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Social media giants have been able to pull in advertising dollars primarily off their large audiences. But now they’re boosting premium content to strengthen their value to advertisers on all fronts, with a focus on video.
Media sales executives gathered at a roundtable late last year to launch Advertise or Die, a campaign created after a tough year for the advertising market. With Ten, Seven, Nine and Foxtel all onboard, they argued they deserved a bigger share of brands’ media budgets because, while digital platforms, such as Facebook and Google, reach more Australians, the premium content of traditional media drives quality engagement.
Consumers are expected to spend 84 minutes a day watching online videos this year, up 25% from 67 minutes in 2018, according to PwC. Advertisers are following, with online video advertising predicted to grow by 22.4% to $3.8 billion in Australia between 2019 and 2023. Linear TV ad revenue is forecast to slip by 1.1% to $3.4 billion and broadcast-on-demand (BVOD) is expected to grow 27.7% to $441 million.
In this battle for advertising dollars around video, social media companies have been able to boast significant reach figures to advertisers, compared to traditional TV.
In Australia, where social media users are some of the most active in the world, 15 million people are on Facebook and 6.4 million on Snapchat, or, 60% and 25% of the total population, respectively. On the other hand, the TV industry as a whole, both free-to-air and subscription, attracts 19.6 million Australians, or 82.6% of the population in people-metered markets, according to a 2017 Nielsen report.
The response from TV executives to double down on the quality of their content was a common theme at The Future of TV Advertising conference in Sydney last month. It has also been reinforced with the formation of the PremiumContentAlliance, which is focused on proving the effectiveness of advertising in premium digital content.
“We invest so much money into our shows,” Ten’s chief content officer and executive vice president for ViacomCBS in Australia and New Zealand Beverley McGarvey told the industry conference.
“People talk about cheap reality [TV], but everyone in television knows that there is no cheap reality on TV at the moment.
“The reality shows that we make, the storytelling and the staff that is required are incredibly expensive. The interesting thing for me is that when you’re a BVOD viewer, you might have sat and watched The Project or Survivor last night on TV because you thought ‘whatever’, but if you go searching for Survivor on 10Play, you are a super engaged viewer. You’ve gone out of your way to find that. It’s not like you scrolled through a feed and clicked a button and watched it for five minutes, you’ve gone looking for it.
“To get audiences to go looking for things you have to provide premium content. Obviously we’re incredibly biased, but I feel like we’re providing a premium service that’s targeted particularly at experience, which sets us apart from what everyone else is doing.”
TV may have a right to this claim – it does put significant money into production – but recently there’s been a noticeable effort by social media to increase high-quality content, including video.
Last year Facebook ramped up investment in Facebook Watch, which launched locally in 2018. It partnered with media owners for content, including extensions of Australia’s Got Talent and The Bachelor. It’s also struck deals with Seven, Nine, Ten, Sky News and Junkee for News in Watch, which are exclusive to Facebook.
“It’s quite a refreshing space for them to finally move through because it has been a couple of years in the making,” says Ryan Menezes, Starcom head of digital and commerce, on Facebook’s push into premium video.
“Initially it seemed like there was a big focus on it and then they took their foot off the pedal for a little bit. Now, it seems like they’re absolutely back on the table.
“It’s a huge opportunity in terms of changing the perception of Facebook from just having user-generated content, to more of a premium space. I think that’s exciting in general.”
As well as helping brand safety concerns, Menezes says better quality programs add a new layer to video advertising.
“TV does an outstanding job in terms of driving awareness, but where Facebook can start to play a bigger role is into some other elements including how do you influence consideration, how do you drive preference, how do you drive affinity, because there’s so much more to the platform.
“If you drive broadcast-based components, and quality and brand integration as part of these elements, I feel like it plays such a good complementative role to your TV campaign. There’s absolutely a huge opportunity outside of brand safety building across the key elements around consideration, preference and affinity.”
The deals between Facebook and media owners came just as the Australian Competition and Consumer Commission (ACCC) was preparing its final report on its Digital Platforms Inquiry, raising questions about the social media giant’s motivations. But, alongside its relationship with news media businesses, improving its overall video ecosystem across its apps has been important for Facebook.
Andrew Hunter, Facebook’s news partnerships lead for Australia and New Zealand, says the deals allowed a relationship with media owners and improved the quality of content.
“It protects the appetite of the audiences in Watch for that type of video, but also an opportunity for us to provide some direct revenue in the form of minimum guarantee back to the publishers and broadcasters,” Hunter says. “It’s also about creating an environment where video is engaging audiences and drawing in audiences so that brands can run their advertising in a place where the audiences are engaged with the video.”
Media owners have had varied success with News in Watch. Facebook sees that as measured by quality of engagement, as well as reach.
“We’re looking at not just the viewership, but the engagement and the number of one-minute views of the videos that have been consumed as well, because it’s really important that with these videos that we are starting to grow in that ecosystem as well,” Hunter says.
“At the one minute mark an in-stream ad can appear. So, it’s really important that we’re growing the inventory of those one-minute ads, not just so that we can create a sustainable video ecosystem for our publishers, but also so that it’s a great place for brands to be as well.”
While no numbers have been released, Hunter says both Watch viewers and engagement have increased, driving ads and impressions.
“Because it’s a place where audiences are spending longer with high quality news and other types of video content, it is a place that is generating more ad revenue from high quality advertisers as well.”
Starcom’s Menezes says he’s also seeing interest from brands. “The powerful thing with Facebook is at the end of the day, you’ve got a platform that’s grabbing the most reach and also the fact that you can refine your messaging and personalise,” he says. “So the conversations that we’re having is absolutely on an investment perspective. Brands will want to invest to be part of this.
“Brands that have also been a little bit more cautious in the past, based on some of the brand safety challenges, were actually coming to have the right conversation and to also say, ‘okay, now we feel like this is the right time to invest or to at least bring the investment back to where it used to be in past’, when there is more premium content on the table. That’s driven either more of a reach approach, but having an element of personalisation, which you can’t deliver on television.”
Menezes highlights the potential for sponsorships as a significant opportunity for Facebook. Brands could use Seven’s My Kitchen Rules to connect with audiences with a higher affinity to certain contestants.
“Digital has always been lacklustre in terms of activating a sponsorship, I think this brings forward a good opportunity,” he says.
Meanwhile, Snapchat recently partnered with Screen Australia to produce its first Australian-created vertical series. The series will build on Snap’s library, including Snap Originals and Snap Shows.
For a company that targets the younger audience, 13-34 year-olds, it sees an opportunity to capture viewers with premium content who are watching less TV than previous generations.
Local general manager Kathryn Carter says in addition to user-generated content, which has propped up the platform, users also want quality shows.
“It’s not that user-generated content isn’t enough, but you have to have a look at how people are consuming content and increasingly people are consuming content on their mobile, especially for a Snapchat generation or Gen Z or millennials,” Carter says.
“They want to be entertained, they want to learn, they want to experience and be exposed to a whole variety of different styles of content because that [mobile] is their preferred device for consuming content from that perspective. So it’s really important that we are providing that content and continuing our commitment to storytelling across many different genres.”
Time spent viewing Snap’s premium content has increased 35% year-on-year globally, marking a new area of growth for the platform.
“Across the years we have been focused and continually committed to investing, iterating and making sure that we’re producing world-leading, made for mobile TV-style content, as we’ve seen with the introduction of Snap Shows and with Snap Originals,” Carter says.
“So we’re either partnering with some of the world’s best storytellers or now we’re looking to tell the stories ourselves, across a range of different areas. From an audience perspective, we can see that this commitment to producing high quality content is absolutely working and resonating with our community.”
As with Facebook, advertisers have also been investing in Snapchat’s premium content, particularly through the use of its six-second ad unit.
Ikon’s investment platforms director Shalyce Mclean says social platforms having a channel containing only premium content would help drive an increased share of media budgets.
“Contrary to some recent commentary urging agencies and advertisers to reduce spend with these platforms due to their perceived less premium nature, Facebook deserves a place on media plans,” Mclean says.
“Its value is not just its ability to reach nearly every Australian, or just its ability to drive frequency at scale in relatively short windows, or just its rich targeting capabilities. Facebook and Snapchat’s value is that they can deliver on all of these capabilities.
“These platforms have only been missing the high quality/professionally produced content, which we know is brand safe and still plays a major role in driving human connection that brands want to align with. When this content scales on the platform, it becomes a much stronger proposition.”
While social has undoubtedly eaten up much of traditional’s advertising revenue, Ikon’s Mclean says spending more on social’s premium content in the future won’t necessarily come at the expense of TV or BVOD.
“As long as there is a need for a 15-30 second message to create emotion, shift perception or communicate brand meaning, Facebook and Snapchat platforms won’t be the strongest environments,” she says.
“The definition of professionally produced content is changing, but a platform such as YouTube is a closer rival to broadcasters given the viewing experience, than either Facebook Watch or Snap Originals currently are.”
However, TV companies have hit back at big tech to claw back ad revenue. Facebook’s Hunter says that in a sense all video platforms -- BVOD, TV and social -- are competing for ad revenue, but he sees content deals as “partnerships”.
Menezes at Starcom argues that Facebook’s investment in premium video is a grab for more of TV’s advertising dollars.
“For them [Facebook] right now their big focus is absolutely to get a seat on the table as part of that TV conversation,” he says.
“Their opportunity is to capture incremental screen investment and a cost premium for high quality ad content integrations. Blue chip brands and advertisers have been sceptical and at times cautious since the type of content wasn’t always premium enough. Over time, if this model is proven successful, there is an opportunity to look at an overarching premium screen strategy that they [Facebook] would be an integral part of the discussion.”
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