The TV ad buying ecosystem is getting even messier, according to GroupM’s second-annual “State of Video” report, released Thursday.
Some of the report’s revelations are familiar: Linear TV ratings are still dropping and, as eMarketer predicted in September, Amazon is a “likely third force” in the struggle for ad spend between Facebook and Google. GroupM expects Amazon to generate $4.6 billion in ad revenue this year, putting it behind Facebook and Google but ahead of Oath and Microsoft.
“I think lots of people thought that at some kind of scale, either Oath, Snap or Twitter would’ve broken though in a big way, or some kind of scale, or that addressable TV at scale would have leapt forward,” Rob Norman, GroupM’s former chief digital officer, told AdExchanger. “You can safely conclude none of them did in terms of making orders of magnitude."
Here are a few other observations from the report.
Amazon Prime isn’t primed for ads
GroupM did say Amazon Prime “should not be viewed as a significant competitor in the supply of ad inventory,” since ad spots on its video services are few and far between compared to its competitors.
Although Amazon has been tearing down the silos of some of its ad products – most recently, it’s experimenting with making search data available for retargeting on its DSP – Prime remains isolated.
During its Q3 earnings call, the company denied that it was planning an ad-supported Prime offering.
Facebook embraces vertical video
GroupM found that vertical video, which was originally popularized on Snapchat, has “exploded” on Facebook.
“As ad load maxes out, we see Instagram step up to fulfill demand,” the report reads. “There is still much to do, given that the shortage of premium supply is affecting optimal planning for both precision and mass audiences.”
Last year, GroupM speculated if Facebook Watch took off, it could be an important place for linear media dollars. But that hasn’t happened, Norman said.
Snapchat is just as engaging as Facebook and Instagram
Though Facebook (and by extension, Instagram) might seem like the most popular social platform, GroupM found dwell time per user on Snapchat, which has struggled to grow its user base and generate revenue, is “roughly the same” as it is on Facebook and Instagram.
Can Facebook drive audiences with sports?
If Facebook acquires sports rights, positioning itself against Amazon’s Thursday Night Football on Prime Video, it would open up new advertising opportunities on the platform. But it remains to be seen whether or not consumers see Facebook as a sports destination.
Yahoo and Twitter had previously streamed NFL games, but those deals only lasted for a single season. Amazon is on year two.
Perhaps the most eye-opening part of the report is just how much production companies are investing in Netflix and Amazon. GroupM reports Amazon and Netflix now somewhere between “one third and one half” of the world’s total production investment. Still, newcomers, like Disney’s yet-to-be-released streaming service, could compete with these over-the-top behemoths.
At least the next year of TV won’t be boring.