|Netflix To Skip Ad Steps With Potential Roku Acquisition|
|Recently, we gave you all a warning about ads potentially coming to Netflix, one of the only SVOD players outside of Disney+ without an ad-supported offering. The funny thing is, now both platforms are looking to dive deep into the ads-based pool.
Netflix seemingly figured out a way where they won't have to go through the technological and operational woes that come with adding ads to an already existing model. According to ear hustling employees at Roku, there's a potential acquisition of Roku by Netflix on the horizon.
This office chatter began after Roku suddenly closed the trading window on its employees, preventing them from selling any of their stock; which is very odd, and of course, it has everyone inside the purple house speculating.
|There is no denying that two heads are better than one, so Netflix's potential acquisition of Roku makes perfect sense. Roku's acquisition of Nielsen's ad video business last year bolstered the streaming platforms' ad business and would surely help Netflix to skip whatever steps they can to make their ad business bloom and boom. Dare we say we expect to see more mergers and acquisitions in the fragmented OTT/CTV landscape.
Both outlets have felt powerful jabs at their stock value. Roku's stock dropped 80% since July, which is tragic, and Netflix's stock had decreased by 70% in just six months. This may be the perfect time for them to join forces and build something great.
"It makes sense with where Netflix wants to go," a technology investment banker said. "And it makes sense in this current environment. Everyone is looking around thinking, 'I was worth twice as much last year. What happened?"
Considering Roku's video advertising platform brought in $647 million in the first quarter alone, Netflix will only gain if these acquisition rumors are true. Then Roku can hold Netflix's hand through building out an ad business and help Netflix rise to the top.
|Group M Says No Recession Effects in Advertising Land|
|When they go low, we go high.
Says the advertising industry to the rest of the world during one of the most peeking recessions in history, at least according to Group M.
A mid-year forecast released by the WPP anticipates an 8.4% increase in global ad revenue, excluding U.S. political advertising in 2022. This is impressive as the rest of the world is financially reeling. When it comes to an advertising recession, we ask, "Recession where?"
"Recession should not be the base-case expectation for how the economy will evolve," said Brian Wieser, global president, business intelligence for GroupM. It's "less growth than we might have forecasted a few months ago, but not recession. Deceleration, not decline."
He later mentions that "over time, the correlations have weakened between economic activity and advertising."
It is also important to note that this growth projection is not as extravagant as the 22.5% global ad rev increase in 2021, but that's obvious as 2021 was all about recovery from the beginning of the pandemic, where the ad industry saw a 3.1% decrease in 2020.
Group M's forecast revenue drop correlates with some of the new regulations in China like the Data Security Law, The Personal Information Protection Law, and restrictions on "celebrity fan culture."
|As always, digital advertising is expected to lead ad spend, with retail media and e-commerce stepping out at a quick pace. We expect commerce media's ascent to outpace all other areas of digital ad spend.
Publishers, if these numbers hold true, maybe it's time to stop all your fretting and start putting energy into building the best customer experiences and ad products that you can.
There is a caveat. Group M observed marketers slowing down the rate they increased their media budgets, with fewer new marketers emerging this year.
Perhaps, marketers are holding back to develop more robust strategies before splurging full force.
|Here’s What Roku, Hulu, Amazon, and Others Charge Buyers|
|The streaming services are all trying to get their piece of the TV ad dollar pie, but there's a huge variation in what ads cost on each platform
Insider keeps tabs on ad buyers from a few different independent agencies and agencies owned by holding companies to learn how much ads cost on various streaming platforms. Here are their updated findings for 2022:
CPMs: $20 to $32, according to three ad buyers
Amazon's recent NewFronts revealed a Prime sports push, more live streaming from Twitch, and the newly branded Freevee. Amazon's ad business. is becoming a strong contender to the duopoly of Facebook and Google.
Their pricing model is like Roku and Samsung, both of whom sell hardware and Smart TVs, as well as ads.
CPMs: $25 to $30, according to three buyers
When Discovery launched Discovery+, they pitched it as a way for advertisers to reach those who don't utilize streaming services that often. By the end of Q1, Discovery had over 24 million streaming subscribers.
Discovery+ has higher ad inventory and less premium content than competitors like Peacock and HBO Max, so this explains how they can keep their ad prices lower.
CPMs: $40 to $49, according to three buyers
With their ad-supported version of HBO Max rolling out a year ago, HBO initially charged $60 - $70. Prices have gone down since then to just under $50. It is still one of the pricier streaming platforms.
CPMs: $20 to $33, according to four ad buyers
A report by Omnicon last year showed that Hulu presents 10 minutes of ads an hour, way more than HBO Max and Peacock's ad loads.
What makes Hulu unique is that Disney owns it, so their original programming and tech stack helps advertisers manage campaigns across Disney too.
Two ad buyers also said that Hulu is considering raising its prices this year.
CPMs: $38 to $44, according to three buyers
NBCUniversal created ad formats specific to Peacock, such as product placements. Peacock allows their competition five minutes of ads per hour, a little more than HBO Max.
CPMs: $19 to $21, according to four ad buyers
Roku's been a leading contender in TV hardware and streaming video distribution. Last year they invested in original content through the acquisition of Quibi, as well as an investment in Neilson's advanced TV tools that provided them with better targeting and attribution.
Roku also allows for shoppable ads where consumers can purchase products seen in commercials with Roku pay.
|This breakdown of ad prices by platform reflects introductory pricing. Advertisers usually pay special deals, and extra fees for targeting and measurement are not included.
While Roku is the cheapest on the list right now, today's price will not be yesterday's price if the Netflix acquisition we mentioned above pulls through. Roku is a shiny object for advertisers because those ads hit different. We've seen how well those work for advertisers on FB and IG already.
As a newcomer, Peacock seems a little pricey, but it's likely due to the product placement ad format pushed by NBCUniversal.
These are the big players we know. But depending on what pubs have to offer, there are pricing strategies to be learned across the board.
|Around the Water Cooler|
|Here's what else we're talking about...
Vox Media Flexes Concert's Ad Marketplace Muscle Into an SSP
While it makes totally complete sense, never before has a publisher built its own direct path supply path. After five or so years of a successful ad marketplace, Vox Media decided it was high time to extend their Concert marketplace into an SSP and feed it with exclusive demand from TTD. Concert SSP will also integrate with UID 2.0 and Vox's own first-party solution Forte. That's one way to cut out the middle man and reduce the ad tech tax. (AdWeek; Digiday; AdExchanger)
Federal Privacy Bill in the Works; Just Maybe Not the One We Expected
Big tech, ad tech, and privacy advocates have all asked for one privacy rule that supersedes the various state laws in out in the wild and ultimately rules them all. Well, while we might not see such a thing before the third-party cookie bids adieu, the proposed American Data Privacy and Protection Act would enable users to opt out of most surveillance advertising. While we've always speculated that a federal bill would favor big tech, Apple's Tim Cook has already expressed support. Meanwhile, the US Chamber of Commerce opposes the current draft of the Act. (PCMag; protocol)
Is Google Opening YouTube to Other DSPs Amid EU Antitrust Investigation?
In an attempt to dodge ahead of hefty fines levied against them by the European Commission, Reuters reports that Google might allow other DSPs to place ads on YouTube. Tal Chalozin of Innovid and Simon J Harris of DPG Media both share the view that this news has massive implications for the ad tech CTV space. (Reuters)