“In the future there may be a paid model for the television content currently available” – Meios & Publicidade

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M&P listened to the heads of six of the main media agencies operating in Portugal about some of the topics that promise to mark the advertising market in 2023. The impact of the introduction of advertising on streaming platforms, the fragmentation of the offer and the loss of expression of free-to-air channels, the upheaval in the measurement of television audiences, the transformation of the two main cities into a place outside the home and the end of cookies analyzed today by Bernardo Rodo, managing director of OMD.

Meios & Publicidade (M&P): Advertising is already a reality on Netflix, and the new subscription model with ads is expected to reach the Portuguese market next year. From December 8, Disney+ also opened the door to ads, in a move that will start in the United States but will soon reach the other markets where the platform is present. What could be the impact of the introduction of advertising on streaming platforms on television advertising investment in the Portuguese market?

Bernardo Rodo (BR): The offer of advertising on streaming platforms is a subject that needs some consideration, as it creates new questions that go beyond the simple cannibalization of advertising investment in television. The most advanced market in this transition is the United States, which indicates some challenges as priorities. Firstly, whether the investment share will correspond to the (estimated) audience share. This may not be the case, as there are variables to assess effectiveness, such as targeting, coverage and the time required to achieve that coverage. It is not possible to anticipate this answer without knowing what the streaming platforms’ advertising offer is, how much an individual will watch per day, with what segmentation and at what price. Some news talk about a premium offer from the platforms to advertisers associated with the “quality” of audience segmentation.

The second challenge is the articulation of demographic targets with behavioral targets, which brings the streaming platforms closer to programmatic media models but which will have to be integrated into the so-called conventional planning. On the other hand, there were indications that Netflix and Disney would take advantage of Apple’s decision to restrict ad targeting, bringing the platforms closer to digital territory. We still need to understand how the users of the platform react to join the subscription model with advertising. Netflix talks about a 20 percent reduction in the monthly fee. There is no doubt that the platforms will challenge the distribution of advertising spending, but it is still too early to see the effect.

M&P: The loss of the share of free channels, which was constant as the television offer became increasingly fragmented, intensified in 2022. This is at a time when the multiplication of the OTT offer continues to grow as the number of platforms available to the Portuguese consumer, even though it is already significant, continues to grow, an example of which is the recent arrival of the SkyShowtime platform in -Portugal. How do you see this continuous expansion of the offer of television content and how do you anticipate that the consumption of free-to-air television will evolve in this context? Are generalist channels doomed to lose expression in 2023?

BR: As in any market, the diversification of quality supply is an obvious threat to established supply. However, and not to state the obvious, I think there is a more interesting issue, which is the spread of audiences across multiple platforms (not just television) and how brands can make their content reach these audiences. The main challenge that the generalist channels face is precisely the entertainment content that competes with this offer, which in turn implies a greater effort to attract younger individuals, who tend to look for alternative formats. In some markets, this answer is efficiently provided by reality shows and talk shows.

On the other hand, it is important to understand whether the main factor of the audience’s disinterest is the content or the fact that it is consumed in a linear way, which explains why the on-demand offer of channels generalists, even in fiction, is currently competing with streaming platforms. . This means that a paid model may exist in the future for the television content currently available, which in turn has implications for the current subscription offer and the coexistence of these contents with advertising.

M&P: One of the events that will mark the year 2022 in terms of the advertising market is related to the searches made in the GfK due to a complaint of tampering with audiences. Regardless of the conclusions that the ongoing investigation may reach, could the suspicions raised be a thorn in the credibility of the audience measurement system? What will be needed to calm the media agencies and advertisers and what could be the consequences of a potential breach of trust in terms of the distribution of investment in television advertising?

BR: Due to the role I currently have in the direction of CAEM, and in the capacity in which I am answering this interview, I understand that I should not make any consideration regarding this matter.

M&P: In the out-of-home (OOH) sector, 2023 promises to be a year of great transformation in the offer of outdoor advertising in the two main urban centers. The resolution of the calls for tenders for the concessions of Lisbon and Porto, in addition to bringing new actors for outdoor advertising in the largest cities of the country, is giving a boost to the renewal of the media, and accentuates the progressive digitization of networks. How do you expect the outdoor advertising offer to evolve over the next year as a result of this renewal process and what impact do you expect this transformation to have on advertising investment in -sector?

BR: Of the planned changes, I believe that the reduction of positions and the digitalization of the media will have a greater impact, with the possibility of having suitable networks for each advertiser, with greater flexibility of implementation. Regarding digitization, there is no definitive data on the effectiveness of traditional static and digital formats. The main argument in favor of the digital format is the possibility for the consumer to have a diversified, more attractive impact and in an environment where this content is valued as a distraction. On the other hand, static formats have greater content retention, are more visible in the urban environment and contribute to building the brand in the long term. The challenge is for these two formats to coexist without implying redundancy in communication and wasted investment.

M&P: On digital, 2023 brings the announced end of cookies, which makes the date of the first part increasingly decisive for the strategy of brands and for the media agencies themselves. How do you foresee that the end of cookies will be reflected in terms of investment in advertising by digital firms, on the one hand, and, on the other hand, in what will be the investment of the media agencies themselves in the sense that they create tools and are you evolving your business offer to respond to the new needs of advertisers?

BR: Media agencies are an important part of the discussion. The fact that third party cookies are not allowed will imply a new way of thinking about digital campaigns. On the one hand, there will be a retreat to tried and tested methodologies of presence in the content vertical and topics of interest, which are known for the affinity with the user that the brands have identified. On the other hand, there must be a greater commitment to the development of technology (CDP) that allows the integration of offline and online information, for example CRM and DMP.

These platforms will have to be fed with first-party data, through well-known solutions, such as email marketing. First-party cookies continue to exist for their own benefit, in solutions that make it possible to identify the user when browsing platforms with registration and, in turn, create segments according to interests, topics and navigation. A significant part of the advertising investment is made on platforms, global and some local, which means that there will be no retraction of the investment in digital.

The six interviews, which you can read in full here, will be published in the coming days on our website

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