.5% 12.6% 1.17
m30 3.5% 2.1% 1.2% 0.50
m60 -2.7% 3.4% -6.2% (0.07)
m120 4.2% -4.6% -4.0% (0.01)
1.4 (one and a half) more ads, of which there is just over 1
15 second ad, and a half a 30 second ad
22. More Ads + Shorter Ads
• Ad Break size has
increased from about 7
minutes per half-hour to
7:30. The 30 seconds
extra (about 22 seconds)
roughly equals 2 15
second ad insertions.
• There are about 2 extra
ads per 30 minutes being
inserted
• All of the increase in
impressions (about 2%) is
accounted for by the
insertion of 2 additional
ads per half hour.
• Without those additional
insertions, impressions
would be decreasing at
the rate of about 4% per
year.
23. Conclusion: Current Impression
Counting methods are misleading
• Nielsen counts impressions
for each additional ad. Can
lead networks to inflate
their “ratings” / impressions
by essentially “printing
more money” – adding
more commercial breaks.
• 15s ads score as many
impressions as 30s ads ->
tendency to “print more 15s
ads”.
• However there is a cost to
the advertiser....
29. According to Rentrak:
Rentrak max impressions
39,964,469
43,850,712
38,224,611
42,696,649
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
CY2011 CY2012 CY2013 CY2014
Series1
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
Series1 Linear (Series1)Jira: https://precisiondemand.atlassian.net/browse/TVTAX-75?filter=-3
30. STB viewing data
(higher income population)
y = -2.5029x + 5734.6
R² = 0.0022
0
1000
2000
3000
4000
5000
6000
7000
8000
monthdate
Average of viewminutes per device
year month
6.42
7.22
8.10
7.43
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
CY2012 CY2013 CY2014 CY2015
31. Trend 8: From 2012 to 2015
Viewership is steady
According to 3 large independent data sources, across years
2010-2015, with January data , viewership is STEADY !
6.42
7.22
8.10
7.43
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
CY2012 CY2013 CY2014 CY2015
39,964,469
43,850,712
38,224,611
42,696,649
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
CY2011 CY2012 CY2013 CY2014
Series1
35,205,012
29,212,147
33,230,858
32,035,671
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
CY2012 CY2013 CY2014 CY2015
J
Something far more
interesting is going on...
32. Something far more interesting is
going on...
Who is watching is changing!
33. 0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2012 2013 2014 2015
maxA18to20
maxA21to24
maxA25to29
maxA30to34
maxA35to39
maxA40to44
maxA45to49
maxA50to54
maxA55to64
maxA65plus
Every age-
group < 50 is
declining!
Jan of each year
Average of max
impressions
during the year
(proxy for
viewers)
Trend 9: Demographic Composition of TV Viewers
34. 0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2012 2013 2014 2015
maxA18to20
maxA21to24
maxA25to29
maxA30to34
maxA35to39
maxA40to44
maxA45to49
maxA50to54
maxA55to64
maxA65plus
Every age-
group < 50 is
declining!
But 50+ is increasing! AND it
makes up most of the viewers
already!
Jan of each year
Average of max
impressions
during the year
(proxy for
viewers)
Trend 9: Demographic Composition of TV Viewers
39. Price to target Demo populations on TV (CPM30)
18to20 increased from $700 to $1,200 in 3 years
-
200
400
600
800
1,000
1,200
1,400
CY2012 CY2013 CY2014 CY2015
A18to20
A21to24
A25to29
A30to34
A35to39
A40to44
A45to49
A50to54
A55to64
A65plus
It is getting much harder
to get 18..20 on
television. Because of
the rapid decline in the
segment, the effective
CPM30 to reach this
segment increased from
about 700 to about
1200 per person
between 2012-2015.
40. Side question:
But do 18 year olds even have any money?
• Spending power of 18..49 versus 50+
according to the Bureau of Labor Statistics
(BLS) ->
41. Expenditure 18..25 vs 45-54
Bureau of Labor Statistics
31,411
62,103
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
under 25 45-54
Expenditures
43. BLS Annual Expenditure versus CPM30
for targeted age-group
Marketers are paying
most for the segment
that has the least
annual expenditure
...and paying the least
for the segment with
the highest
expenditure!
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
-
10,000.0
20,000.0
30,000.0
40,000.0
50,000.0
60,000.0
70,000.0
CPM30per1agerange
BLSAnnualExpenditureperperson
BLS expenditure CY2015
44. Summary
• In contrast to TV
doomsdayers, TV
viewership remains steady
• However this belies a
demographic change that is
happening in TV audiences
• The “coveted” 18..49 year
old segment is rapidly
declining on television and
is being replaced by new
viewership from 50+ age
groups
• TV is already majority 50+
(58.1% in 2012) increasing
to 64.6% in 2015
• It will be increasingly
expensive to target young
adult demographics on
television: CPM30 has
already increased from
$700 to $1,200 in just 2012-
2015
46. The 18..49 year old decline is not
inevitable
• The shrinking younger
segments should be of
great concern for TV
networks
• Younger segments will
be older segments in
the future.
• However the decline in
18..49 is not inevitable.
• Several networks have
increased their
viewership amongst
18..49
55. Ad Skipping
• Adview % = percentage of commercial break
that STB is tuned.
• Only possible to do this analysis using STB
data
56. According to our STB data, commercial
Viewing has increased between 2011 –
2014
0.165
0.17
0.175
0.18
0.185
0.19
2011 2012 2013 2014 (blank)
Total
Total
yy
Average of adviews_seconds_pct
callletters adviews_per_session DOW 17.5% -> 19%
58. Commercial Viewing Increase
How could this be so?
• Could it be phenomenal creative?
– Triumph of the Mad Men? Probably not....
– Ad creative quality is undoubtedly higher; outstanding super bowl ads.
• Could it be phenomenal ad relevance?
– More relevant ads should promote higher viewing
– Ad relevance has improved by only about 3% 2012-2015
• Most likely: Older Demographic explosion
– Egress of younger demographics leaving an older population
– Older population have higher propensity to view commercials.
– 55+ population on TV has increased from 45% -> 53% between 2012-
2015
59. Trend 11: TV Prices
• TV is the last great
reach medium.
• Shared cultural
experience.
• Audience has
maintained itself.
However prices have
not just remained the
same – prices have
grown significantly.
• This “price inflation” is
exerting a huge burden
on advertisers.
63. Consumer Price Index Compounded
Inflation index = 3%
0.97
0.98
0.99
1.00
1.01
1.02
1.03
1.04
1.05
Inflation accounts for 3-
4% of the increase
64. Advertiser Value is being impacted
• Prices are going up:
– ~ 29% inflation since
2012
• Pod positions are going
down:
– Ad Pod Position ~ 10%
degradation in
performance due to
inflated ad breaks and
loss of position
• $1.00 in 2012;
• $0.58 in 2015
• 42% loss of
performance since 2012
65. Price increases to slow
• Prices have been
increasing at the rate of
about 18% per year
since 2012.
• In 2015 we are seeing a
slow-down.
• 6% forecast for 2015;
down from 18% per
year from 2012. So
approximately a 2/3rd
reduction in price
growth in 2015
66. Trend 8: Spend was increasing – 2015
Jan the market appears to have shifted
67. Spend
y = 0.0034x + 0.8844
0.50
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
damt
damt Linear ( damt )
+5% YOY
growth
Industry has shown consistent
growth in ad budgets
72. SMI for comparison
month CY2009 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015
J 100 110 123 135 129 142 142
F 101 127 120 132 136 168 147
M 114 133 131 146 142 162 161
A 114 124 129 140 148 160 148
100
110
123
135
129
142 142
0
20
40
60
80
100
120
140
160
CY2009 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015
J
J
SMI reports
flat spend in
Jan, and -8% in
April 2015
114
124 129
140
148
160
148
0
20
40
60
80
100
120
140
160
180
CY2009 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015
A
A
Values in Jan-Apr
2015 are
0%
-13%
-1%
-8%
Mean not
including Feb = -
3%
73. Spend summary
• 7% year over year
growth in spend since
2012, and further back
• First inclination of a
shift -> 2015 January
shows almost the first
time that spend has
dropped.
• Drop is 3% in January.
• February was affected
by Olympics, but should
get more information
with March data.
77. Trucks (CPM30)
y = 0.0287x + 0.7853
-
0.50
1.00
1.50
2.00
2.50
3.00
Series1 Linear (Series1)
Prices up
73% from
2012
5.21 5.21
5.72
6.81
14.33
8.99
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
CY2010 CY2011 CY2012 CY2013 CY2014 CY2015
1-Jan
Large price
growth
Drop in 2015
78. Trucks
y = 0.0063x + 0.8285
-
0.50
1.00
1.50
2.00
2.50
Series1 Linear (Series1)
Spend up
11% from
2012
152,198,948.00
142,438,815.00
157,184,042.00
139,114,654.00
237,292,409.00
183,043,869.00
-
50,000,000.00
100,000,000.00
150,000,000.00
200,000,000.00
250,000,000.00
CY2010 CY2011 CY2012 CY2013 CY2014 CY2015
1-Jan
Drop in 2015
Unclear why
2014 was a big
year for trucks
89. African American
0
10000000
20000000
30000000
40000000
50000000
60000000
70000000
80000000
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1
2010 2011 2012 2013 2014 2015
Average of tratio_pos7 Sum of spendamt7
Average of tCPM30nonzero_pos7 Linear (Sum of spendamt7)
Values
year month
Average of tratio_pos7 Sum of spendamt7 Average of tCPM30nonzero_pos7
stationgenre
90. International
0
2000000
4000000
6000000
8000000
10000000
12000000
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1
2010 2011 2012 2013 2014 2015
Average of tratio_pos7 Sum of spendamt7
Average of tCPM30nonzero_pos7 Linear (Sum of spendamt7)
Values
year month
Average of tratio_pos7 Sum of spendamt7 Average of tCPM30nonzero_pos7
stationgenre
91. Sports
0
100000000
200000000
300000000
400000000
500000000
600000000
700000000
800000000
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1
2010 2011 2012 2013 2014 2015
Average of tratio_pos7 Sum of spendamt7
Average of tCPM30nonzero_pos7 Linear (Sum of spendamt7)
Values
year month
Average of tratio_pos7 Sum of spendamt7 Average of tCPM30nonzero_pos7
stationgenre
92. Television Network Genres
CY2014 vs CY2012
Network Genre 2012 2014% diff
Sports 4204071622 5503799290 30.92%1,299,727,669
Movies 671296438.1 872081017.4 29.91% 200,784,579
International 74898556.14 97056451.57 29.58% 22,157,895
Family 2467881835 3142870090 27.35% 674,988,255
Syndicated Programming 2906935059 3554318346 22.27% 647,383,288
African American 607155858.4 738956825.6 21.71% 131,800,967
Lifestyle 2133509398 2549814621 19.51% 416,305,223
Latin American 6762502416 7752723447 14.64% 990,221,031
Faith 24295533 27638455.64 13.76% 3,342,923
Education 4088229212 4570032030 11.79% 481,802,818
News 1907271220 2034546912 6.67% 127,275,692
Reality 2638553315 2749163712 4.19% 110,610,398
Women 1278014440 1272933929 -0.40% (5,080,511)
National Broadcast 28419374959 27873120825 -1.92% (546,254,134)
Music 1731026523 1603606931 -7.36%(127,419,592)
93. Network Summary (Forecast)
• Expansion in
– Sports (31%)
– International (30%)
– Latin American 18%
• Minimal growth in
– Reality shows (4% becoming
cultural old news)
– Music television (-7%
Youtube)
– Movies* (Netflix effect? 2015
Jan data shows low growth)
– News (7%)
96. CBS Revenue
vs TV Ad
Revenue 13.39 13.44
13.92
14.33
13.81
13.74
12.8
13
13.2
13.4
13.6
13.8
14
14.2
14.4
14.6
CY2010 CY2011 CY2012 CY2013 CY2014 CY2015
Q1 Revenue (B)
781,946,295
820,406,534 839,300,916 843,359,491
869,548,542
739765388
-
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
1,000,000,000
CY2010 CY2011 CY2012 CY2013 CY2014 CY2015
1/1/2015
CBS Revenue
Q1 of each year
CBS Television Ad
Revenue
January of each year
12.91
20.99
28.83
41.99
62.38
58.33
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
CY2010 CY2011 CY2012 CY2013 CY2014 CY2015
Q1
CBS Stock price
Q1 of each year
97. Spots are becoming smaller and more
demographically targetable
• This doesn’t mean TV is
going away. This trend
has been underway
since 1950.
• However it does
suggest a greater role
for targeting.
103. Programmatic TV ad relevance
out-performs the Industry
74%
5%
-40%
-60%
-40%
-20%
0%
20%
40%
60%
80%
tratio (buyers per impression) CPM (raw cost per thousand
impressions)
tCPM (cost per buyer reached)
Programmatic vs industry: tratio 74% higher
tCPM 40% lower
CPM buying inventory at about the same price – if not a little
higher!
tCPM range -
90%..+20%
Tratio increase range
-0.01..+0.23
Mean increase 0.11
105. tRatio Summary
• Tratio has improved very slightly; only 3%
• We believe this is causing a shift particularly in
the Scatter market.
106. TV Trends Summary 1:
Ad load is higher
• Viewer ad load has
increased
• More Ads
• Shorter Ads
• Longer Commercial
Breaks
• Shorter TV Programs
107. TV Trends Summary 2:
Advertiser value is not as high
• 29% CPM increase since
2012
• Worse pod positioning ~
10% degradation in perf
• However advertisers
can now target – this is
the future.
108. TV Trends Summary 3:
TV Demographics are shifting
• Impressions were going up –
until now. Impressions inflated
due to counting practices plus
longer ad breaks.
• Core viewership is steady but
the demographics are
changing
• A18to49 to become
increasingly rare on TV; A50+
increasingly common
• Cost to reach 18to20
exorbident on television
• Cost to reach 50+ will become
cheaper
109. TV Trends Summary 4:
Prices dropped in 2015
• Demographic changes
may cause some
disruption.
• If TV industry was geared
towards reaching 18to49
then correction will be
occurring, since this
segment is rapidly exiting.
• 3% drop in spend this
year
• Price increases have
declined by 2/3rds in
2015
• Other monitoring
companies reporting
drops in TV spend in
2015.
110. TV Summary 5:
Programmatic unlocks revenue
• Networks should actively
manage their ad
relevance to ensure a
total viewer experience.
• Advertisers can micro-
target on television.
• Increased ad relevance
• Higher Advertiser ROI
• Higher Network revenues
• Better viewer experience
111. TV Trends 6: It is possible to win 18to49s on TV but
content and ad relevance/load need to be improved
• For example CW carries
innovative, high quality,
original content that
appeals to 18to49s.
• CW has expanded its
footprint amongst
18to49s significantly.
• Ad load and Ad
relevance needs to be
monitored carefully lest
the network lose its
audience.
