The Media Monthly November 2015
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Report Summarizing Media Sector Activity The Media Monthly November 2015 Special Highlights in This Issue: . NYC TV Week Highlights Recent PJSC Transactions: Pending . State of Mobile Commerce . Why The Internet Won’t Be The Next TV for Has agreed to acquire selected Advertising assets from . Can Anything Stop The Decline of Traditional TV? The undersigned is serving as advisor to Key Food . Ad Spend Forecast PETER J. SOLOMON COMPANY . Ad Tech January 2014 to Present Media, Entertainment, Communications & Technology Capital Markets Fred Seegal Rich Brail Mark Boidman Juan Mejia Joe Stein Vice Chairman Head of Media, Ent., Managing Director Managing Director Managing Director 212.508.1626 (w) Comm. & Tech 212.508.1661 (w) 212.508.1659 (w) 212.508.1662 (w) 917.992.5027 (m) 212.508.1628 (w) 917.526.1092 (m) 917.716.8143 (m) 203.550.2184 (m) [email protected] 646.458.1570 (m) [email protected] [email protected] [email protected] [email protected] Twitter: @MBoidman 1 The Media Monthly NYC TV Week Highlights Recent Over-the-Top (OTT) Trends On-Demand vs Traditional Cable . Over 50% of US households use more than one . Although On-Demand TV has surged over the OTT service past few years, traditional cable providers are still maintaining their subscribers Netflix is the most popular subscription - service with over 40% of the total OTT - Many viewers still do not know what they want to watch and would rather pay a premium for a variety of networks and - Hulu and Amazon Prime are the next two biggest providers, followed by many niche content so they can channel flip services providing specific video content - On-Demand music, such as iTunes has . In Q2 2015, consumers paid ~80% of total been around longer than On-Demand TV, media expenditure to pay TV providers while yet people are still listening to music from only ~10% went to OTT providers and internet the radio and from music streaming platforms because they don’t know what video subscriptions they want to listen to - However, OTT and internet are receiving ~35% of total video consumption . Content providers are launching VideoEverywhere platforms to compliment their . Ease of navigation and how quickly consumers TV network service can find content they are looking for are important factors for OTT providers HBO Now launch subsequently led to an - increase in HBO Go subscriptions . Major advantage for OTT providers is the direct relationship they have with the viewer . Creating popular original content is the ultimate goal, as advertisers will pay for more views Viewers control what they want to watch - and OTT provider offers suggestions based - Traditional subscription service players on recent consumption such as Netflix, Amazon Prime and Hulu are creating more original content to . Roku recently partnered with Nielsen to complement the vast video library they already have measure video advertising on Roku devices, which will enable marketers to buy video advertising with more certainty on who is PJSC’s TMT Team is a Proud viewing the ads Partner of NYC TV Week www.pjsc.com 2 The Media Monthly State of Mobile Commerce Mobile is Becoming the Preferred Purchase Device For Cross-Device Shoppers . 4 in 10 transactions now involve multiple devices - Cross-device purchasers are 20% more likely to complete the transaction on their mobile device than the average user (a) - One-third of desktop sales now involve mobile prior to purchase - Shoppers are visiting the retailer’s desktop and mobile browser sites when researching and making a purchase . Apps now generate at least half of Apps are making it easier for shoppers to make purchases all mobile sales for retailers who have made their app experience a priority (b) - Apps convert at a 3.7x higher rate than mobile browsers and convert at a 2x higher than desktops in the case of retail Order per transaction for - apps is $116, compared with $100 for desktops and $91 for mobile browsers . The average retailer has seen its mobile transaction share grow 15% this quarter . Smartphone share of mobile transactions grew to 56% in Q3 as screens continue to grow Retail eCommerce transactions have risen in almost all of the top countries from Q2 to Q3 2015 Source: Criteo. (a) Where the consumer has more than one device. Based on Criteo’s cross device product providing exact matches of users across multiple devices. (b) Defined as retailers that have over 25% of E-commerce transactions on mobile. Of those mobile transactions, more than 10% are from mobile apps. www.pjsc.com 3 The Media Monthly Digital Place Based Advertising Association September 2015 Members Meeting . Ad blocking was added to the list of important issues facing online media channels, which already included online fraud and viewability . Digital place based ad revenue is up 14.3% (1st half ’15 vs 1st half ’14) . “We’re not just selling signs, it's engagement with the audience. To do this, we have to understand the brand’s architecture “ - François de PJSC is a proud Gaspé Beaubien, DPAA's Chairman and CEO of Zoom DPAA member . “Location data is key, it is the intersection of media and creative data” - Alan Smith, Chief Digital Officer, Assembly . DPAA’s recent media summit was well received - details will be included in next issue Puma, in Partnership With Blue 449 and Zenith Media, Teamed up With Blue Bite and Loop to Create a One-Of-A-Kind Campaign to Promote Puma’s Latest Sneaker, the Ignite XT . Deployed in collaboration with JCDecaux in Chicago, custom built experiential transit shelters portraying Puma’s training campaign will feature the first-ever integration of NFC and dual- beacon tech in OOH . Transit shelters outfitted with Blue Bite’s mTAG (NFC/QR) and esca (dual-mode beacon) technologies . Users will be able to tap or scan the mTAG installed on the display to launch a mobile experience promoting the Ignite sneaker . Users with the PUMATRAC app installed on their device will Puma experiential transit shelter receive a notification when they are within proximity of the shelter integrating Blue Bite esca beacons Impax Media - DOOH Advertising Company That Uses Advanced Big Data / Technology to Ensure That the Most Relevant Ads Are Being Shown to the Appropriate Shopper Passing by the Screen . Patented digital screens are situated at the retail checkout lanes in large grocery stores - They replace signs used to indicate when the lane is closed and play relevant advertising to shoppers walking or standing in front of them . Unique technologies include embedded profiling technology using cameras and proprietary algorithms / software to personalize the ad content based on the shopper in front of the screen . Can include either a beacon transponder or near field Digital screens inform customers about communication (NFC) transponder to push offers to relevant products in the store shoppers in the vicinity of the screens www.pjsc.com 4 The Media Monthly Why The Internet Won’t Be The Next TV for Advertising . Advertising forecaster eMarketer lowered its growth estimated for 2015 world-wide ad spending, citing slower than expected growth in Latin America, Western Europe and North America . North America’s ad-growth slowdown is being fueled by the shift in spending from traditional media such as TV, newspapers and magazines to digital, including mobile, advertising . eMarketer estimated North American digital spending will rise by 16.8% to $62.07 billion in 2015 with mobile spending climbing by 59.9% to $31.53 billion Mobile Internet Ad-Spending Growth Estimates and Forecasts For North America . However, eMarketer believes 90% that the value being lost in the traditional arena is not being 80% completely made up with the 70% value being gained by digital 60% 50% . This is due to advertiser 40% wariness about ad fraud and 30% accuracy of measurement and 20% targeting in some digital formats 10% 0% 2014 2015 2016 2017 2018 2019 Mobile internet ad-spending growth is projected to considerably slow down in the next few years Can Anything Stop The Decline of Traditional TV? . Traditional television viewing has decreased from the prior year across the majority of demographics . Pay TV industry lost an estimated 556,000 subscribers in Q2 . ESPN alone lost 3.2 million estimated subscribers over 12+ months . Cable channels' commercial ratings have been down every month since May 2014 . In July, usually a good season for cable viewing, 21 of the 30 top cable nets saw significant declines in prime time ratings . Many popular services such as Netflix and HBO Go do not take advertising and ad blocking is growing exponentially online Source: WSJ, MoffettNathanson, Nielson, Video Everywhere - DPAA. www.pjsc.com 5 The Media Monthly PJSC’s Eric Lesorgen: Traditional Radio Companies Have Been Struggling Over the Past Year Due to the Increased Presence of Music Streaming Options . Cumulus Media and iHeartMedia have seen their LTM share prices decrease around 90% and 75%, respectively Millennials have been switching to more of a streaming option for - listening to music for years, and companies are now noticing, attracting new entrants into the space - Tech giants have launched their own streaming options, such as Apple with its launch of Apple Radio, Amazon with its prime music and Google with its Google Play Music Saturated market that includes traditional music streaming companies such - as Pandora, Spotify and Rhapsody . Radio companies are looking towards grabbing broadcasting rights for sporting events as this is still popular for people who like listening to the play-by-play For example, Cumulus Media recently landed the rights to White Sox - baseball and Bulls basketball games in Chicago starting in 2016 . iHeartMedia Q3 reported revenues were up 2% YoY to $847 million, however, operating income before depreciation and amortization of non-cash charges (OIBDAN) was down 0.1% to $326 million Ad Spend Forecast: Mobile to Overtake Print and Radio by 2017 .