Delivering Value Across the Marketing Funnel - PREMIUM VIDEO: Q2 2018 - FreeWheel
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PREMIUM VIDEO:
Delivering Value
Across the
Marketing Funnel
Q2 2018
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 1
TABLE OF CONTENTS
Premium Video: Delivering Value
Across the Marketing Funnel
Q2 2018
Letter from the Authors
PAGE 3
Q2 2018 Summary
PAGE 4
The FreeWheel Video Monetization Report highlights
the changing dynamics of how enterprise-class content
Core Observations: U.S. owners and distributors are monetizing premium digital
PAGE 7 video content.
Core Observations: Europe The data set used for this report is one of the largest
PAGE 18 available on the usage and monetization of professional,
rights-managed video content worldwide, and is based
off of census-level advertising data collected through the
Conclusion FreeWheel platform.
PAGE 28
Author Bios
PAGE 29
Glossary
PAGE 30
Appendix
PAGE 31
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 2
LETTER FROM THE AUTHORS
Premium Video: Delivering Value Across
the Marketing Funnel
PREMIUM VIDEO GAINED MOMENTUM AS A MARKETING Premium video is uniquely positioned to deliver These three factors—scale of the inventory,
PLATFORM IN BOTH THE U.S. AND EUROPE as the TV top-of-the-funnel brand benefits due to its scale sophistication of advertising solutions, and
industry continues to embrace technology and and brand-safe environment, and also increasingly simplicity of execution—are what make premium
articulate its proposition across the full marketing delivers value further down the marketing funnel video such an attractive advertising platform for
funnel. During the 2018 U.S. Upfront buying season, via sophisticated targeting and attribution marketers. In this report, we explore the ways
CPMs increased across networks, with most reporting capabilities. Many premium TV publishers have that premium video delivers on these important
high single- or double-digit growth year-over-year. invested heavily in their advanced audience buying objectives and reveal the key trends behind the
This demonstrates that advertisers see TV as a critical shops, from NBCUniversal’s Audience Studio to evolution of the television ecosystem.
platform for their marketing success. Viacom Vantage, enabling marketers to deliver
bespoke messages to specific audience segments
TV executives were keen to highlight the benefits across premium content. Hasan Iqbal
of their offerings to set themselves apart from Senior Manager, Advisory Services
prominent digital competitors who seek to capture At the same time, buyers continue to look for tools
TV’s share of marketing spend. As Linda Yaccarino, that can simplify buying through greater automation Rebecca Rangeley
Head of Business Insight International
Chairman, Advertising Sales and Client Partnerships, and efficiency. Programmatic transactions are
NBCUniversal, stated, “We’re not in the likes growing in importance as a monetization channel Esra Akturk
business. We’re in the results business. Real, verified for premium publishers, but must work in tandem Associate, Advisory Services
results delivered the right way.” That message with direct-sold deals to maximize yield and
resonated with marketers, who bought into premium meet buyer demands while ensuring competitive Ying Wang
video’s power to reach engaged audiences at scale. separation and brand safety concerns are met. Director, Advisory Services
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 3
Q2 2018 SUMMARY
Premium Video: The Power of Scale, Sophistication and Simplicity
VMR data demonstrates that TV as a platform is uniquely positioned to deliver across the marketing funnel providing scale of reach,
sophistication of targeting, and simplicity of buying.
Scale
+35%
Total Views
Growth YOY
In Q2 2018, ad views grew by 35% U.S.
and 31% year-on-year in the U.S. Q2 2017 vs Q2 2018
AD VIEWS
and E.U. respectively, continuing a
multi-year upward trend.
E.U.
Growth YOY
Q2 2017 vs Q2 2018
+31%
AD VIEWS
Syndicated Viewing
+111% Growth
In the U.S., syndicated viewing via traditional and virtual
Multichannel Video Programming Distributors (vMVPDs)
grew at 111% year-over-year as consumers accessed
TV Everywhere capabilities via IP-platforms.
YOY
Q2 2017 Q2 2018
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 4
Q2 2018 SUMMARY
Sophistication
33
Big Screen Devices
The big screen (OTT devices and STB VOD) makes % of the
up 57% and 30% of total premium video ad views Market
in the U.S. and E.U. respectively, demonstrating the
power of the “new living room.”
(+90% Growth YOY)
COMBINED TOTAL AD VIEW SHARE
OTT STB VOD
57 U.S. 30E.U.
Live Ad Views
% % Live ad views grew 90% year-over-year and now
constitute 33% of the U.S. market, demonstrating that
premium video can deliver ads in real-time in challenging
technical environments.
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 5
Q2 2018 SUMMARY
Simplicity
Programmatic Transactions
Programmatic transactions, predominantly through
private marketplaces, now drive 14% of total ad
views, a growth of 58% year-over-year.
14 %
TOTAL AD
+58%
YOY
VIEWS
11
%
OF CREATIVES
REPEATED
ONLY ONCE OR MORE
Ad Repetition
Automated frequency capping makes it easier for
advertisers to ensure a positive viewer experience,
with only 11% of creatives repeated once or more
in full-episode content.
FULL EPISODE
CONTENT
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 6
Q2 2018
Core Observations:
U.S.
The Most Definitive Data
Available on Premium Video
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 7
CORE OBSERVATIONS: U.S. / OVER ALL MARKET
Media Companies Seek Scale to Compete
in a Data-Enabled World
There is still significant value in TV for advertisers as independent measurement. In addition, publishers and example, in June 2018 AT&T received the green light
the market continues to move to a more consumer- distributors have highlighted scale as a key success to complete its merger with Time Warner, Inc., (now
centric and data-enabled future. The TV industry is factor. Scale enables the acquisition of large amounts WarnerMedia) giving it access to content via Warner
addressing this shift by developing partnerships and of first-party data, facilitating a direct-to-consumer Bros., HBO and Turner.
coalescing around certain standards like OpenAP, strategy and allowing organizations to better compete
which enables cross-publisher audience targeting and with their competitors’ walled-data-gardens. For
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 8
CORE OBSERVATIONS: U.S. / OVER ALL MARKET
Premium Video Grows
Across Formats
CHART 01
Total Video Start and Ad View Growth, U.S. In Q2 2018, video views grew by 31% streaming is the future with Netflix
Q2 2017 vs. Q2 2018 and ad views grew by 35%, compared briefly overtaking Disney to become
CLICK TO TWEET
to Q2 2017. All formats experienced the largest U.S. media company by
growth, but once again, live content market capitalization in May, before
saw the highest growth rate at 90%, falling back. Disney, in response to
compared to 7% and 24% for clips and the evolving market, is finalizing the
full-episode ad views, respectively. acquisition of 21st Century Fox’s
entertainment assets, allowing Disney
The FIFA World Cup capped off the to diversify content beyond its current
first-half of 2018 in which a series of family and sports (via ESPN) audience
tentpole events, including the Winter demographics. A key aspect of the
Olympics and Super Bowl LII, drove deal is that Disney will acquire a
+35%
live viewership and tested streaming controlling stake in Hulu, now jointly
capabilities. A year of successful live owned by Fox, Disney, Comcast
+31
events reassured both advertisers and and Time Warner. Having a broader
% AD VIEWS publishers about delivery capabilities,
yet challenges remain, including issues
range of content will help strengthen
the proposition for Disney’s own on
with latency and stream failure. As demand video streaming service, set
VIDEO VIEWS
the number of viewers who turn to live to debut in late 20191.
streaming continues to grow, it will be
imperative for the video ecosystem Clip monetization also grew, but at a
to continue to invest in technology to slower rate of 7% year-over-year. This
ensure a seamless viewer experience. format remains the most diverse, with
publishers creating content across
Full-episode on demand content genres, in part to attract viewers to
comprises 56% of ad views and is their other formats.
seen as a key format in attracting
and retaining viewership. The market
seems convinced that on demand
1. “Disney-Fox Merger Approved” (2018). Retrieved at: https://www.tvtechnology.com/news/disney-fox-merger-approved
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 9
CORE OBSERVATIONS: U.S. / OVER ALL MARKET
CHART 2
Content Composition and Growth by Format, Ad Views, U.S.
Q2 2017 vs. Q2 2018
CLICK TO TWEET
Content Format Composition Content Format by Vertical
Q2 2017 vs. Q2 2018 Q2 2018
Q2 2017 Q2 2018
Entertainment Sports News
27%
18% 11% 26%
+7% YOY
47%
92%
56%
61%
+24% YOY
5%
3%
24
33%
%
+90% YOY
66%
21%
10%
CLIPS (0-5MIN.) FULL-EPISODES (5+ MIN.) LIVE
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 10CORE OBSERVATIONS: U.S. / DISTRIBUTION
Viewers are Endpoint Agnostic, and
Many Marketers are Not Far Behind
CHART 3
The rise of the big screen continues, and 57% of all ad
views are now delivered either via over-the-top (OTT)
Ad View Composition and Growth, by Device, U.S.
devices or through set-top-box video on demand (STB Q2 2014 — Q2 2018
VOD). In particular, OTT devices grew rapidly at 54% CLICK TO TWEET
year-over-year, continuing a multi-quarter trend.
+14%
Smartphones remain the most versatile device, YOY
allowing users to access content on the go
while affording advertisers strong targeting and
17% Desktop
measurement capabilities. Ad views on smartphones
grew at 76% year-over-year, the highest of any device.
+54%
YOY OTT
Consumer viewing habits are largely independent of
the device they are using. Live viewing indexes higher
on OTT devices and smartphones, representing 48% 41%
and 36% of their ad view shares respectively.
Viewers are endpoint agnostic and marketers are
trying to be too. The Nielsen CMO Report 2018 found
that 62% of respondents now take an omnichannel +15%
approach to planning and are organizing their
marketing departments in a channel-agnostic way.
16% YOY STB VOD
Just four years ago, only 29% of marketers were using
an omnichannel approach, illustrating the significant +76%
19%
shift 2. This suggests that there will be demand for YOY
Smartphone
unified buying within TV if the premium video industry
enables the right capabilities.
+16%
7% YOY Tablet
Q2 Q2 Q2 Q2 Q2
2. The Nielsen Company (US). (2018). “The Nielsen CMO Report 2018” [PDF file].
Retrieved at: http://www.nielsen.com/us/en/insights/reports/2018/cmo-report- 2014 2015 2016 2017 2018
2018-digital-media-roi-measurement-omnichannel-marketing-technology.html
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 11CORE OBSERVATIONS: U.S. / DISTRIBUTION
CHART 4
Format Composition by Device, Ad Views, U.S.
Q2 2018
CLICK TO TWEET
CLIPS (0-5MIN.) FULL-EPISODES (5+ MIN.) LIVE
Desktop
32% 41% 27%
OTT
3% 49% 48%
STB VOD
100%
Smartphone
21% 43% 36%
Tablet
12% 63% 25%
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 12CORE OBSERVATIONS: U.S. / DISTRIBUTION
MVPD and Virtual MVPD Offerings CHART 5
Share and Growth of Ad Views by
Drive Growth in Syndication Syndication Platform, U.S.
Q2 2018
In Q2 2018, syndication grew by 29% year-over-year. MVPD distributed
CLICK TO TWEET
content delivered via IP-delivery, e.g. websites, mobile apps and OTT
devices, remains the primary driver of this growth. Audiences consumed
111% more content on IP-enabled MVPD platforms than they did one
year ago by accessing the TV Everywhere capabilities offered by cable Total Volume of Ad Views, U.S.
39
providers or turning to the streamed skinny bundles of virtual Multichannel
Video Programming Distributors (vMVPDs).
There has been a steady loss in traditional pay-TV subscribers: today, 79% of
TV households subscribe to a pay-TV service, compared to a peak of 88% in %
20103. This has led to traditional MVPDs trying to innovate to retain viewers
and advertising dollars through IP-enabled TV Everywhere platforms and Syndicated
enabling dynamic ad insertion on their traditional set top boxes. +29% YOY
vMVPDs such as Sling TV, DIRECTV NOW and PlayStation Vue typically
offer flexible subscriptions, and their chief value proposition is lower costs
for smaller bundles. According to research from The Diffusion Group,
vMVPDs ended 2017 with a collective 5.3 million subscribers. Of these, 9% Breakdown by Channel
are cord-nevers, 54% are cord-cutters, and 37% also subscribe to a more
traditional pay TV service 4, which may suggest these “skinnier” bundles are
unable to meet all the entertainment needs of subscribers.
MVPD (IP PLATFORMS)
23%
+111% YOY
However, as vMVPDs seek scale, many skinny bundles are forced to get fatter
MVPD (STB PLATFORMS)
and increase costs. For example, Dish Network increased the price of its Sling
TV Orange service, currently the cheapest way to get ESPN without cable, by
38%
+15% YOY
$5 per month. This could mean true cord-cutters who want limited bundles will
go unserved in the future, leaving room for new players like Philo who stick to
PORTALS
the ‘skinny’ model. 39%
+19% YOY
3. “79% of TV Households Subscribe to a Pay-TV Service” (2017). Retrieved at: https://www.leichtmanresearch.
com/79-of-tv-households-subscribe-to-a-pay-tv-service/
4. “vMVPDs ended 2017 with a collective 5.3 million” Retrieved at: https://www.multichannel.com/news/virtual-
mvpds-ended-2017-53m-subs-study-418107
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 13CORE OBSERVATIONS: U.S. / PREMIUM VIDEO BYING
CHART 6 Publishers Double Down on
Ad View Share by Advertiser Industry, Enabling Unified Buying
U.S. Programmers
Q2 2018 There is clearly demand for premium and deals, although ‘fluidity’ deals,
video, as demonstrated by strong where a percentage of TV delivery
CLICK TO TWEET
network performances at the 2018 can be done on digital endpoints, are
Television Upfront, and FreeWheel’s Q2 starting to gain traction.
15
data shows an increase in monetization
% across content genres, formats
and devices. The premium viewing
As premium video inventory grows,
it will continue to increase in
environment, particularly on the big attractiveness to advertisers looking to
Entertainment screen via OTT and STB devices
consistently deliver mid-roll completion
target engaged audiences. In the short-
term, limiting targeting at the outset of
& Media rates of over 95%. In this context, it a campaign to achieve reach and then
is no surprise that all major industries layering in targeting criteria can help
are represented within premium video balance scale with precision.
advertising, the top five of which accounted
for 65% of ad views in Q2 2018. To further enable unified campaigns,
publishers, distributors and their
Premium video offers a safe harbor, technology partners continue to
as there continues to be negative invest in solutions to enhance
15% 13% 11% 11% 9% headlines surrounding the wider
digital ad ecosystem. Advertisers
buying, targeting and measurement
capabilities. An effective cross-
Consumer Financial Auto Retail Telecom are concerned about ad fraud, brand platform measurement solution would
Packaged & Business
safety and the impact of Europe’s new go a long away in winning advertising
Goods Services
General Data Protection Regulation budgets. NBCUniversal reported that
(GDPR), which went into effect in May. CFlight, its new cross-platform viewing
Premium video deals are predominantly metric announced in April, played a
made in private marketplaces, meaning big role in its Upfronts success. This
7% Healthcare & Pharma 3% Travel & Leisure
the parties involved, deal terms and fall, comScore will test a new product
inventory costs are all known upfront. (comScore Campaign Ratings) that
7 %
Quick Service Restaurants 2 %
Government & Non-Profit aims to measure de-duplicated viewing
6% Computing Products 1% Energy, Manufacturing,
The ultimate goal for advertisers is to across TV, OTT, desktop, and mobile
Utility & Industrials make unified buys across both linear devices. ABC, CBS, Fox, NBCUniversal,
and digital TV. To date, there is still a the CW, Turner, Viacom, and Freeform
bifurcation of linear and digital budgets have all agreed to test it out5.
5. “comScore Lines Up Networks to Test Campaign Ratings” (2018). Retrieved at: https://www.broadcastingcable.
com/news/comscore-lines-up-networks-to-test-campaign-ratings
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 14CORE OBSERVATIONS: U.S. / PREMIUM VIDEO BUYING
Programmatic Direct-Deals CHART 7
Share and Growth of
Dominate Year-Over-Year Direct and Programmatic
Monetization, U.S.
For premium video, direct-sold deals dominate, accounting for 86% of total Q2 2018
deals sold in Q2 2018. However, programmatic transactions now comprise 14%
CLICK TO TWEET
14
of ad views, a growth of 58% year-over-year. At one end of the spectrum is
the programmatic direct model in which deals are negotiated directly between
%
two parties, but execution is automated. This model has relatively high-levels
of adoption as market participants see the potential benefits from automated
workflows of limiting errors and increasing efficiency. A deal ID from a publisher
serves as a passkey to a portion of their inventory and this can be supplied
Programmatic
to a single buyer. The use of automated transactions is likely to accelerate as
+58% YOY
premium video overcomes technological hurdles such as enabling live inventory
to include custom pacing strategies, enabling frequency caps, and ensuring
malfunctioning ad creatives don’t crash content streams.
Further along the programmatic spectrum are transactions where participants
offer and bid on inventory in a market model. These auctions include a limited set 86 % Direct
+17% YOY
of private participants or operate as an open market. This approach empowers the
seller to optimize price by allowing competition on their inventory, while the buyer
can target the inventory that is of most value to their marketing objectives. There is
precedent for wholesale use of a market based programmatic model. In the display
advertising ecosystem, eMarketer predicts more than 80% of display ads will be
bought programmatically by the end of 20186. However, in premium video, the
bar is set higher. Delivering a good user experience, brand safety and validated
viewing must be table stakes for publishers and distributors, but they must also
adhere to stricter business rules, such as competitive advertiser separation. Ad View Share by by Device* Ad View Share by
Transaction Model*
To date, the premium video ecosystem has largely settled on a ‘private deals
through programmatic pipes’ model, with only 7% of transactions occurring in
an open market based on a sample of programmatic transactions. Looking at a
43% Desktop
7%
Open
Exchange
27%
similar sample of transactions across devices it can be seen that, while desktop
93%
OTT Private
and smartphone dominate representing 43% and 30% of ad view share
Marketplace
respectively, OTT devices comprise 27%. This demonstrates that programmatic
transactions are gaining traction in delivery to newer endpoints, and beginning
to mirror the more mature direct sold market. 30% Smartphone
6. “More than 80% of Digital Display Ads Will Be Bought Programmatically in 2018” (2018). Retrieved at: https://
www.emarketer.com/content/more-than-80-of-digital-display-ads-will-be-bought-programmatically-in-2018 *Note: Based on revenue from a sample data set
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 15CORE OBSERVATIONS: U.S. / AD EXPERIENCE
CHART 8
Average Number of Ads per Mid-Roll Break, Full Episodes, U.S.
CLICK TO TWEET
Q2 2017 vs. Q2 2018 Q2 2018 by Device Distribution of Ads per Mid-Roll Break
97s 95s 48%
BREAK
DURATION BREAK
DURATION
4.0 4.0 4.0
3.9 3.9 3.9 31%
21%
Q2 2017 Q2 2018
AVERAGE AVERAGE DESKTOP OTT SMARTPHONE TABLET 1-2 ADS 3-4 ADS 5+ ADS
Publishers Seek to Due to the rise in time spent on mobile and the being delivered per mid-roll, suggesting publishers
Balance User Experience perceived shortening of consumers’ attention spans,
publishers and advertisers are increasingly using six-
are employing different commercial break pattern
models to balance viewer experience, advertiser
to Compete with and fifteen-second ads as part of the creative mix. In messaging and monetization goals. Looking at ad
Subscription Models fact, 79% of publisher respondents and 74% of brand/
agency respondents plan to work with or invest more
distribution, 48% of mid-rolls had three to four ads
per break, with the remaining 52% relatively equally
in the six-second format in the coming 12 months, split between lower ad load models of one or two
A positive viewing experience is a key component of according to the Interactive Advertising Bureau (IAB) ads per mid-roll break, and higher load models of
premium video’s unique value proposition. This year, Video Innovation Survey 20187 and the FreeWheel five or more ads per mid-roll break.
publishers are focused on creating and maintaining Council’s “The Six-Second Ad Experience” paper8. The
an optimal viewing experience, as doing so not only format is widely used by YouTube, but it is not just for
attracts and retains viewers but also improves the value digital. Fox, for example, used six-second ads during the
of advertising inventory. As publishers work to compete Teen Choice Awards and some NFL games in 20179.
with subscription and transaction-based models, 7. IAB. 2018. “Building 21st Century Brands: Video Creative Innovation” [PDF file]
Retrieved at : https://www.iab.com/wp-content/uploads/2018/05/IAB_Video_
they are placing a greater onus on innovation and In Q2 2018, the average number of ads per mid- Creative_Innovation_Whitepaper_2018-05.pdf
8. “The Six-Second Ad Experience” (2018). Retrieved at: http://freewheel.tv/
experimenting with different ad lengths, formats, and ad roll was 3.9, which was consistent across most fwcouncil/#freewheel-council-positions
loads, while minimizing repetition rates. devices. There is variability in the number of ads 9. FOX utilized 6-second ads during the Teen Choice Awards and select NFL
games in 2017. Retrieved at: https://www.adweek.com/tv-video/fox-sports-will-
air-6-second-ads-during-nfl-baseball-and-soccer-games/
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 16CORE OBSERVATIONS: U.S. / AD EXPERIENCE
CHART 9
Ad Completion Rates by Ad Unit and Content Duration, U.S.
Q2 2018
CLICK TO TWEET
FULL-EPISODE LIVE CLIPS
Pre-Roll
88%
87%
Completion and Repetition 76%
Rates are Well-Managed
Mid-Roll
Across the board, completion rates remain very high
for premium video at over 76% for pre-rolls across 98%
content types and above 97% for mid-rolls. This is a
testament to the engaged viewing of premium content.
97%
Repetition rates for mid-roll ads are also low, with
only 11% of creatives repeating once or more in a full
episode stream. This is because of the growing diversity CHART 10
of advertisers entering the premium video space, as
Ad Repeat Frequency per Stream by Content Format, U.S.
well as a conscious effort on the part of publishers to
Q2 2018
maintain an enjoyable user experience. Many premium
video providers are employing frequency capping to CLICK TO TWEET
provide more control over the user experience and
2+ REPETITIONS 1 REPETITION NO REPETITION
enhance reach. While this is possible at a user or device
level on some endpoints, such as desktop and mobile,
2%
the picture is much more complicated in a cross-device
9% 14%
world that includes OTT devices like connected TVs.
Live streams have greater ad repetition, as the longer
viewing times and sponsorship deals associated with Full-Episode Live
the format increase the likelihood of ad repetition. % of Ads 89% 66% % of Ads 20%
This can also have unintended consequences in the Delivered Delivered
pacing of campaign budgets if viewing levels are
higher than anticipated.
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 17Q2 2018
Core Observations:
Europe
The Most Definitive Data
Available on Premium Video
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 18CORE OBSERVATIONS: EUROPE / OVER ALL MARKET
CHART 11
Total Video Start and Ad View Growth, Europe
Q2 2017 vs. Q2 2018
CLICK TO TWEET
Broadcasters Band Together
to Capitalize on Premium
Video’s Strengths
Premium video’s growth shows no
signs of slowing down in Europe, and
the space appears unscathed by the
Some broadcast companies see the
rise of SVOD as an opportunity rather
than a threat. For example, Sky will
+31% AD VIEWS
implementation of GDPR. In Q2, ad bundle Netflix as part of its premium
views grew some 31% year-over-year subscription package later this year.
whilst video views marched on, up Stephen van Rooyen, Sky’s CEO in the
22% year-over-year. U.K. and Ireland, told attendees of the
+22%
annual ISBA conference that viewers in
Streaming services continue to the U.K. aren’t as quick to replace paid
grow quickly in Europe as well. At TV with streaming services as their
the end of 2017, Amazon and Netflix American counterparts12. VIDEO VIEWS
were in a combined 12.5 million
U.K. households, an increase of 9.6 But broadcasters aren’t taking
million from 201610. New regulations chances. To compete with SVOD,
passed this April allow Europeans to better deliver on audience demand,
watch paid online content providers and best take advantage of premium
throughout the EU without facing video’s growth, media companies
region blocks11. The rule should benefit throughout Europe are seeking ways
content providers, as they will not have to work together. In the U.K., top
to acquire licenses for territories where broadcast companies the BBC, ITV,
their subscribers stay temporarily. Channel 4 and network operator Arqiva
10. “Amazon Prime Video’s Growth Outpaces Netflix in UK” (2018). Retrieved at: https://www.theguardian.com/media/2018/
may/03/amazon-prime-video-outpaces-netflix-in-uk-on-demand-market
11. “Digital Single Market: Travel with your online content across the EU” (2018). Retrieved at: https://ec.europa.eu/
commission/news/digital-single-market-travel-your-online-content-across-eu-2018-mar-27_en
12. “Netflix and Amazon are complementary: Sky CEO downplays OTT threat to paid TV” (2018). Retrieved at: https://
digiday.com/marketing/netflix-amazon-complementary-not-substitutionary-sky-ceo-downplays-ott-threat-paid-tv/
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 19CORE OBSERVATIONS: EUROPE / OVER ALL MARKET
are joining forces to accelerate the growth of the
Freeview platform, the U.K. market leader in free-
to-view connected TV13. The companies agreed to
invest £125 million in the platform over the next five
years, a decision that should help Freeview evolve
into a fully hybrid platform offering both free-to-view,
live, and on demand television. France’s three major
television networks—public service broadcaster
France Televisions and privately owned M6 and TF1
groups—will create a joint OTT platform to take
on Netflix and Amazon14. The platform, SALTO, will
offer a variety of programming, including news,
syndicated series, films and exclusive content.
In June 2018, ProSiebenSat.1 and Discovery
announced they are partnering to create a German
OTT platform. Much like Hulu in the U.S., major
German broadcasters are invited to join the platform,
which is set to launch in the first half of 201915.
13. “Broadcasters collaborate to secure the future of free-to-view TV”
(2018). Retrieved at: https://www.freeview.co.uk/news-and-blog/press-
releases/broadcasters-collaborate-to-secure-future-of-free-to-view-tv.
html#xIZpQXRP3BEfUcQM.97
14. “French TV Companies Launch New Streaming Service to Take on Netflix,
Amazon” (2018). Retrieved at: https://www.hollywoodreporter.com/news/
frances-biggest-tv-companies-combine-take-netflix-amazon-1120451?utm_
source=Sailthru&utm_medium=email&utm_campaign=THR%27s%20
Today%20in%20Entertainment_now_2018-06-15%2007:10:36_ehayden&utm_
term=hollywoodreporter_tie
15. “ProSiebenSat.1 and Discovery join forces to create German Hulu” (2018).
Retrieved at: https://www.broadbandtvnews.com/2018/06/25/prosiebensat-1-
and-discovery-join-forces-to-create-german-hulu/?mc_cid=ffc33c285e&mc_
eid=b5a036403e
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 20CORE OBSERVATIONS: EUROPE / CONTENT & DISTRIBUTION
Full Episode Content
Drives Growth
CHART 12
Monetization across all content types grew, and live
Ad View Composition and Growth
continues to increase its share across all devices. by Content Duration, Europe
Live ad views grew at 45%, full-episode content Q2 2017 vs. Q2 2018
at 30% and clips at 28%. The growth of live ads CLICK TO TWEET
reflects user adoption of live streaming. According
to a recent report from IAB16, two-thirds of people CLIPS (0-5MIN.)
globally have streamed live video content, and nearly 15% 14% FULL-EPISODES (5+ MIN.)
+28% YOY
50% claim they have increased their live streaming LIVE
since last year.
But the growth of live viewing is hindered in Europe
by shortcomings in targeting and measurement 81% 82%
+30% YOY
capabilities, which are not as advanced as they are in
the U.S. Live ad share is likely to increase as premium
broadcasters roll out new technologies for inserting
ads in live streams. In France, dynamic ad insertion
(DAI) is not permitted in a live stream. Live ad share
is predicted to increase in France once the country
relaxes these regulations in 2019.
4% 4%
+45% YOY
Q2 2017 Q2 2018
16. “Live Video Streaming: A Global Perspective” (2018). Retrieved at:
https://www.iab.com/insights/live-video-streaming-2018/
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 21CORE OBSERVATIONS: EUROPE / CONTENT & DISTRIBUTION
Viewers Still Turn to the “Big Screen”
for Tentpole Events
CHART 13
The FIFA World Cup drew large, but not record-
breaking audiences in Europe. Viewership of the final
Ad View Composition and Growth, by Device, Europe
four games declined compared to 2014. More than half Q2 2014 — Q2 2018
a million viewers followed the final on their smartphone, CLICK TO TWEET
tablet or computer. If there is one story to be told
from the World Cup, it’s that linear still draws the
+26%
largest audiences despite the plethora of devices and YOY
Desktop
platforms viewers have to choose from. In France, 19.3
million viewed the victory of ‘Les Bleues’ on TF1.
34%
Despite a potential viewership dip, the World
Cup final is still the single most watched sports
event globally17. It is only natural, therefore, that
premium video trends towards the big screen, as +41%
13%
viewers want to watch the best content on the YOY OTT
best screen available to them. This quarter, the
big screen captures a 30% share of all ad views.
+21%
Furthermore, both STB and OTT displayed a strong YOY STB VOD
17%
growth performance over last year of 21% and 41%,
respectively. However, we saw STB strengthen in
share as premium publishers in Europe increased
available inventory, particularly around on demand +46%
content. Nonetheless, viewers continue to view YOY
Smartphone
premium video across their devices—when, where 21 %
and how they want to see it. As a result, the premium
video experience remains fragmented, with growth
strong across all devices. Mobile ad view share grew +16%
46%, tablet 16% and desktop 26% year-over-year. 15 % YOY Tablet
Q2 Q2 Q2 Q2 Q2
17. “Global Broadcasters Score Big with Live World Cup Final Ratings”
(2018). Retrieved at: https://variety.com/2018/tv/global/world-cup-final-
2014 2015 2016 2017 2018
ratings-1202876383/
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 22CORE OBSERVATIONS: EUROPE / CONTENT & DISTRIBUTION
CHART 14
Format Composition by Device, Ad Views, Europe
Q2 2018
CLICK TO TWEET
CLIPS (0-5MIN.) FULL-EPISODES (5+ MIN.) LIVE
Desktop
22% 70% 8%
OTT
12% 87% 1%
STB VOD
100%
Smartphone
17% 79% 4%
Tablet
9% 85% 6%
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 23CORE OBSERVATIONS: EUROPE / CONTENT & DISTRIBUTION
Broadcasters Increasingly Rely on
Syndication as a Revenue Stream
Publishers generally prefer to retain primary sales But it is a balancing act in which premium It is important to note regional differences. In France
rights rather than rely on other content providers, thus providers strive to retain audiences on owned syndication is some 20% above the European average
O&O still dominates in Europe. In Q2, O&O accounted and operated platforms while still exploring new and almost all through operators. The Nordics, by
for 83% percent of ad views, up 33% year-over-year. revenue options and keeping up with consumer contrast, have below average syndication, most
But traditional networks, like all content providers, behavior and preferences. It is further reinforced commonly through portals and the long-tail with news
are facing increasing pressure to make it easy for by the trend of content owners launching their clips commonly distributed via Yahoo, YouTube and
consumers to engage with content whenever and own direct-to-consumer services as they realize better regional news sites. This allows premium publishers
wherever they want it. As such, operator-driven margins outside of rights deals, for example to follow audiences online, as the most popular news
syndication continued its growth this quarter at 13% the NFL and the launch of Game Pass within European sites in the Nordics are legacy media brands18.
year-over-year, and now accounts for 17% of ad views. markets. Albeit an example of a subscription based
video on demand (SVOD) service, advertising video on
The syndication trend will likely continue as a demand (AVOD) certainly stands to benefit as content
means for publishers to deliver content to viewers distributors experiment with monetization models.
who don’t want to commit to large bundles.
CHART 15
Percent of Ad Views by Syndication Platform, Europe
Q2 2018
17
CLICK TO TWEET
%
Total Volume of Ad Views, Europe Breakdown by Channel
92% 90% OPERATOR
AGGREGATOR
Syndicated LONG-TAIL
+13% YOY
83 % O&O
+33% YOY 6% 9%
2 %
1%
Q2 2017 Q2 2018
18. “Media Trends in the Nordic Countries; Newsletter from NORDICOM” (2018). Retrieved at: http://www.nordicom.gu.se/sites/default/files/mediefakta-
dokument/Nyhetsbrev_Norden/nordicom_nordicmediatrends_2-2017_1.pdf
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 24CORE OBSERVATIONS: EUROPE / PREMIUM VIDEO BUYING
CHART 16
Share and Growth of Direct and
Programmatic Trends Persist in
Programmatic Monetization, Europe the Face of GDPR
Q2 2018
European premium publishers bucked late June, just a month after GDPR went
CLICK TO TWEET
the digital trend, despite the regulatory into effect, programmatic spending was
12
changes poised by GDPR, retaining its almost back to its pre-GDPR levels,
%
12% share of total ad views. As in the U.S., according to reporting from Digiday20.
direct-sold deals still dominate accounting
for 88% of total premium video ads sold in Because of GDPR, buyers may
Q2, up 41% year-over-year. increasingly look to work directly with
publishers rather than partnering with
When deals are brokered programmatically, exchanges that rely on third-party data.
Programmatic
they are almost always executed within As such, premium publishers may opt to
private exchanges, which affords both develop and/or improve their in-house
brands and publishers more control over programmatic capabilities, and some
where advertising is placed. However, this publishers are investing in third-party
88%
Direct
quarter deals on open exchanges broke
the 25% barrier, three times the share
measurement solutions to verify their
audiences. This is both a response to
typically seen as we saw a fresh release of advertiser demand and a step toward
premium inventory into the open exchange. better understanding their viewers.
In contrast, digital programmatic Programmatic has a strong future and
spending took a big hit immediately will continue its upward trajectory for
post-GDPR, with exchanges reporting sellers as it provides more automation
anything between a 25% and 40% and less administration than direct buys.
reduction in demand19. It wasn’t Furthermore, buyers in the E.U. are
Ad View Share by Transaction Model* just advertiser fear that caused the increasingly looking for cross-channel
nosedive. Some publishers didn’t have targeting and measurement solutions,
the technology in place to effectively programmatic or otherwise. As viewers
25%
Open target audiences while staying GDPR- become device agnostic, marketers work
Exchange
compliant, which limited the amount of to follow suit. Agencies are increasingly
targeted inventory brands could buy. moving digital and TV buyers under “one
As a result buyers switched parts of roof,” which makes it simpler for publishers
75%
Private their budgets back to direct buys. But to cross-sell and for brands to launch
Exchange programmatic is recovering quickly. In cross-channel/cross-device campaigns.
19. “GDPR mayhem: Programmatic ad buying plummets in Europe” (2018). Retrieved at: https://digiday.com/media/gdpr-
mayhem-programmatic-ad-buying-plummets-europe/
20. “A Month after GDPR takes effect, programmatic ad spend has started to recover” (2018). Retrieved at: https://digiday.
*Note: Based on a data sample set com/marketing/month-gdpr-takes-effect-programmatic-ad-spend-started-recover/
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 25CORE OBSERVATIONS: EUROPE / AD EXPERIENCE
Premium Video Delivers improved on every impression served, publishers a two-third share, and ads of 30 seconds account
Favorable Viewer have room to test the effects of ad load reduction and
shorter ad slots. In Q2, the average ad slot was 87
for a third of all ad slots. Time is called on anything
over 30 seconds in premium video, with this ad slot
Experience and High Ad seconds, compared to 93 seconds in Q2 2017. The accounting for less than a 5% share.
Completion Rates average number of ads per break has remained fairly
stable, at 4.67 ads this year compared to 4.97 in Q2 Premium video continues to provide an engaging
2017. Publishers are squeezing the same levels of ads experience for viewers. As a result, ad completion
Publishers continue to experiment with the ad in but opting for shorter lengths, therefore optimising rates remain high regardless of format, with live and
experience to drive user engagement. DAI enables the ad break. The number of ads under 15 seconds full episode pre-roll completion at 91%, and higher still,
publishers greater levels of targeting, and in turn, the increased by 5% year over year. That said, 16-30 mid-roll completion rates at 94% and 96% respectively.
ability to command higher CPMs. Since margins are second ad slot remains the most popular with almost
CHART 17 CHART 18
Average Number of Ads per Break, Average Ad Break Duration in Seconds,
On-Demand Long-Form, Europe Europe
Q2 2017 vs. Q2 2018 Q2 2016 — Q2 2018
CLICK TO TWEET
Q2
93s 2016
BREAK
DURATION
87s Q2
BREAK
DURATION 103s 2017
Q2
2018
4.97
93s
4.67 87s
Q2 2017 Q2 2018
AVERAGE AVERAGE
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 26CORE OBSERVATIONS: EUROPE / AD EXPERIENCE
CHART 19
Ad Completion Rates by Ad Unit and Content Duration, Europe
Q2 2018
CLICK TO TWEET
FULL EPISODE LIVE CLIPS
Pre-Roll
91%
91%
76%
Mid-Roll
96%
94%
Post-Roll
79%
57%
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 27Q2 2018 Conclusion
Advertisers, publishers and operators are confident in the future of both linear
television and digital capabilities as evidenced by the U.S. Upfronts season.
They are increasingly working to marry these channels, in a move that reflects users’
viewing behavior and advertisers’ expectations. The premium video industry is working
to develop cutting-edge targeting and measurement capabilities. Often, this means
partnering with other industry participants to bring data sets together, and in the first
half of 2018, a number of partnerships were announced across the U.S. and Europe.
As premium video’s growth continues, both in viewer consumption and advertiser
adoption, there is an opportunity for the format to own a greater portion of the
marketing funnel. Bringing together premium video’s brand safe and uniquely
engaging viewer experience with data-enabled targeting and measurement will
prove to be a winning formula.
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 28Author Bios
Hasan Iqbal is a Senior Manager Rebecca Rangeley is the Head of Esra Akturk is an Associate on the Ying Wang As Director of Advisory
in FreeWheel’s Business Advisory Business Insight for our International Advisory Services Team. In this role, Services at FreeWheel, Ying Wang
practice and helps clients generate Business. In this role, she works across she provides clients with strategic leads the company’s Business Advisory
insights through data-backed analyses. Comcast Technology Solutions (CTS) and tactical guidance on how deliver Practice. In this role, she partners
His areas of expertise include market and Freewheel, using data analysis maximum value to their businesses with enterprise and emerging media
benchmarking and analysis, revenue to support customer decision making using the Freewheel product suite. companies to develop and execute
strategy, and scaling of organizational and investments for clients. Prior to Prior to Freewheel, Esra worked in ad strategies for digital video that improve
capabilities. Prior to FreeWheel, Hasan FreeWheel, Rebecca managed the operations at Disney ABC Television viewer experience, maximize yield, and
was a strategy consultant with PwC Digital Insight Team at Sky Media in Group where she managed and grow revenue. Prior to FreeWheel, Ying
Strategy & where he advised media and the U.K., delivering insights to drive optimized digital campaigns to ensure advised media and retail companies
technology companies. Sky U.K.’s advertising revenue for VOD, that client KPIs were met. as part of Oliver Wyman, a global
online and mobile applications. management consultancy.
Special thanks to: Xu Yao, Faith Bentzel, Zhuoli Xu, Haley Glazer, and Alexander Groysman
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 29Glossary
AD COMPLETION RATE IMPRESSION OVER-THE-TOP (OTT) SIMULCAST
Measures the percentage of ads that were Occurs each time an ad is displayed. Viewing content delivered over an internet A digital stream of a live event that is
completed once started Synonymous with “ad view” connection. Typically seen as OTT Device, which simultaneously broadcast on linear TV
includes devices like Roku, Apple TV, Connected
AD VIEW INVENTORY TVs, etc. SYNDICATION
An impression that is accrued after the first frame An ad opportunity. A piece of inventory is filled by Viewing that occurs outside of a publisher’s
of an ad is displayed an ad impression OVER-THE-TOP DEVICE (OTT DEVICE) Owned and Operated properties or primary
Viewing content delivered over an internet platforms TV
AGGREGATOR LINEAR connection on a TV streaming device, including
A high-traffic content aggregator, for example Traditional broadcast, cable, or satellite television devices like Roku, Apple TV, Connected TVs, etc. EVERYWHERE (TVE)
AOL or MSN Apps that allow viewers to access content
LONG-TAIL PRE-ROLL over the internet by logging in with their MVPD
AVOD Small scale/niche content aggregators An ad break that occurs before content starts subscription credentials
Advertising video on demand business model
MID-ROLL PREMIUM VIDEO VIDEO START
CONTENT VERTICAL An ad break that occurs in the middle of content Video content that is professionally produced, Accrued after the first frame of video content is
Content genre, e.g. news, entertainment, sports rights managed, and limited in supply displayed. Formerly referred to as video view
MULTICHANNEL VIDEO PROGRAMMING
DEAL ID DISTRIBUTOR (MVPD) PROGRAMMATIC VIRTUAL MVPD
Unique deal identifier of a programmatic Provides pay TV services delivered either through The use of automation software or managed Digital-only cable alternatives that offer access to
transaction that can be used to match broadcast satellite or cable TV. Examples include services to execute an advertising deal both live and on-demand premium video content for
advertisers and publishers directly Comcast and Verizon a subscription fee. Sometimes referred to as digital-
PROGRAMMER MVPD (dMVPD)
DIRECT-SOLD NEW LIVING ROOM U.S. publishers that generate the majority of their
Advertising deals made directly between a The same high-quality TV content that was advertising revenue from linear TV services and
publisher and an advertiser traditionally consumed in the living room is offer a diverse content mix in digital environments
experienced today by the same audience through as well
DYNAMIC AD INSERTION (DAI) a multitude of screens and locations
Process of dynamically inserting ads into a PUBLISHER
content stream, such that different ads can be OPERATOR Producers or syndicators of content. Can be
inserted into the same ad break Provides pay TV services in Europe, functioning programmers or digital pure-plays
similarly to MVPDs in the U.S. Examples include
FREEWHEEL COUNCIL FOR PREMIUM VIDEO (FWC) Sky U.K. and SFR SET-TOP BOX VIDEO ON DEMAND (STB VOD)
Serves the interests of those in the premium Accompanies a cable/broadcast/satellite setup.
video industry through leadership positions, Contains a cable input and outputs to a TV.
research, and advocacy to promote the premium Integrations via FourFronts STB VOD and Canoe
video economy Phase III
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 30Appendix
CHART 3 - EXPANDED
Ad View Composition by Device, U.S.
Q2 2014 — Q2 2018
Q2 2014 Q2 2015 Q2 2016 Q2 2017 Q2 2018
Desktop 76% 62% 34% 27% 17%
STB VOD - - 17% 20% 16%
OTT 4% 10% 23% 29% 41%
Tablet 7% 7% 8% 8% 7%
Smartphone 13% 21% 18% 16% 19%
CHART 13 - EXPANDED
Ad View Composition by Device, Europe
Q2 2014 — Q2 2018
Q2 2014 Q2 2015 Q2 2016 Q2 2017 Q2 2018
Desktop 78% 66% 43% 35% 34%
STB VOD - - - 18% 17%
OTT 3% 10% 19% 12% 13%
Tablet 15% 7% 19% 16% 15%
Smartphone 12% 21% 19% 19% 21%
#FreeWheelVMR / Q2 2018 / FREEWHEEL VMR 31Back Cover
Q2 2018
FreeWheel.tv
@FreeWheel
More Information Media Inquiries
David Dworin Dan Friedman
VP, Advisory Services VP, Communications
ddworin@freewheel.tv daniel_friedman@comcast.com
#FreeWheelVMR
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