egta CEO & Top Execs Survey: report of selected findings June - - PDF document

egta CEO & Top Execs Survey

Report June 2017

egta CEO & Top Execs Survey: report of selected findings

June 2017 In April 2017, egta conducted a high-level, wide-ranging opinion survey among its 140 members. This piece

• f research was designed to shed light on the priorities, expectations and forecasts of the leaders of some of

the industry’s most powerful and influential companies. The survey sought answers to the following questions:

• What direction is our industry (broadcast and advertising) headed in?
• What threats and challenges are keeping TV and radio CEOs and top executives awake at night?
• What are the most promising opportunities for growth in the coming years?

egta’s survey generated a very high response rate, with more than 80% of surveyed companies’ senior managers taking part. The following report examines some of the trends that can be determined by analysing the responses of European single-market sales houses, a sub-set of respondents that represents the majority of egta members and aligns with the survey’s most comprehensive geographical coverage. Analysis of the complete data-set, which represents the views and opinions of all egta members, including international and non-European companies, is available on request from egta. Concerns, opportunities and competitors European television and radio sales houses rank audience measurement and the lack of a single trading currency, competition from online players in the advertising market and changes to the way young people consume media as their most significant concerns. These concerns mirror the considerable efforts now being undertaken in several markets to modernise television/video audience measurement, as well as the dominance of Google and Facebook in particular in the digital advertising space. Likewise, much of today’s media discussion centres around young people and how their media consumption habits are impacting the media business. Of less concern are some of the issues that are currently disrupting the digital marketplace, such as ad fraud, ad blocking and viewability, suggesting that broadcasters and their sales houses have yet to feel much impact from these. The most significant opportunities for the coming few years centre around two poles: new ways to deliver content to audiences and the targeting possibilities opened by data, while programmatic trading is considered a middle-ranking opportunity. The survey responses suggest that broadcast sales houses do not consider artificial intelligence and machine learning – arguably among the most significant concepts now driving the next generation of data-driven marketing technologies – to be particularly significant opportunities for their businesses yet, suggesting that the television and radio industries are unlikely to be the leading innovators in this field in the near future. When asked to note potential growth areas for the coming few years, respondents overwhelmingly point to digital technologies as offering the most promising opportunities. On the one hand, these relate to digital advertising concepts, such as data, targeting, addressability and programmatic marketing, and on the other

hand, they concern ways to distribute and monetise content, with VOD (subscription and advertising-funded) the term to appear most regularly. Several respondents also see branded content, native advertising, mobile and personalisation as opportunities for growth, along with exploiting new client sectors – e-commerce in particular. Perspectives on the television and radio advertising markets Advertising represents the lion’s share of revenues for most respondents, with a mere 22% reporting that advertising made up less than half of their turnover. Those exceptions to the rule mainly consist of public broadcasters that have other sources of income, such as licence fees, and commercial broadcasters that form part of a larger media entity, such as broadcasters combined with telecoms operators. European television and radio sales houses are optimistic about the future, with more than half (60% for TV, 54% for radio) expecting growth in adspend on their media between now and 2020. In both cases, the majority of these optimistic respondents forecast 0-10% growth over the period. A quarter of respondents (25% for both TV and radio) are rather more pessimistic, forecasting – for the most part – modest declines. For television, the greatest optimism for high growth comes from respondents in Russia, Ukraine, Turkey and Romania, while expectations for the largest decline stem from Denmark and Switzerland. Close to two-thirds of TV respondents’ companies (60%) have been able to increase the price of their broadcast TV advertising inventory in real terms over the past three years, with less than a quarter seeing decreases in price. A similar, if weaker, trend is seen for the prices of these companies’ online inventory. Most TV respondents expect the price of their broadcast TV inventory to increase by 2020, but they are less

• ptimistic about the prices for their online inventory.

A majority of radio respondents, likewise, have seen increases in price for their broadcast radio inventory; however, fewer have seen their online inventory prices increase. Despite this trend, radio respondents are generally positive for the future price levels of both their broadcast and online inventories. Sales house strategies Broadcast, rather than online, remains by far the biggest advertising revenue source for both TV and radio

• respondents. Overall, respondents from both media expect online to take a larger share in the future, rising

from an average of 7% today to 16% in 2020 for TV and from 5% to 15% for radio. These forecasts, should they be realised, would represent an evolution in monetisation strategies and a potential multi-billion Euro shift in the way European broadcasters derive their advertising revenues. 40% of TV respondents indicate that they have recently developed partnerships with telecoms operators, suggesting that this is an important aspect of today’s television business. Partnerships include activities around specific TV shows, content packages, sales on A-VOD and S-VOD and – in one case – the use of STB data for addressable advertising. In a small number of instances, the relationships are deeper, involving buying or taking shareholdings in telcos or undertaking a merger.

39% of all European respondents (representing both TV and radio companies) have either invested in or acquired start-ups. The majority of these relate to digital and data-driven advertising technology in some form, and several respondents note that they engage in media-for-equity deals. Investments in Augmented Reality (16% of TV respondents) and Virtual Reality (21% of TV respondents) are currently relatively rare, and it remains to be seen whether these technologies will emerge as a viable – if niche – business proposition, or whether interest in them will fade, as was largely the case for 3D television a few years ago. Respondents overall indicate that they tend to have at least as much, or more, direct contact with advertisers than they did three years ago. Data strategies Among respondents, the most frequently cited actions undertaken as part of their company’s data strategy include the creation of a dedicated data team, the establishment of first-party data collection and addressable and/or personalised advertising in online video and audio. Fewer than half of respondents indicate that they have prepared for the EU’s General Data Protection Regulation, which is due to come into force in May 2018 and will likely have implications for all European sales houses. While many have recently hired digital advertising specialists, data scientists and social media specialists, only a very few reported that they have hired or appointed a Data Protection Officer, a dedicated position that will be an obligation for certain companies under the GDPR. The use of second and third-party data, and the inclusion of a DMP either as an in-house-developed solution

• r from an external provider, are among the rarest actions to be undertaken by respondents.

More than half of respondents indicate that their companies employ programmatic advertising (which may include automation technologies) for online display and non-linear online VOD. A smaller, but significant, number also employ programmatic for linear/live simulcast online video, online audio and broadcast/terrestrial TV (in some cases, in a test phase). Just under a quarter of respondents indicate that they do not employ any programmatic advertising at all. Research Respondents indicated that, overall, their companies are investing more into research than they were a few years ago, with a small minority reporting decreased investment. High priorities include research into TV and radio effectiveness, followed by audience insights, ROI and comparisons between media. Advertising creativity and – for radio respondents, online audio attribution models – are significantly lower priorities.

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egta CEO & Top Execs Survey

Extracted sub-set of data: European single-market sales houses June 2017

Geographical coverage and response rate

Plus: Kazakhstan: 1

Full survey

Companies surveyed: 118 Companies represented: 95 = 80.5% response rate Valid individual responses: 101

Presented sub-set of data: European single-market sales houses

Companies surveyed: 105 Companies represented: 82 = 78.1% response rate Valid individual responses: 86

• No. companies represented:

29/06/2017 2

June 2017

As a senior decision-maker in your company, how concerned are you about the following issues?

n=86 * Radio and TV & Radio respondents only (n=28) ** TV and TV & Radio respondents only (n=67) European single-market sales houses

0% 20% 40% 60% 80% 100% The positioning of audio* Viewability Agencies' and advertisers' media knowledge Ad blocking The impact of sales automation and technology Competition from SVOD and streaming music providers Ad skipping (in linear and non-linear consumption) Ad fraud Pressure from auditors and clients' procurement strategies Decline in radio listening* Further restrictions due to legislation Lack of transparency & neutrality in trading relationship with agencies Decline in television viewing** Young people's media consumption habits Competition from online players (incl. GAFA) Audience measurement and the lack of a single trading currency

Very concerned Quite concerned Not very concerned

June 2017

How significant will the following opportunities be for your company in the next three years?

0% 20% 40% 60% 80% 100% Augmented reality (AR) and virtual reality (VR) Artificial intelligence and machine learning Exploiting new client sectors Podcasting/on-demand audio* Developing new KPIs for clients Programmatic trading New ways to measure efficiency Increasing direct contact with advertisers New sources of data New ways for audiences to access content Targetability and personalisation Streaming/online audio*

Highly significant opportunity Quite significant opportunity Not very significant opportunity

n=85 * Radio and TV & Radio respondents only (n=28) European single-market sales houses

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June 2017

Please note the significance of the following as competitors to your company over the next three years

0% 20% 40% 60% 80% 100% Other non-broadcast media companies Below-the-line marketing Amazon Non-broadcaster music streaming services* Non-broadcaster SVOD services** Other digital media companies Other broadcasters Facebook Google/YouTube

Highly significant threat Moderate threat

n=85 * Radio and TV & Radio respondents only (n=28) ** TV and TV & Radio respondents only (n=68) European single-market sales houses June 2017

Do you expect the total TV advertising market in your country to grow or decline by 2020?

1% 4% 21% 13% 51% 3% 6%

>20% decline 10-20% decline 0-10% decline Flat 0-10% growth 10-20% growth >20% growth

n=67 TV and TV & Radio respondents only (n=67) European single-market sales houses

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June 2017

0% 25% 21% 39% 11% 4%

>20% decline 10-20% decline 0-10% decline Flat 0-10% growth 10-20% growth >20% growth

Do you expect the total Radio advertising market in your country to grow or decline by 2020?

n=28 Radio and TV & Radio respondents only (n=28) European single-market sales houses June 2017

What, in your opinion, are the two greatest areas of potential growth for the next three years?

n=90

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June 2017

Has your company been able to increase the price of its advertising inventory, in real terms, over the past three years?

0% 10% 20% 30% 40% 50% 60% 70%

Significant increase Slight increase Stable Slight decrease Significant decrease

Broadcast TV: n=65; Online inventory: n=60 TV and TV & Radio respondents only (n=65) European single-market sales houses

Broadcast TV inventory Online inventory

June 2017

Has your company been able to increase the price of its advertising inventory, in real terms, over the past three years?

0% 10% 20% 30% 40% 50% 60% 70%

Significant increase Slight increase Stable Slight decrease Significant decrease

Broadcast Radio: n=28; Online inventory: n=23 Radio and TV & Radio respondents only (n=28) European single-market sales houses

Broadcast Radio inventory Online inventory

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June 2017

0% 10% 20% 30% 40% 50% 60% 70%

Decrease in price expected Prices expected to remain stable Increase in price expected

Do you expect your advertising inventory prices, in real terms, to decrease or increase by 2020?

Broadcast TV: n=63; Online inventory: n=59 TV and TV & Radio respondents only (n=63) European single-market sales houses

Broadcast TV inventory Online inventory

June 2017

0% 10% 20% 30% 40% 50% 60%

Decrease in price expected Prices expected to remain stable Increase in price expected

Do you expect your advertising inventory prices, in real terms, to decrease or increase by 2020?

Broadcast Radio: n=28; Online inventory: n=25 Radio and TV & Radio respondents only (n=28) European single-market sales houses

Broadcast Radio inventory Online inventory

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June 2017

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Advertising Licence fee/taxation Carriage fees Programme sales Subscriptions

Smaller proportion No change expected Greater proportion Not applicable

Do you expect the following sources of revenue will represent a greater or smaller proportion of your revenues by 2020?

n=64 TV and TV & Radio respondents only (n=64) European single-market sales houses June 2017

0% 5% 10% 15% 20% 25% 30% 35% 40% 0% - 10% 11% - 20% 21% - 30% 31% - 40% 41% - 50% 51% - 60% 61% - 70% 71% - 80% 81% - 90% 91% - 100%

What proportion of your company's turnover (broadcaster or group) comes from advertising?

n=80 European single-market sales houses

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June 2017

93% 7%

Current (2017)

Broadcast TV Online 84% 16%

Target for 2020

Broadcast TV Online

What is the current split between your advertising revenues from broadcast TV vs. online; what is your target for 2020?

n=57 TV and TV & Radio respondents only (n=57) European single-market sales houses June 2017

95% 5%

Current (2017)

Broadcast Radio Online 85% 15%

Target for 2020

Broadcast Radio Online

What is the current split between your advertising revenues from broadcast Radio vs. online; what is your target for 2020?

n=27 Radio and TV & Radio respondents only (n=27) European single-market sales houses

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June 2017

21% 79%

Radio

% Non-spot % Spot 25% 75%

TV

% Non-spot % Spot

What proportion of your advertising revenues come from spot advertising vs non-spot/brand integration solutions?

n=61 TV and TV & Radio respondents only (n=61) European single-market sales houses n=28 Radio and TV & Radio respondents only (n=28) European single-market sales houses June 2017

Has your company recently developed partnerships with telco operators?

40% 60%

Yes No

n=65 TV and TV & Radio respondents only (n=65) European single-market sales houses

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June 2017

39% 61%

Yes No

Is your company investing in start-ups (i.e. buying shares in,

• r acquiring, new companies)?

n=83 European single-market sales houses June 2017

16% 84%

Augmented reality (AR) Yes No

21% 79%

Virtual reality (VR) Yes No

Is your company investing in augmented reality (AR) or virtual reality (VR)?

n=63 TV and TV & Radio respondents only (n=63) European single-market sales houses

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June 2017

0% 10% 20% 30% 40% 50% No Yes - new distribution strategy Yes - other content partnerships Yes - development of, or partnership with, multi-channel networks (MCMs) Yes - new content acquisition strategy Yes - new production strategy

Has your company recently changed its content strategy?

n=61 TV and TV & Radio respondents only (n=61) European single-market sales houses June 2017

0% 10% 20% 30% 40% 50% 60% 70% Concluded deals to acquire 3rd-party data from suppliers Developed an in-house DMP Engaged in 2nd-party data partnerships Partnered with an external DMP Addressable and/or personalised targeting (linear radio)* Prepared for 2018 General Data Protection Regulation Addressable and/or personalised targeting (linear TV)** User registration (may include social login or SSO) Hired new profiles Addressable and/or personalised targeting (online audio)* Addressable and/or personalised targeting (online video) Established 1st-party data collection Created a dedicated data team

Has your company deployed the following as part of its data strategy?

n=75 * Radio and TV & Radio respondents only (n=24) European single-market sales houses

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June 2017

0% 10% 20% 30% 40% 50% 60% 70% 80% To power data-driven pricing solutions Content recommendation/personalisation B2C marketing and promotion To meet advertisers' appetite for data

Does your company use data for any

• f the following purposes?

n=66 European single-market sales houses June 2017

0% 10% 20% 30% 40% 50% 60% 70% No Yes - other changes Yes - older target groups Yes - younger target groups

Has your company recently changed its target groups?

n=77 European single-market sales houses

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June 2017

0% 10% 20% 30% 40% 50% 60% No Yes - for broadcast/terrestrial radio (linear) Yes - for broadcast/terrestrial TV (linear)** Yes - for online audio (podcasting/on-demand audio)* Yes - for online audio Yes - for online video (linear/live simulcast)** Yes - for online video (non-linear/VOD) Yes - for online display

Does your company employ programmatic advertising?

n=82 * Radio and TV & Radio respondents only (n=26) ** TV and TV & Radio respondents only (n=63) European single-market sales houses June 2017

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Second quintile less direct contact First quintile less direct contact Middle quintile First quintile more direct contact Second quintile more direct contact

Does your company have more or less direct contact with advertisers compared to three years ago? More contact Less contact

n=63 European single-market sales houses

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June 2017

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Media agency retention executives/managers Advertiser key account executives/managers Media specialists (TV, digital, radio, etc.)

Yes No

Does your company have any of the following dedicated staff roles?

n=80 June 2017

Have you recently recruited people with new profiles or skills?

n=70 European single-market sales houses

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June 2017

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Second quintile less investment First quintile less investment Middle quintile First quintile more investment Second quintile more investment

Has your company increased or decreased the amount it invests in research compared to three years ago? Increased investment Decreased investment

n=57 European single-market sales houses June 2017

0% 10% 20% 30% 40% 50% 60% 70% 80% Attribution models for online audio* Advertising creativity Comparisons between media ROI Audience insights (e.g. millennials' consumption habits) TV effectiveness** Radio effectiveness*

What are your main priorities in research?

n=81 * Radio and TV & Radio respondents only (n=27) ** TV and TV & Radio respondents only (n=62) European single-market sales houses

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June 2017

0% 10% 20% 30% 40% 50% 60% Interactive advertising Advertising delivery Data management Advertising sales automation

Has your company recently added new capabilities to your adtech stack (engaged new technology partners)?

n=89 European single-market sales houses June 2017

63% 37%

No Yes

Have you recently made any other changes to your company's structure?

n=79 European single-market sales houses