Demystifying Premium

Home , Dentsu Aegis Network, Premium (marketing)

SEPTEMBER 2018 #PremiumVideo

THE KEY ATTRIBUTES OF PREMIUM VIDEO

1 FREEWHEEL COUNCIL / DEMYSTIFYING PREMIUM / #PremiumVideo Executive Summary

THE CONCEPT OF THE WORD “PREMIUM” HAS SUFFERED some efficiencies, but it has also created risks. When from a lack of consistent definition since the dawn of considering audiences as “premium”, the viewer digital advertising and has been applied universally (sometimes not actually a human) can no longer be as a sales and marketing tactic to create appeal to considered in a vacuum—the environment is critical, advertisers. It is often said that premium is in the eye not only in terms of brand safety but also transparency, of the beholder, and the price of advertising will often verification and the likelihood to drive business outcomes. come down to what an advertiser is willing to pay for an opportunity to get in front of a target audience. Premium video—which is a TV or TV-like environment, However, the value of the audience is only one element both linear and digital—is a powerful advertising of the premium equation. Whilst important to a brand’s environment, yet buy-side investments are often limited overall strategy, building ongoing brand values and by the perception that TV is challenging to access, or affinity with consumers over the long term is arguably prohibitively expensive. At the same time advertisers are the primary goal in any sustainable engagement lured into quick, easy and apparently low-cost, lower between brands and consumers. If the past couple of quality digital advertising options. It’s only once they look years have taught us anything, it is that the quality of deeper and start to scrutinise results that they begin to environment and ultimately, the results or the return on understand that some of these platforms lack efficiency investment (ROI), are what matter. of long-term brand building or driving positive ROI and worse still, may even present a risk to brand reputation.

While there may be some truth in the view that premium Premium is content and context video is more complex than other digital advertising, it that add value in the eyes of the viewer. is ultimately far more effective at driving genuine brand outcomes in both the short- and long-term. It is also So, something that makes it premium is becoming more simple and affordable all the time. something that makes it more valuable. This paper demystifies the term “premium”, taking a deep dive into what it takes to justify its name, how Phil Smith premium video differentiates itself from non-premium Director General, ISBA media and using research from multiple markets to Watch the Interview illustrate how it is more accessible and worthy of greater investment.

The past few years have been a jolting experience for many brands as they encountered quality issues among buys, some of which were from exchange- based platforms and some from supposedly trustworthy sources. The shift towards audience-only buying that the digital revolution has facilitated, has created

2 FREEWHEEL COUNCIL / DEMYSTIFYING PREMIUM / #PremiumVideo Key Takeaways

• Many claim “premium”, but not everyone offers premium advertising opportunities. “Premium” entails a specific set ofattributes that drive business outcomes.

• Five key attributes of “premium” are:

1 2 3 4 5

Brand Safety Transparency Engagement Trust Quality Reach

• TV advertising has evolved to enable new transaction models and access to high quality, engaged audiences at scale.

• Premium video delivers the largest short- and long-term multiplier of ROI for brands.

• Brands should question the ubiquity of the term “premium” and make no compromises when it comes to investing in premium inventory.

Redefining Premium: What Makes it Premium?

PREMIUM VIDEO IS PROFESSIONALLY-PRODUCED VIDEO CONTENT, DELIVERED VIA CURATED USER EXPERIENCES, IN A BRAND-SAFE CONTEXT TO HIGHLY ENGAGED AUDIENCES.

Accessed via any screen, it is often viewed within multiplatform TV including broadcaster video-on- demand (VOD) and over-the-top (OTT) platforms (with limited presence within video aggregators, social networks or long-tail video sites).

Many claim, but very few can deliver on the promise of premium: premium video is defined by its quality and the attributes that make it different from other types of video content, including brand safety, transparency, engagement, trust and quality reach.

3 FREEWHEEL COUNCIL / DEMYSTIFYING PREMIUM / #PremiumVideo ATTRIBUTE 1 Brand Safety

BRAND SAFETY CAN BE A CHALLENGE IN DIGITAL ADVERTISING WHERE AUDIENCE-ONLY OR audience-first models mean advertisers and agencies often have no idea of environment, opening up the possibility of ads appearing next to inappropriate content.

Premium video is different because content is expertly curated and only features in high-quality, sought-after environments that are complementary to brands and their values. When discussing VOD at an event in May 2018, Matt Hill, Research & Planning Director of Thinkbox1, explained:

On-demand TV content is 100% brand-safe because it is regulated by the same broadcasting code that applies to linear TV, applying strict rules around harmful or offensive content, impartiality, and accuracy of information.

Matt Hill Research & Planning Director, Thinkbox

These rules are designed to protect consumers, but simultaneously protect advertisers, ensuring a brand-safe environment.

The exponential growth of the digital ecosystem has brought with it the need for control and safety measures. Fraud, driven by poor quality inventory, is extracting significant value from the industry and is badly damaging performance. It is time to focus energy away from risk mitigation and towards quality media environments that will drive campaign success. In an interview with Beet.TV in June 20182, John Montgomery, GroupM’s Global EVP of Brand Safety, explained:

By buying better quality, the CPM may be higher but it will be worth it. We’ve done a lot of studies proving that brand safety not only limits risks, but it works better. Buying quality actually sells, and this is where we think we should take the conversation to, after brand safety becomes table stakes.

John Montgomery Global EVP of Brand Safety, GroupM Watch the Interview

1. https://www.thinkbox.tv/News-and-opinion/Events/Watch-Broadcaster-VOD-The-Bigger-Picture 2. https://www.beet.tv/2018/06/john-montgomery.html

4 FREEWHEEL COUNCIL / DEMYSTIFYING PREMIUM / #PremiumVideo ATTRIBUTE 2 Transparency

THE NEED FOR TRANSPARENCY HAS PERMEATED THROUGH The need for transparency goes the other way as the entire advertising industry, with brands demanding a well, with premium publishers and broadcasters clear understanding of where and how their advertising standards requiring ad creative clearance to ensure the budgets are being spent. An Ebiquity report3 illustrates consumer experience is of the highest quality. This has that, in some cases, only 15 cents of every euro spent ramifications on the transaction itself, with premium in programmatic digital media trading reaches the video players transacting the majority of their inventory intended audience. The majority goes to intermediaries, via direct sales and private marketplaces, as opposed and in some cases, further value is eroded by non- to open auctions and exchanges where controls and viewable inventory or fraud. Without transparency there transparency levels are lower. This also creates more is diminished accountability, and without accountability predictability for delivery on both sides. there is an inevitable loss of trust and confidence. With premium video, buyers know exactly who they are dealing with and precisely where their budget is One thing that brands should never being spent. The need for control over supply and compromise on is transparency. There is compliance means that premium video is mostly transacted via private marketplaces, and often served no trust, no campaign monitoring, no within the closed environments of OTT and VOD. optimisation, if there is no transparency.

Philippe Boscher Head of Digital Marketing & Innovation, TF1 Publicité Watch the Interview

Premium Video & Transparency: The Inverted Transactional Pyramid PREMIUM VIDEO

MANUAL DIRECT DEALS

PROGRAMMATIC TRANSPARENCY GUARANTEED SEMI-AUTOMATED CONTROL PREFERRED PREDICTABILITY DEALS

PRIVATE AUCTIONS AUTOMATED

OPEN AUCTIONS

3. The new marketing landscape: How TV can take advantage of change, EbiquityEbiquity, 2017

5 FREEWHEEL COUNCIL / DEMYSTIFYING PREMIUM / #PremiumVideo ATTRIBUTE 3 Engagement

WHILE THE QUALITY OF LINEAR TV HAS ALWAYS DRIVEN Premium video also drives more attention than other engagement, on-demand premium video capabilities types of digital video, which is vital for consumers to add a new dimension. Viewers are in control, choosing engage with advertising messages. A 2017 report from the shows they want to watch, at a time that suits them, Think TV6 reveals the attention an average second of making them further engaged with the content and active video content commands on various platforms. receptive to the ads associated with it. TV content captures 58% attention, while video sharing or social platforms only command 31% and 4% attention The highly engaging nature of premium video is illustrated respectively. Channel 4 research5 also describes the by the outstanding completion rates it achieves. The UK’s distracted attention state as “the enemy of advertising,” recent “Bigger Picture” research4 (involving Sky, Channel revealing the level of distraction time for online platforms 4, ITV and Thinkbox) reveals the average view-through as being 3.1 times greater than the more immersive the rate (VTR) for VOD is 93%, while separate Channel 4 All4 platform. research5 reveals ads served on its All4 platform achieve a completion rate of 96%, compared with 59% or even This disparity is due to multiple factors such as the 17% on some digital platforms. emotional engagement with the content, the quality of the ad creative as well as the device and the screen Premium video truly delivers on time-spent metrics coverage achieved by premium video. Progressive because it is based on a fair value exchange where buyers have started to use enhanced viewability and viewers are willing to watch quality ads to gain access quality metrics, such as screen coverage and field of to extremely high quality, made-for-TV content. vision, as a way to value media opportunities.

UK Ad Completion Rates “Bigger Picture” Research Study 96% 59% 17 %

All4 Platform Digital Media Platform Social Media Platform

4. https://www.skymedia.co.uk/news/broadcaster-vod-the-bigger-picture/ 5. https://www.4sales.com/not-all-vod-same 6. https://thinktv.com.au/wp-content/uploads/2017/08/ThinkTV_media_attributes_that_matter.pdf

6 FREEWHEEL COUNCIL / DEMYSTIFYING PREMIUM / #PremiumVideo ATTRIBUTE 4 Trust

QUESTIONS ARE BEING RAISED OVER THE ACCURACY and visible, which gives a more meaningful indication and trustworthiness of digital verification models, with of audience engagement. some social platforms making multiple announcements about incorrect, inaccurate or incomplete metrics specific As illustrated in Chart 1 below, recent research by SevenOne to video viewership and placements. According to a 2018 Media / Payback demonstrates the power of both sight and CMO Council survey,7 24% of marketers have already sound together in terms of emotional engagement. reduced spend due to false or faulty verification metrics. With the proliferation of screens and viewing platforms, But it’s not just a case of whether advertising metrics are TV measurement models have become more trustworthy or not, it is also about whether the metrics sophisticated. The attribution of the true value of media used are the ones that matter. Industry standards present is better understood, and it is increasingly clear that a low baseline against which to measure elements such premium video delivers results that were previously as viewability, with digital ads deemed viewable if half the attributed to other media. pixels are in view for a couple of seconds—a standard only 3%7 of marketers are satisfied with. Rather than Brands not only trust verification within premium focussing on this basic measurement, advertisers environments and their innate quality, but increasingly can make use of far more powerful metrics such as they can also place their trust in the fact that premium completion rates and whether the ad was both audible video investment will drive value in terms of results.

CHART 1 The Power of Sound VIDEO ONLY AUDIO ONLY AUDIOVISUAL

Video Ad - Consumer Electronic Video Ad - Automotive Percentage for Top Two Responses* Percentage for Top Two Responses*

Enjoyable Serious

Likeable Attractiveness

Serious Informative

Informative Likeable

Attractiveness Enjoyable

20% 30% 40% 50% 60% 70% 20% 30% 40% 50% 60% 70% 80%

* Question: Using a scale from 1 (“I agree entirely”) to 5 (“I do not agree at all”), please evaluate to what extent the following descriptive words best apply to the video ad Base: 300 Adults aged 18 to 49, equally spread gender, 3 spots exposure followed by online survey. Source: SevenOne Media / Payback

7. https://cmocouncil.org/thought-leadership/reports/engage-at-every-stage-an-investigation-of-video-activation

7 FREEWHEEL COUNCIL / DEMYSTIFYING PREMIUM / #PremiumVideo ATTRIBUTE 5 Quality Reach

SCALE AND REACH ARE FUNDAMENTAL TO THE SUCCESS OF where several members of one household are exposed to advertising; after all, brands must reach their audiences the advertising message simultaneously. in a meaningful way to grow their business, and premium video is increasingly able to fulfil this need of delivering Channel 4 and ITV’s research8 revealed TV screens scale and simultaneous reach efficiently. are watched by an average of 1.6 people, meaning that for every 1,000 TV impressions advertisers buy, The average consumer is exposed to 21 minutes1 of their message is actually reaching an additional 600 video advertising per day, with TV—including playback individuals. This multiplier varies by show: for example, TV and VOD—accounting for around 95% of that advertising around The Great British Bake Off is viewed viewing time. In contrast, advertising on the largest by 2.1 people per impression1. online video platform only accounts for 0.9% of that 21 minutes; a mere 11 seconds. The multi-viewer experience of premium video watched on the big screen not only increases real With the rise of VOD and OTT via connected TV’s, premium audience reach, it also makes advertising more video consumption increasingly takes place on the big effective. Sky Media1 discovered that watching content screen, and is fully integrated into the TV experience, with with other people leads to higher engagement with and 38% viewers watching broadcaster VOD on the television enjoyment of that content. When viewing content set according to the FreeWheel Video Monetization Report: together and on the big screen, viewers are happier Q1 2018. This shift back to the living room environment and more energised, which has a halo effect on the transforms premium video into a multi-viewer experience, brands advertising around that content.

CHART 2 Average Video Advertising Time Per Day8 All Individuals: 21 mins 16-34s: 14 mins 0.9% 2.9% % 3.9 % 0.4% 6.3 2.5% 0.7 % LIVE TV 6.6% 4.8% YOUTUBE 85.8% OTHER ONLINE VIDEO 9.0% CINEMA All Individuals 16-34s % BROADCASTER VOD 76.3

PLAYBACK TV

8. https://www.itvmedia.co.uk/why-itv/research/bvod

8 FREEWHEEL COUNCIL / DEMYSTIFYING PREMIUM / #PremiumVideo Is Premium Worth It?

PREMIUM VIDEO MAY BE SEEN AS UNATTAINABLE, ESPECIALLY FOR SMALLER ADVERTISERS, WHO may feel they cannot afford it. But choosing to invest ad budgets in lower-quality media is a false economy.

Digital advertising has encouraged a short-termist approach to marketing, where the focus is delivering information to the audience at the lowest possible cost, without considering the effectiveness and whether it will drive the required brand outcomes. Digital has stimulated the direct response market where immediate performance metrics are more important than long-term strategy.

Morten Bruhn Hojsgaard Managing Director, iProspect, Dentsu Aegis Network

Premium video is a more limited commodity, accounting for just 9%9 of all video starts, so basic supply and demand dynamics, as well as its quality, make it more highly sought after. But premium video provides substantial value. When other factors such as completion rates, attention levels, return on investment, and long-term impact are considered, advertisers can achieve far more with premium video than with digital advertising, using the same budget.

For additional perspective, through a programmatic lens, you can watch an interview of Anna Forbes, Managing Director UK, The Trade Desk here.

An Ebiquity and Radiocentre research project10 explored the ROI of a variety of advertising media and its normative data on profit ROI and determined that TV yields the best returns overall:

• Every £1 spent on TV (premium video environment) makes £1.73 profit • Every £1 spent on online video makes £1.21 profit • Every £1 spent on online display makes £0.82 profit

When the ROI of advertising media is measured, the tendency is to focus on the short-term, looking at the immediate impact of investment during a campaign and for the three-to-six months following its completion. But in reality, less than half of advertising’s profit occurs in this short- term period; Thinkbox research11 concluded that the majority (58%) of profit return happens after the initial six-month period.

9. http://freewheel.tv/freewheel-views/the-premium-video-opportunity-infographic/ 10. https://www.radiocentre.org/re-evaluating-media/ 11. https://www.thinkbox.tv/Research/Thinkbox-research/Profit-Ability-the-business-case-for-advertising

9 FREEWHEEL COUNCIL / DEMYSTIFYING PREMIUM / #PremiumVideo Only by looking at the combined short- and long-term effects of advertising can one see the entirety of each medium’s contribution to profitable return. According to the Thinkbox research, this would translate as follows:

• Every £1 spent on TV makes £4.20 profit over three years • Every £1 spent on online video makes £2.35 profit over three years • Every £1 spent on online display makes £0.84 profit over three years

CHART 3 Proportion of Advertising-Generated Profit by Medium

Bubble size represents % of total profit. Total profit = all return (short & long-term) generated over 3 years.

TV PRINT ONLINE VIDEO RADIO OOH ONLINE DISPLAY

BREAK EVEN 70%

60% 71%

50%

40%

30% % OF BUDGET 18%

20%

10% 3% % % 4 1% 3 0% £0.00 £0.50 £1.00 £1.50 £2.00 £2.50 £3.00 £3.50 £4.00 £4.50 £5.00

TOTAL PROFIT ROI EFFICIENCY

Note: Online Video includes Broadcaster VOD, YouTube, Facebook video & online programmatic video Source: Profit Ability: the business case for advertising, Nov 2017 Ebiquity ROI campaign database (Feb 2014-May 2017) & Gain Theory. Campaign obs: 1,954

10 FREEWHEEL COUNCIL / DEMYSTIFYING PREMIUM / #PremiumVideo TV delivers the largest long-term multiplier of all media types, so while advertisers may see the initial cost of premium as comparably high, they could miss out on maximising advertising-generated profit by under- investing in premium environments.

Simon Bevan Chief Investment Officer, Havas Group

Advertisers could spend less per impression on other digital media but will require far more impressions to achieve the same goal, potentially making this a costly strategy if not a poor user experience, due to increased frequency. For smaller advertisers, advances in premium video such as programmatic and addressable TV help to keep costs manageable and allow them to focus on more specific audiences.

When considering its innate qualities and ability to drive outcomes, the value of premium video is undeniable.

Conclusion: The Non-Negotiables of Advertising

WHEN BRANDS OR AGENCIES INVEST IN ADVERTISING THERE ARE FIVE KEY ELEMENTS THEY SHOULD never compromise on, and if all the boxes cannot be ticked by an advertising partner, the value should be questioned:

• A brand safe environment • Complete transparency • An engaging ad experience • Trust through certified third-party verification • Sufficient scale and reach (based on goals)

Brands should be skeptical about the ubiquitous term “premium” and query supplier claims to that descriptor. Premium video has the traditional strengths from its broadcast heritage of reach and engagement, in a high-quality environment. It combines these with new digital advances in data, targeting and measurement, bringing together the five key elements into one package. And it does this in a way that drives real business outcomes in both the long and short-term, offering value to advertisers that cannot be provided by any other medium.

Ultimately premium video, in all of its incarnations, represents the most compelling environment for brand marketers to drive results, and the worthiest marketing channel of its name.

11 FREEWHEEL COUNCIL / DEMYSTIFYING PREMIUM / #PremiumVideo THANK YOU TO THE FREEWHEEL COUNCIL FOR PREMIUM VIDEO, EUROPE MEMBERS AND PARTNERS who contributed to this paper. You can watch the full series of interviews with Phil Smith (ISBA), Anna Forbes (The Trade Desk), Etienne Bodel (Dentsu Aegis Network) and Philippe Boscher (TF1 Publicité) about their views on Premium Video here.

About The FreeWheel Council for Premium Video, Europe (FWCE)

The FreeWheel Council for Premium Video Europe (FWCE) was formed in June 2017 to serve the interest of those in the premium video industry through leadership positions, research, and advocacy. Aligned to the FWC formed in North America in 2015 (with members such as ABC, Fox and NBCUniversal), the FWCE consists of 17 members: Canal+ Régie, Channel 4, Discovery Networks International, European Broadcaster Exchange (EBX), France Télévision Publicité, Medialaan, Publitalia, NENT Group, Proximus, RTÉ, Sanoma Finland, SevenOne Media, SFR Régie, Sky Media UK, Sky Media Germany, Talpa and TF1 Publicité. Across both Europe and North America, the FWC operates as an educational and organising resource to assist marketers to reach desired audiences in premium video environments, conduct research documenting the benefits of premium video and represent the interests of member publishers and the market.

For more information on the FreeWheel Council for Premium Video please visit www.FreeWheel.tv/FWCouncil and follow us on Twitter @FWCouncil.

FreeWheel Council Inquiries [email protected] Emmanuel Josserand [email protected] @FWCouncil