Paid Media Updates

Media Update: HBO Adds Advertising, NCAA Men's Basketball, and Google Attribution Updates

By Tinuiti Innovation & Growth Team
Media Update header 4-12-2023

Key Highlights

  1. Streaming: Yet another ‘no ads here’ brick has fallen, as HBO brings ads to its original content.
  2. Linear: The NCAA men’s basketball final drew a record-low audience, while the women’s final drew a record high.
  3. Ad Economy: Google has announced the forthcoming deprecation of four rules-based attribution models, marking another step toward machine learning as the basis of all attribution. 
  4. Consumer Economy: Bank of America credit and debit spending rose just 0.1% YoY in March, the slowest pace since February 2021. 

Streaming

Ad-supported video supply has held relatively steady since ticking up noticeably in mid-March.

Chart

Industry Notes (Video)

1. YouTube TV revealed pricing for its newly acquired NFL Sunday Ticket this week, and consumers will find themselves paying as much – if not more – than they were with DirecTV. The NFL Sunday Ticket package has been a valuable product for avid NFL fans (price reflects passion) and those who want access to all games, not just those on the national broadcast schedule. After a promotional period expires on June 6, the 2023 season of Sunday Ticket will cost $349 to $449, the company said Tuesday, with YouTube TV subscribers getting the lower price. As we spoke about a few weeks ago, it is somewhat ironic that disruptor services like YouTube TV find themselves charging as much as the services they replaced, but sports rights are more expensive than ever.

The decision to offer Sunday Ticket to non-subscribers highlights the importance of technology capabilities in broadcasting. DirecTV’s inability to offer Sunday Ticket to non-subscribers (due to its satellite-only contract) significantly reduced their addressable audience, which might explain why it was unwilling to pay as much as YouTube for the rights renewal. In contrast, YouTube’s embrace of internet TV has enabled it to offer Sunday Ticket as a standalone product, maximizing its revenue and giving customers more options than traditional cable. This strategy demonstrates the importance of creating programming bundles that meet the diverse interests of their customers, utilizing cross-subsidization to generate revenue for popular content that can also support niche programming. This approach will be essential for companies to succeed in the new streaming environment and meet the changing demands of their customers.  |  AdAge

2. In a reversal of a pre-merger decision, HBO Max has begun showing ads on its original content like Succession. Given Warner Bros. Discovery’s recent moves to increase profitability, such as keeping Discovery+ as a standalone platform and moving (popular) canceled shows to FAST platforms, this is not altogether surprising. HBO Max began refining this strategy with The Last of Us, but this revenue stream is still very much in its infancy. Succession drew 5.8 million viewers in its first week across HBO Max and HBO linear channels – the media giant doesn’t break out viewership for its streaming service, and ad-supported accounts are but 20% of that base. This might explain why inventory is limited, with only two advertisers on the show.

Relatedly, Warner Bros. Discovery has finally revealed plans for its much-anticipated combined streaming service, Max. The service will be released on May 23 with new branding and the tagline “The one to watch,” as WBD aims to grow beyond the HBO brand and attract children and families with a wider variety of programming. 

Max logo

In order to manage this breadth of content, Max will lean on new navigation, with genre hubs and machining learning recommendations to engage its viewers. As we have seen in this new era of consolidation (Disney+/Hulu/ESPN+, Paramount+/Showtime, etc.), helping users triage so much content is not a simple project, and companies are still very much in experimentation mode. On the advertising side, WBD is saying it will have “One of the lightest ad loads in streaming,” and will likely provide more details on its advertising opportunities at its Upfront in May.  |  AdAge, Fierce Video

3. Some of you may remember Twitch from befuddled comments like “It’s a thing where you watch other people play video games?! Why?” Others may remember it as a thing where you watch other people play video games, for which Amazon ponied up $1 billion in 2014. And still others may remember it as a pandemic phenomenon that saw its viewership double almost overnight, making it a very coveted platform to advertisers looking to reach the elusive young male demo. Now, as the platform embraces advertising in a serious way, Twitch is struggling with alienation of its core users, tension between its creator/community and monetization objectives, and stagnating utilization.

We should begin by acknowledging what a success story Twitch has been – when Amazon acquired it in 2014 it was doing about 250m watch hours per month; now, it is doing just under 2b watch hours per month.

Watch Time Aggregated by Month (graph)

But like many pandemic darlings, Twitch utilization has been on a down slope for the past two years, partly due to platform evolution and an increasing emphasis on monetization. A high point of this tension came in October last year, when Twitch updated its revenue share model to a 50/50 split with creators, up from the platform’s previous take of 30%. Predictably, creators were not best pleased, which caused some of them to explore other platforms. Meanwhile, increasing emphasis on ad monetization caused tension with both creators and viewers, a dynamic many major platforms are having to navigate.
Twitch is in the business of creating and sustaining a two-sided market (creators and viewers), which is tricky – content creators want to be where there is a large audience and where they can make money; viewers want to be where the best content is and they want to pay, directly or indirectly, as little as possible; and the platform has to figure out a way to skim a margin while keeping both sides happy. Twitch having some growing pains is not surprising, but it will need to carefully navigate these trade offs if it is to remain the premier place for advertisers to reach the most elusive demo there is.  |  Digiday

Linear Media

As discussed below, the paltry viewing figures for the men’s NCAA final produced a YoY drop in sports viewership last week. News viewership has fully recovered from its YoY drop, which owed to the blanket news coverage of the invasion of Ukraine in late February last year.

P2+ Audience, Selected Genres - chart

Industry NotesAs predicted, viewership for the NCAA men’s basketball final was historically low, averaging 14.69 million viewers on CBS. Viewership was down 14% from last year’s broadcast across TBS, TNT, and TruTV (17.05M). Although the men’s tournament started off strong, the lack of well-known teams in the later stages was a major hindrance – as we discussed two weeks ago, matchups matter. Popular teams like the Cowboys bring booming ratings, and matchups between small market teams, such as in the Bucks-Suns NBA finals in 2021, tank ratings. The entire tournament averaged 9.55 million viewers per window, down 7% over last year, but still up 4% over 2021. It’s worth noting that even with this weak performance, the 2023 men’s final was the most-watched basketball game in 2022-2023. In fact, seven of the top fifteen spots are claimed by the NCAA men’s tournament.

Most-Watched Basketball Games, Past Year

You may notice on that list that the NCAA women’s final nabbed the #12 spot – while men’s viewership floundered compared to previous years, the women’s tournament crossed several major milestones. As you can see in the chart below, the women’s final averaged 9.9 million viewers, 2-3x the viewership over the past decade. Viewership has risen each year from 2018 (excluding 2020, when the season was canceled), despite the challenges of the pandemic and the increase of cord-cutting. In recent years ESPN has invested in promotion of the women’s tournament and featured it in premier television windows – this was the first year since 1995 that the title game was broadcast on network television (ABC). Other factors – such as record scoring, the electric performance of Iowa’s Caitlin Clark, and branding the tournament as “March Madness” (this title was reserved for the men’s tournament until 2022) – undoubtedly had an impact. However, it was bringing the championship to network television, meeting the apparently strong demand for women’s hoops, that likely had the greatest effect.  |  SMW, SMW

NCAA Women's Basketball National Championship Viewership

Last week Google announced that it will deprecate four rules-based attribution models – first-click, linear, position-based, and time decay – in Google Ads and Google Analytics 4. These models will no longer be available for new conversion events in GA4 in May and in Ads in June; legacy conversion events using these models will begin to sunset in September.

Way back in September 2021, we told you about Google making data-driven attribution the default in Google Ads, a machine-learning approach which makes attributed volume a function of:

Google has received some criticism for pushing a black-box attribution method, but the reality is that rules-based methods will never produce the right answer, the best one can hope for is that they correlate with the right answer; and only about 3% of Ads conversions are using one of the aforementioned rules-based models anyway (NB last-click is not one of the methods being deprecated). Google’s position is that the proliferation of digital touchpoints across surfaces, the imperatives of user privacy, and the increasing power of machine learning methods make an ML approach the best answer for advertisers in 2023. So if you’re using one of these rules-based models today, set a reminder to transition them over before September!  |  @AdsLiaison, MediaPost

Consumer Economy

1. The era of pandemic consumer spending might be coming to end – Bank of America credit and debit spending rose just 0.1% YoY in March, the slowest pace since February 2021. BofA cites fiscal headwinds of slowing wage growth, the expiration of pandemic emergency allotments, and lower tax refunds as drivers of the slowdown. The latter two factors may be temporary, but the health of the labor market could have a lasting effect on spending this year, even as inflation fell to its lowest level in two years in March. As noted in most discussions of consumer spending, the resilience of consumers is attributable to a large cushion of savings, which bears out in credit utilization rates – while they’ve climbed since 2021, levels remain below 2019. While BofA’s data represents just 20% of consumers, if this trend continues with the slowdown of the labor market, we may see the Fed pause interest rate hikes as its policy takes effect.  |  BofA

Average credit card utilization rates by household income based on Bank of America internal data

2. It seems fairly clear now that the labor market is cooling, albeit gradually. According to the March jobs report, the labor market added 236,000 jobs last month, the second consecutive month of MoM decline. Unemployment remained near a record low at 3.5%.

U.S. Job Growth Moderates, While Unemployment Rate Declines  -- Gain in March employment in line with economists' forecast

Taken together, these two indicators are not clear evidence of slowdown. In fact, you can see in the chart above that these numbers have been relatively consistent over the past six months, and March’s jobs gain is not concrete, even though it was lowest since 2020. However, evidence of the Fed’s interest rate hikes is apparent in slowing wage growth: private sector wage growth slowed to 4.2% in March, returning to pre-pandemic levels.

Hourly wages and CPI, changes from a year earlier

Looking to the future, some indicators are showing weakening labor demand: job openings fell below 10 million in February (the lowest point in nearly two years); a recent report revealed that fewer small-business owners plan to hire in the coming months; and an index of demand for temporary and contract workers declined over seven of the last eight weeks (temporary jobs are considered a leading indicator because they are the easiest to cut). This weakening of labor demand could moderate wages further, in turn exerting downward pressure on persistent inflation.  |  WSJ, Bloomberg

You Might Be Interested In

This field is for validation purposes and should be left unchanged.

*By submitting your Email Address, you are agreeing to all conditions of our Privacy Policy.