As we head out of 2020, into what has already become a challenging 2021, I wanted to provide a few macro market trends that I predict will have an effect on the digital video ecosystem and how we all try to reach audiences. I originally wrote this post over the holiday break, and I would be remiss if I didn’t edit it after the first week’s events of 2021. I still believe that the “Great Home Expansion” will happen as I predicted, but I am happy to add another prediction: the “Great Internet Edit.”
Macro Trend #1: “The Great Internet Edit”
I have often said that the internet’s biggest problem is hate and misinformation being spread online. It is why I work at Pixability — to help solve the problem. I spend a lot of my days talking to brands and agencies about our strategies and technologies that make sure their dollars never, ever would support hate, bullying, misinformation, child endangerment, racist, and/or sexist remarks online or on Connected TV. It is my job to make sure brands are protected, and I feel I have a personal duty to make sure we only support good actors online. We at Pixability have taken many steps to only support apps and content that we feel are positive places for brands to advertise, and a positive place for consumers to view. But, while we can control where our advertisers run their ads, we cannot control the content available to consumers. 2021 will become the year when the people who do control that content step up and take it down.
The problem has long been: whose problem is this to solve? Section 230 protects platforms from liability if a user uploads illegal content, but it also gives platforms the right to take down any content they feel breaches their policies. For a comment to be viewable by the masses, many tech layers need to be complicit to help it be seen.
Whose job is it to take down horrible content? Everyone’s. I believe in 2021, everyone will band together to help solve this problem — and we have already begun to see the Great Internet Edit. Twitter banned Donald Trump for life, Apple and Google have suspended Parler from the app store, and even more importantly, AWS booted Parler from its web hosting service.
Brands will again do a deep dive on the sites they spend their money on, hardware manufacturers will look at which apps default on their devices and see what their role in this is, search engines will make it much more difficult to find bad content, domain hosts will have content policies, web browsers and internet service providers will block horrible sites, and cyber security companies will re-review their policies.
I also think the government will re-review section 230 and begin to discuss who is liable when awful things happen online.
This change is a positive for our communities and for advertisers. Brands should continue to do their part in speaking with their wallets. Only run ads on platforms that continue to make the right choices. At Pixability, we will continue to analyze all of our content, and make sure we are only supporting appropriate content.
Macro Trend #2: The Great Home Expansion
The overarching macro theme that I see playing out in 2021 is a continuation of what I like to call “The Great Home Expansion.” I believe people will continue to invest in home improvement projects, at-home exercise technologies, and upgrading their devices. Even if (when?) things go back to normal in 2021, months more with a shaky internet connection is too long, and people will continue to invest in their homes and the technologies within their homes. People will continue to upgrade old TVs to smart TVs, swap old routers for better routers, and increase internet speeds. Technology that they had to invest in to allow two kids and two adults to simultaneously Zoom all day in 2020 will now be used for gaming, streaming, and online video. Because now that we have the bandwidth — no one likes to make their internet slower, right?
This macro trend will have a distinct impact on the digital video landscape in 2021. Here are a few of my predictions:
- Linear continues to decline, and Connected TV viewership continues to outpace predictions. All of those new TVs, new devices and faster internet means more ways to watch the Great British Bake Off and how to bake bread tutorials (or other shows, I suppose). In 2020, we saw the largest decline in traditional cable TV subscriptions ever, and CTV outpaced analyst predictions — and I believe this will continue. eMmarketer predicts by 2023, 56.1 million US households will be cord-cutters or cord-nevers, and that cable companies will lose over $15B in revenue by 2024.
- YouTube will continue to be the single biggest source of CTV supply in the US. Most people do not think of YouTube as a CTV source, but it is by far the largest ad-supported CTV player. According to eMarketer, “YouTube’s gross US CTV ad revenues to reach $2.89 billion this year, accounting for more than one-third (35.7%) of total US CTV ad spending. By 2022, YouTube’s US CTV ad revenues will reach $5.45 billion, and its share of US CTV ad spending will increase slightly to 38.7%.”
- Streaming wars
- First, there will be Skinny Bundle* wars: For most people, 2020 was a strain on many things — including their wallet. For many people, this meant making sacrifices — cancelling cable, unsubscribing to a service, ect. For those that cut cable, they look to make up that content with other options, like YouTube TV or Hulu Live TV. Hulu announced this week that they have launched a partnership with ViacomCBS, bringing their live TV offering much closer to YouTube TV’s offering (with a price increase as well, with both offerings now $64.99/month).
- Then there will be subscription wars: For those that have cut cable or not — I think users will begin to take a deep look at which subscription services are worth their price tag. I think users will begin to slim down their OTT paid choices as they realize how many offerings they are paying for. As Netflix monthly price increases (4K increase to $17.99/Month), Disney+ is taking market share quickly ($6.99/Month), other paid services will have a hard time breaking in, like Peacock, Hulu, etc. (I don’t include Amazon Video in this battle, because Prime has other benefits that make getting Amazon Video basically free for anyone shopping on Amazon.com. This genius-type of bundling is for another blog post.)
- Then there will be Hybrid** wars: As people move away from having too many OTT subscriptions it opens up the hybrid and free options to advertisers. According to a study from Nielsen and Comscore, about 50% of viewers watch ad-supported CTV content compared to paid content, and I think ad-supported content will gain more traction in 2021 as people consolidate their paid subscriptions and look for new content. As I said above, YouTube is leading the way in the hybrid game and I think they will continue to win this battle. YouTube is watched by 84.2% of US digital video viewers (free with ads, or subscription), compared to Hulu’s 32.2% (paid with ads, or premium without ads). YouTube, Hulu, and Peacock all have premium ad-free subscriptions that people may downgrade to their lower cost (or free for YouTube) solutions to make way for the more premium paid subscriptions.
So quickly, what does all of this mean for advertisers? Here are a few thoughts:
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- Smart Shift to Video Advertising: As linear TV continues to decline, make smart shifts to ad-supported video advertising on YouTube and other platforms. By smart, I mean, don’t just shift all your TV spending to digital, but make calculated shifts based on reach and cost. We use Reach Planner to help advertisers see what the right mix is to get greater reach at the same cost.
- TV Screens through YouTube: YouTube already has the greatest reach in Connected TV and as Google continues to push in this area, advertisers should take advantage of the great ways to target audiences that are not available in most CTV options.
- Shift Perceptions about Premium Content: Our old ideas that network programming is more premium than any user-generated content are continuing to fade away. In 2021, do not underestimate the power of advertising on in-home how-to content on YouTube, as it will continue to have engagement levels well beyond most linear TV shows.
- Take an Audience First Approach: Context is important — but only if you are reaching the right audience. Use analytics and planning tools to understand what your audience is watching, and find them there.
- Brand Safety is More than Brand Reputation: In 2021, brands will continue to speak with their wallets. Continue to find good content, good actors, and support platforms that are helping society move forward together.
Most of all, let’s just all stay safe, and try to find more common ground in 2021. 🙂
*A skinny bundle is a group (bundle) of live TV channels, similar to those you would get from a cable provider. The difference is that the skinny bundle is typically smaller — so it is more cost effective than most cable providers.
**Hybrid is a solution that has a paid aspect with ads. These are typically more cost effective because users need to watch ads. Peacock for example has a hybrid option that is $4.99/month or a premium version without ads that is $9.99/month.