The end of 2020 is near, and so many of us are longing to close this chapter and move onto a new one, though 2021 is still full of unknowns. Will it be another year of social distancing and working from home? Or will widespread distribution of vaccines return us to a semblance of normalcy by late Q2 or Q3? Is there even a universal “normal” anymore?
No matter what the future holds, the advertising industry will continue to push forward and adapt to whatever our “next normal” is. That being said, what does 2021 mean for linear TV and, more specifically, for linear TV advertising?
I have some thoughts and three predictions.
1. Sports, Sports and Sports—and Little Innovation
The return of sports and the Olympics in 2021 will be a cash cow when it happens. Sales teams will focus their energy on generating demand, and any time and attention that shifted during 2020 to advanced or addressable linear will shift back to high-value programming. Despite the windfall of political advertising in 2020, linear TV ad sales are expected to be down 2.8% this year from 2019, and sellers will be focused on making up for lost revenue from sports cancellations and production stoppages in the easiest way possible.
The likely prioritization of demand generation is also due to many sellers significantly reducing their workforces in 2020. As a result, they’ll be lacking the teams required to sell and operationalize data-driven TV products, as well as the appetite to make significant investments in this area.
2. What Upfront?
With 2021 only a little more than two weeks away, we are in the unfortunate position of beginning the year with uncertainty. This will curtail Q1 and Q2 spending by brands and increase their hesitancy to make upfront commitments to sellers. We’re going to see a shift away from the concentrated power TV sales teams once had to set prices, making the jobs of both buyers and sellers even harder. That’s because a more active scatter market requires more active management of spending and media planning—and fosters greater competition.
The bottom line is that linear TV sellers, particularly National Broadcast, will need to work harder at packaging their inventory to ensure that lower-value inventory is bundled with premium inventory to allocate demand as efficiently as possible in order to maximize yield. This requires the development of new muscle memory, sales strategy and operational prowess—none of which can be achieved without using data to better inform sales planning, pricing and inventory management. I predict that more sellers will lean into improving their planning and sales operations to be more efficient.
3. The SVOD Model Will Peak
In a Beet.TV podcast we recorded together during the week of Thanksgiving, Simulmedia’s Dave Morgan shared a fascinating data point. Of the 128 million homes in the U.S., approximately 42 million, or 32%, don’t have access to broadband internet. At the same time, more than 100 million, or 78%, of U.S. households subscribe to one of the top three SVOD services (Netflix, Amazon and Hulu). With so much of the U.S. population lacking access to high-speed internet at home, there is little room for SVOD services (which require high-speed internet) to grow. Of course, 5G and LTE offer high-speed access, but all-you-can-eat plans absent of throttling are few and far between.
I don’t think this means cord-cutting will hit a wall altogether, but I do believe that U.S. households have a spend threshold on SVOD services that they’re approaching if they haven’t already met—whether they have cable subscriptions or not. (Consider that someone with a $50 monthly entertainment budget could afford two or three of these services at most.) Approaching this saturation point will result in significantly slower year-over-year subscriber growth for SVOD services—and the launch of more and more ad-supported offerings with no monthly subscription fee as a way to gain audience share. (This recent blog post from the Furious team further expands on the subject.)
No matter how you look at it or what you predict, there will be a lot of noise in 2021 again, and we all have to be willing to work together to find the signal. Even without a pandemic, our industry and world have changed—and audiences have adapted at the same time.
I am not a fatalistic person, and I don’t believe the sky is falling for TV advertising. I do, however, believe this is a Cartesian moment for sellers to choose their own destiny. They can innovate, adapt and thrive—or sit back and struggle to survive.
The choice is ours to make.