Converging Competition: Changes In TV & Online Advertising Drive Consumer Benefits
As legal proceedings begin in the U.S. Justice Department’s case against the proposed AT&T-Time Warner merger, cries of “duopoly” against leading tech services continue to be raised despite clear examples of competitors repeatedly building innovative products and partnerships to expand their advertising reach.
An Analysys Mason report notes: “Ultimately, online and TV players are experimenting and developing their strategies on how to position themselves in the converged advertising market that is progressively being built.” The authors note, “competition and new, sometimes unexpected, partnerships are likely to go hand in hand, in a way that should ultimately benefit consumers.”
As we noted previously, eMarketer forecasts smaller rivals will take a bite out of the digital advertising pie from today’s leaders. More broadly, competition is alive and well in the $540 billion global advertising market, with new entrants in the digital space, as well as cable and wireless companies, positioning themselves to compete in online advertising.
Here are just six examples:
—Comcast acquired NBCUniversal in 2011, and after acquiring FreeWheel in 2014 to improve digital offerings, Comcast bought StickyAds.Tv to expand its programmatic offers in 2016.
—Verizon has argued its acquisition of Yahoo would make it a digital advertising powerhouse. Marketing Land’s James Green wrote, “If Verizon unclutters the inherent messiness with a prolonged tech and content strategy, they could be poised to be a legitimate competitor to Google and Facebook.”
—AT&T launched AdWorks, a targeted advertising network reaching tens of millions of U.S. households, acknowledging that Facebook and Google were key competitors to the service.
—TV conglomerates Fox, Turner, and Viacom are collaborating on a common platform to enable “better scalability of targeted TV advertising products” across TV networks.
—Snapchat’s ad revenues are expected to jump 81.7 percent to top $1 billion.
—Publishing alliances are using their collective power to pool login data and transform ad buying, as shown by collaboration efforts by News Corp, Axel Springer, and The Guardian — as well as by the online publishers’ association Digital Content Next’s TrustX ad platform.
Cable And Wireless Companies Continue To Develop Competitive Alternatives In Digital Advertising
Verizon Has Argued Its Acquisition Of Yahoo’s Operating Business Would Allow Verizon To Become A Digital Advertising “Powerhouse.” “AOL CEO Armstrong told CNBC that combining the power of Yahoo and AOL could give Verizon Communications the necessary tools and reach to become a major powerhouse in digital advertising.” (Michelle Castillo, “AOL CEO Tim Armstrong: Yahoo Deal Helps Verizon Against Facebook, Google,” CNBC, 7/26/16)
Verizon Aims To Leverage Significant Quantity Of Consumer Data Gathered From Online And Mobile Channels To Expand Digital Advertising Share. “Verizon wants to become a strong third choice for advertisers by adding Yahoo’s popular sites and billion users worldwide to its own media business, which includes AOL and Verizon’s home-grown go90 video service. It can place ads on those sites, and can also combine data from visitors to those sites with AOL’s ad technologies and sales teams, and possibly also personal data from Verizon mobile customers such as location and other information, in order to better target ads at individuals. Verizon has programs that use mobile-customer data for targeted ads and may combine that with data gathered by AOL and Yahoo. Verizon says customers can choose whether to participate.” (Tali Arbel, “How Verizon Hopes To Grab Digital Ad Dollars With Yahoo,” Associated Press, 6/8/17)
AT&T’s AdWorks Serves Targeted Advertising To More Than 25 Million Households And 280 Million Mobile Subscribers. “In 2015, AT&T launched a trial of a new feature of its digital advertising product, AdWorks, which enabled cross-screen addressability. This feature allows targeted advertisement on TV and mobile platforms. With the help of Opera Mediaworks, AT&T is able to track the mobile profiles of the TV viewers and then show the mobile advertisement to those who have already seen it on TV. The mobile advertisement will usually offer the call-for-action feature such as a link to the website of the advertiser or a seller, a downloadable coupon or a calendar invitation. AT&T has access to the data of over 4 million US households, and it has recently acquired a satellite operator, DirecTV, extending its reach to an additional 21 million households. Meanwhile, Opera MediaWorks has access to 285 million US mobile subscribers, and it is able to deliver the ads to the target segment of subscribers within one of the thousands of popular apps.” (David Abecassis, Yuilya Guitard, And Michael Kende, “Convergence Of TV And Digital Platforms: Increased Innovation And Competition For Advertisers’ Budgets,” Analysys Mason, 12/21/17)
AT&T AdWorks President Rick Welday Notes There’s “No Question” That AdWorks Is Designed To Compete With Leading Tech Services. “There’s no question Facebook and Google are competitors. There is no shortage of options for advertisers. Everybody knows a lot of money is moving to the digital space. I think, for us, when we look at where the growth is, it’s clearly going toward targeted, more audience-based advertising. Even in digital, growth is not riding on the backs of display or search advertising. It’s coming from mobile video. AT&T, having acquired DirecTV with the stated purpose of being an integrated carrier that specializes and leads and innovates in mobile video, that’s a good thing for us.” (Kelly Liyakasa, “AT&T Sees A Future At The Intersection Of Cross-Screen And Addressable TV,” AdExchanger, 10/13/16)
Comcast’s Freewheel Offers Ad Customization And Targeting To Help TV Networks “Optimize Their Digital Revenue.” “In 2014, Comcast acquired FreeWheel, a start-up that performs advertisement personalization and insertion online. Comcast keeps FreeWheel as an autonomous company that serves different media clients across the globe, including Comcast’s competitors. It provides services to DirecTV and Viacom in the US, TF1 in France, Sky in Europe, and many other media companies. FreeWheel serves as the supply-side platform for TV players to sell their digital advertisement inventory in a programmatic way across all digital platforms through one centralized system. This allows the TV players to optimize their digital revenue. Freewheel also addresses issues with users’ quality of experience. It optimizes the number of ads served per length of content, adopts its insertion style based on the screen type, reduces repetitiveness of the ads served and ensures the video quality of the advertisement. It also uses audience viewing habits data (e.g. binge-watching or short video sampling) across digital platforms to deliver ads in such a manner that would increase viewability rates.” (David Abecassis, Yuilya Guitard, And Michael Kende, “Convergence Of TV And Digital Platforms: Increased Innovation And Competition For Advertisers’ Budgets,” Analysys Mason, 12/21/17)
Freewheel Allows TV Content Providers To Create “Private Ad Exchanges” For Programmatic Ads. “Comcast has acquired StickyAds.tv, a startup that specializes in TV ads that run on digital properties. People familiar with the transaction say the Paris-based startup will be rolled up into Comcast’s FreeWheel unit, which helps TV-centric publishers like Comcast, Viacom and Fox deliver digital video ads. Comcast* bought that company two years ago for at least $360 million; no word on a purchase price for this deal. StickyAds helps publishers create their own ‘supply-side platforms’ — essentially, private ad exchanges that allow publishers to give certain buyers the ability to purchase their inventory via ‘programmatic’ tools.” (Peter Kafka, “Comcast buys French startup StickyAds to build out its digital video business,” Recode, 5/8/16)
Magna Global’s David Cohen Says Comcast, Through Its NBCUniversal Property, Is Working To Partner With Online Publishers And Smaller Tech Platforms To Improve Targeting In Digital Advertising. “NBCU’s newest data platform, Audience Symphony, expands that same audience-targeting approach beyond linear and into all the digital, mobile and social platforms the company owns, along with partners like BuzzFeed, Vox, Snapchat and Apple News. ‘Symphony is that platform’s agnostic way to scale an audience approach across almost every consumer touch point during the day,’ said Rosen.” (Jason Lynch, “Inside NBCUniversal’s Billion-Dollar Bet On Data-Based Advertising,” AdWeek, 4/3/17)
Comcast Has Launched A Digital Video Platform To Compete With Facebook And Google In Digital Advertising/Content Space. “Notably, just a couple of days ago, Business Insider reported that Comcast is set to launch a digital video platform in the coming weeks. The new service is likely to be called “Watchable” which will offer non-exclusive, unlicensed and original content of several digital content developers. With this, Comcast will foray into the highly lucrative digital advertising market. Watchable will primarily compete with Google Inc. GOOGL controlled YouTube and Facebook Inc.’s FB online video platform.” (Zacks Equity Research, “Comcast Buys This Technology To Boost Digital Ad Platform,” NASDAQ.com, 8/19/15)
Smaller Tech Platforms Such As Snapchat Are Presenting More Competition In Digital Advertising
EMarketer Estimates Show Snapchat’s Share Of Digital Ad Spending Is Increasing. “Snapchat’s US ad revenues will jump 81.7% this year, topping $1 billion for the first time.” (“Data Suggests Surprising Shift: Duopoly Not All-Powerful,” EMarketer, 3/19/18)
Publishers Like News Corp. And Their Trade Groups Have Established Digital Advertising Exchanges, Reaching Large Audiences
News Corp. Has Grown Its New Digital Advertising Platform To An Audience Of Over 140 Million. News Corp’s new platform, News IQ, a ‘brand safe’ advertising platform boasting an audience of over 140 million. (Ronan Shields, “News Corp Debuts New Ad Platform News Iq Promising Premium First Party Data Insights And Brand Safety Assurances,” The Drum, 12/5/17)
Digital Content Next (DCN) Launched TrustX Ad Exchange To Reach Consumers On Premium Properties. “Digital Content Next (DCN), the only trade association exclusively dedicated to trusted, high-quality digital content brands, today announced the creation of a cooperative digital advertising marketplace, TrustX, designed to address the industry’s trust, transparency and accountability challenges in digital advertising. This unique marketplace will be a subsidiary of DCN and will operate as a public benefit corporation (B Corp) for the sole purpose of creating a sustainable future for trusted advertising. Founding companies include DCN members CBS Interactive, Condé Nast, ESPN, Hearst and News Corp.” (Digital Content Next, “DCN Launches Premium Digital Advertising Marketplace, TrustX,” Press Release, 9/26/16)