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Heading to CES? I’ll be speaking with the CEOs of two of the biggest global ad agencies on the future of marketing and automation today at 2:00pm at the Consumer Electronics Show. Join us or email me.
1 big thing: Amazon's next ad play
Amazon is quietly piloting a program to let brands like Maybelline and Folgers pay to send free samples to consumers — all based on what the retail giant already knows they're likely to buy.
Why it matters: Amazon thinks the sample strategy will be a more effective ad product than what its biggest competitors — Google and Facebook — can offer.
- Amazon says that marrying old-school samples with its customer data will provide brands "a higher likelihood of conversion than display ads,” according to a job posting for a team leader.
- Display ads are currently how Amazon makes the majority of its roughly $5 billion in ad revenue.
The big picture: Amazon has more than 100 million subscribers to its Prime services, meaning it has established long-term relationships with users.
- Millions more purchase goods regularly from the company, even without a Prime subscription.
- It also has the logistical infrastructure to deliver samples of products that some of its tech rivals do not.
- "Having this huge installed base of users, or really Prime subscribers, and putting something in the box that people will have a high proclivity for liking — that seems like a brilliant Amazon strategy," says Rich Greenfield, a managing director and media analyst at BTIG.
How it works: Samples of new products are sent to customers selected using machine learning based on data Amazon has about consumer habits, according to recent job postings, details listed on its site and industry sources.
- Amazon doesn’t publicize the offering among its other ad products, but its legal terms for advertisers include details about how the program functions.
- “No later than the date specified by Amazon, Advertiser will deliver to Amazon at the location(s) designated by Amazon and at Advertiser’s expense, all Samples to be delivered or distributed by Amazon,” the terms say.
- Of note: Amazon declined to comment.
Between the lines: Analysts predict that offering consumers samples of products in the convenience of their homes also opens up the potential for Amazon to sell more packaged goods and products.
- "I would think this would play in well to Amazon’s efforts to capture more activity from packaged goods companies," says Pivotal Research Group's senior analyst Brian Wieser.
What’s next? A software developer job ad also says the unit’s tech team works to track and automate the ad campaigns with the ultimate goal of enabling “self-service,” which means that in the future, brands can run these type of ad campaigns without the assistance of a human sales representative.
Go deeper: Read the full piece by Axios' David McCabe and me.
2. Exclusive: NBCU is slashing even more TV ads
NBCUniversal is further reducing its prime-time ads and is looking now at other parts of the day to do the same, Axios has learned.
Why it matters: NBCU, like other legacy TV networks, is trying to push away from the old advertising model that networks relied on for decades. Today's consumers hate ads and new advertisers want more digital solutions.
What's new: NBCU will reduce the number of commercial breaks in prime-time TV shows by more than 20% across all of its networks by 2020. Last year it committed to a 10% reduction in ad breaks.
- The company adds it aims to decrease ad breaks during shows outside of prime time, although it hasn't committed to a percentage reduction yet.
- NBCU also is looking to lessen ad loads, or ratio of ads to other content. It previously committed to a 20% reduction in ad load across original broadcasts of several dozen series in 6 of its networks. It now says it will extend that reduction by 2020.
Yes, but: Just because a network commits to reducing ads doesn't mean it always follows through.
- A Pivotal Research analysis of Nielsen data last year found that networks aiming to cut back on ads are having trouble shedding that ad load.
- Overall, total U.S. ad load rose from 2017 to 2018, despite increased calls from ad network bosses to reduce ad load. Per that report, NBCU’s ad load was significantly smaller than some of its peers, but it still slightly increased.
Between the lines: Cutting down on TV ads is only half of the strategy. NBCU is also pushing to simultaneously provide better targeting options and also sell more digital ads.
- A NBCU spokesperson says the company will expand its new lucrative ad format, Prime Pods, from prime time to more shows and time slots.
- Prime Pods help NBCU reduce overall commercial time by letting advertisers reserve ad space for a higher cost during the very beginning or the very end of a show where a viewer is more likely to be hooked.
3. Nielsen vs. Comscore battle heats up
The battle to become the premier cross-platform measurement firm is heating up between Nielsen and Comscore, as Nielsen announced yesterday big updates to a new cross-platform measurement tool that will rival one Comscore launched in beta last September.
Why it matters: Nielsen has been painted by much of the TV industry as being antiquated and slow to evolve. Part of that, experts argue, is because it's lacking real competition aside from Comscore that would pressure it to innovate faster.
Driving the news: Nielsen announced at CES that it's expanding its cross-platform ad measurement tool to include over-the-top streaming and mobile viewing, as well as YouTube mobile audiences.
- It also says the new measurement tool doesn't count the same person more than once on different devices. (Comscore also has "de-duplicated measurement" on the device level.)
- Sources say they are a bit skeptical about the de-duplication methodology used by Nielsen, but there really isn't another perfect solution out there.
Be smart: Nielsen is considered somewhat of a monopoly in the TV measurement business. But despite some networks threatening to cut the service, most still use Nielsen ratings for live TV and now digital TV measurement.
- An ongoing standoff between CBS and Nielsen over a contract renegotiations got some buzz on Twitter recently, but sources say it's mostly a pricing disagreement and analysts don't foresee the spat as permanent.
The bottom line: Despite all these woes, Nielsen's media business is actually doing ok. It's the retail side of its company (selling insights to mostly consumer packaged goods companies about marketing effectiveness) that's taken a hit in recent months.
What's next: There's been reports that Nielsen is starting to seriously consider going private under its new CEO and use some private equity cash to make investments to improve both sides of its business.
4. CES: Connected TV devices eat at TV sales
Fewer TVs are expected to be sold in the U.S. this year, according to data from the Consumer Technology Association (CTA) released at CES. Unit sales of total TVs in 2019 will remain above 42 million units, a 1% decrease from last year.
Why it matters: One reason TV sales are down is because of the "pretty sizable market of media streaming devices that people plug into the TVs," says Ben Arnold, senior director of innovation and trends at CTA. Trade tensions with China could also be a factor, as they could increase the cost of some devices.
What's happening: The rise of full entertainment ecosystems from tech companies like Apple, Google and Amazon including music, video and movies are pushing more users to buy connected TV hardware devices from tech companies to hook up to their existing TVs.
- This is in contrast to buying smart TVs from other manufacturers, like Samsung or LG, that are more expensive.
- "We're finding that increasingly, people and their viewing habits, follow along those ecosystem lines," Arnold says.
Be smart: Traditional manufacturers knows this, which is why they are pushing to add software from those tech giants into their new lineup of smart TVs.
- Samsung announced Sunday that its new lineup of smart TVs will add support for movies and TV shows from Apple's iTunes.
- LG said Monday it's adding support for Apple AirPlay to its new TV lineup, joining Samsung and Vizio.
Yes, but: The undeniable leader of connected TV devices despite this trend, is still Roku, which announced ahead of CES that it will sell subscriptions to premium TV channels like Starz, Showtime and Epix.
The big picture, per Axios' Ina Fried: "The big story — so far — is just how much the big tech companies are partnering with one another. Apple's AirPlay is finding its way onto TVs from Samsung, LG and Vizio, while Google's Assistant and Amazon's Alexa are also landing on a wide range of new hardware."
Go deeper: What's happened at CES 2019 so far
5. CES: Video and voice lead smart home devices
CES is full of an almost overwhelming amount of "smart home" technology.
What we're seeing: Most of it isn't practical, but smart video entertainment tech (smart TVs, digital media adapters, and other IP-connected video devices) followed by smart speakers seem to be popular in smart home devices worldwide, according to data from the International Data Corporation.
Why it matters: Smart entertainment and smart speakers can be a gateway to other smart home devices.
Yes, but: As Ina explains, a truly smart home needs to be more than just connected. "To be sensible and practical, such devices also have to be secure and easy to use, which means more than just adding some wireless technology."
A much bigger topic of conversation at CES this year has been around privacy. For many manufacturers and software companies building "smart" devices, anticipating the regulatory demands of uncertain privacy rules is challenging.
6. Verizon pivots
Verizon CEO Hans Vestberg isn't ready to ditch Verizon's media business, but the unit had better make money without relying on data from the company's wireless and wireline subscribers, he tells Ina at CES.
The former AOL and Yahoo businesses "need to survive on their merits," Vestberg says of the company's 3 businesses — consumer, business and Verizon Media Group (neé Oath).
Why it matters: It's a sharp departure from the company's original premise for buying Yahoo and AOL: that it could use its detailed data on subscribers to take on Google and Facebook, which together dominate digital advertising.
- While Vestberg says he sees opportunities in content — and advertising more broadly — he argues the company needs to take seriously the responsibilities it has to those paying it for network services.
- "We're not trying to mimic a Facebook or Google," he says. "We don’t think that's the right way to do that."
Flashback, January 2018: Verizon's Oath has a new data plan to take on Google and Facebook.
7. Trump sets new precedents on free speech and free coverage
All of the major television networks (NBC, CBS, ABC, PBS) as well as all of the major cable networks (Fox News, CNN, MSNBC) say that they plan to cover President Trump's prime time address on border security on Tuesday, per CNN. Democrats are demanding equal air time for a rebuttal.
Why it matters: The airing of the address has sparked a debate amongst journalists about whether networks should carry Trump's remarks live, if the president has a tendency to twist facts and lie in these types of situations.
- Be smart: Some operatives have suggested that networks ask for a copy of the speech ahead of time, so that they can prepare to fact-check the president's comments in real-time or decide to pull the address from the air altogether.
- The bottom line: Via WashPost's Karen Tumulty: "Journalists are going to fact-check every word of Trump's nationally televised speech. And it won't mean a thing to his supporters. Which tells you everything you need to know about 2019."
Meanwhile, a Virginia circuit court ruled Monday that government officials can't block constituents on social media accounts that they use for official business, arguing that if officials can't block people from physical forums in the real world (like town halls), they shouldn't be allowed to block them in virtual forums either.
- The case has big implications for an upcoming circuit court case on whether the president can block voices he doesn't like from his official @realdonaldtrump Twitter account.
My thought bubble: Both of these instances show ways U.S. institutions have really had to evolve during the Trump presidency to account for the new realities of a social media-savvy president. It's safe to say if these issues aren't addressed now, they eventually will be down the line.
Worthy of your time: Alexandria Ocasio-Cortez Is A Perfect Foil For The Pro-Trump Media (BuzzFeed News)
8. 1 🏈 thing
Across the country, 90% of local broadcast stories about high schools' athletic state championships were about football, according to a new report from the National Association of Broadcasters, provided to Axios Media Trends.
By the numbers: In total, local broadcast networks aired a whopping 180,000 stories about high school football state championships versus 20,000 about other championship games.