Streaming Wars to eSports: What Social Distancing Means for Video Advertising
Published: March 19, 2020
Author: Tom Leonard
As has been expressed by just about everyone, we’re living in unprecedented times. As such, there are certainly more important things to do right now than assessing your approach to marketing. Do the 5. Reach out to an elderly neighbor. Take a moment to ensure you’re set up for success in your new WFH setup. Get a few breaths of fresh air. Then let’s think about how to tackle the changes in the advertising space.
Understanding consumer behavior is imperative to find success in advertising. Typically, we can study consumer behavior over time and spot trends that emerge over years. So what happens when changes happen overnight?
As the U.S. and countries around the world adopt a temporary new normal to curb the spread of the coronavirus, here’s how we expect the online video advertising space to be impacted by rapidly changing consumer behavior both in the short term and permanently.
Immediate spikes in TV viewership will flatten and decline as users shift to online video
Last week, Nielsen reported increases in total TV viewership (TV, DVR, VOD, Streaming) in areas heavily affected by C-19. With more time at home, this is expected. But with produced shows being canceled or postponed and live sports, one of the main reasons to still have a linear TV subscription, at a standstill, we see more users shifting to streaming alternatives. As consumers question their decision to pay for linear TV without live sports, I expect more will look to Hulu with Live TV and YouTube TV (both of which have live sports) and take advantage of their low costs compared to a cable bundle. As NYU professor Scott Galloway put it on his podcast a few weeks ago, the industries that will be most hurt in the long term by the coronavirus are those that people will have to avoid and realize they don’t miss. While he spoke directly of movie theaters, expect this to be another blow to cable TV as cheaper, better alternatives continue to emerge.
Shifts to streaming will be led by ad-supported services
There’s no doubt that the state of the world will lead to the continued growth of streaming services. As the world spends more time inside, total media usage is going up, and with the challenges linear TV faces, streaming services become even more attractive. All the streaming services currently fighting for attention, including soon-to-launch Quibi and NBC’s Peacock, will face opportunity and challenge in our current landscape.
In the short term, people will search for the best content to watch, but as the coronavirus puts even more pressure on the economy and discretionary income, expect ad-supported streaming services to thrive. Studies prior to COVID-19 showed 60% of Americans were only willing to pay up to $20 on streaming services; how much less are they willing to pay now? This is good news for advertisers looking to find reach lost from live sports as there will be an influx in attention up for grabs. Many of these users can be reached programmatically, allowing advertisers to scale up or down based on performance.
Programmatic media buying looks even more attractive
With so much TV content being cancelled, specifically sports that advertisers rely on for mass reach, brands are left with the need to shift investment. While networks look to reroute to other owned entities and fill in gaps with “classic games” and prime-time reruns, the allure of programmatic buying becomes even more enticing. The ability to shift funds in real time between streaming services and online video platforms makes clear the benefits of programmatic and shows why the industry is so ready for more robust linear TV buying capabilities to go programmatic. Time will tell how traditional buying at the now-cancelled or reconfigured Upfronts will be impacted and may or may not be trumped by the Newfronts and digital companies that offer more flexible buying options.
eSports pose an opportunity as traditional sports grind to a halt
With live, traditional sports at a standstill, fans of competitive play and advertisers looking to reach highly coveted audiences should look to fill the void with eSports. The Verge reported March 18 that both Twitch and YouTube Gaming are seeing traffic increases worldwide, with the most affected areas, like Italy, seeing the largest usage increases. While these platforms are yet to go mainstream and eSports have yet to attract the same levels of viewership as traditional sports, look for advertisers to shift portions of their ad budgets to Twitch in the short term and make large-scale sponsorships in eSports going forward. It was already just a matter of time before eSports’ viewership numbers turned heads in the advertising world, and the current landscape is only going to accelerate its growth.
Just as good video content has an important role to play in helping people stay (somewhat) sane in this era of social distancing, marketing teams can help their organizations navigate a completely unfamiliar landscape by staying on top of changes in consumer behavior and their impact on ad buying. Thanks for reading, and stay safe!