As the pandemic brought on radical shifts in TV viewership, many heralded it as perhaps the dawn of a new era of connected-TV activation. With live sports off the air and new production halted, subscription video-on-demand (SVOD) platforms became the go-to options at the height of the pandemic, thanks to their huge content libraries and on-demand access to those libraries.
At the time, it appeared that the rise of connected TV (CTV) viewership, affordable linear TV airtime, and growing SVOD inventory would forever alter the way advertisers purchased TV inventory. As we see the end of a summer where consumers tried their hardest to be outside their homes and enter a fall with questions swirling around new virus variants, the TV market is shifting again.
Performance advertisers have subsisted exclusively on remnant advertising for years, but clearance rates are changing, the remnant market is getting much tighter and the deep discounts from summer of 2020 have gone away. The market is showing TV can still very much be a performance medium, but relying solely on remnant inventory may leave advertisers without airtime.
The Clearance Conundrum
As the economy continues to reopen and more advertisers ramp up their TV spending, gaining clearance for scatter advertising has been challenging. That makes it harder for performance-focused advertisers to hit their reach goals. The tight environment means advertisers need to act fast on opportunities and think ahead more than in past years to get the inventory they need. Without impressions, it’s hard to drive conversions and revenue.
Higher Rates, Lower Viewership
The other factor that is emerging is that linear TV rates have returned to pre-pandemic levels, but viewership, while still high, is coming down. This trend skews performance metrics, and makes value-based buying much more difficult.
On linear TV, top-tier networks are selling out the fastest. That makes sense: These networks have the highest reach, and advertisers want to buy impressions that will deliver them the most eyeballs.
Prices are also up. It’s an increase by about 20% to 30% over 2020, but that year remains an outlier. A more practical comparison can be made to 2019, and prices are still about 5% higher for Q3. That’s also making for a much tighter quarter than we saw two years ago.
NPE and Upfronts Emerge
All of these factors are creating a difficult situation, but we’re not quite in an Armageddon situation for TV advertisers. In fact, there are a number of precautionary steps that performance TV buyers can take in order to stave off a dire situation.
Live events, including sports, first-run broadcast programming, and streaming are growing in viewership. Live sports still command attention, and fans of broadcast programming still want to watch their shows when they air.
The other option is to buy insurance in the form of NPE (short for non-pre-emptable) inventory. Performance-based advertisers may blanch at the idea of NPE because of its higher prices. But poor clearance and a tight market is going to affect everyone this quarter, and will only make buyers hungrier for the fourth quarter, with back-to-school, Black Friday and holiday buys. Competition for remnant and scatter inventory will only increase across both streaming and linear. The notion of rock-bottom rates for performance can’t last.
NPE presents a way to guarantee airtime while quite possibly maintaining performance numbers when balanced with available remnant inventory. It also represents a potential opportunity to beat the market. By locking in an NPE rate for Q4 as soon as possible, there’s a strong likelihood that buyers can secure lower or comparable rates to what they’d need to pay come Q4.
It was fairly evident that Q4 would be tight for inventory before the calendar even turned to July. Now, as we approach the end of September, it’s clear that advertisers need a plan if they still want to drive performance. While growth brands have seen that TV is a clear performance channel, the shifts in the market are forcing a new perception of how to achieve that performance. We’ll likely return to a market where performance advertisers can build campaigns fully out of remnant inventory, but if they want to hit their performance goals in 2021, they need to pay increased attention to market clearance.
Brad Geving is VP of media buying at Tatari, a San Francisco-based data and analytics platform for buying and measuring advertising across both linear and streaming TV.
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