2021 has not been without challenges. The media and advertising industries faced a series of surprises and were constantly having to rethink their strategies to adapt to the changing landscape. As we begin to emerge from the pandemic, here at RTL AdConnect, we modestly offer our predictions on the trends that will likely shape our ecosystem significantly in the coming months.
A battle for the best content is causing restructuring
Over 2021 an already saturated video landscape became even more crowded with new players emerging with various offers and business model. This increased competition has turned into a passionate war for content as players vie for consumer’s time and attention.
The biggest streaming platforms are continuing to make astronomical investments in content. Netflix plans to spend over €17bn[1] whilst has Disney+ has announced its intention to produce or commission 60 original series[2], and 15 docuseries or limited series. Not to be outdone, Amazon are relying on their recent purchase of MGM studios.
However, these big platforms are not limiting themselves, encroaching on content traditionally reserved for broadcasters, such as sport. Amazon has already bought exclusive packages for Premiere League in UK, Ligue 1&2 in France, Champions league in Italy and struck an exclusive deal with the NFL to broadcast the 2022-2023 season[3]. YouTube has the rights to the Women’s Champion League whilst sports-platform DAZN has snapped up the rights to all European football leagues in Spain, Calcio in Italy, Champions League in Germany until 2024 and has set its ambitions on more sports and markets.
Traditional broadcasters are not wanting to be left behind in this race, forming national champions through local alliances to compete with these global players. Some examples include: Groupe M6 & TF1 in France, Talpa & RTL Nederland in the Netherlands, RTL Belgium and DPG in Belgium and the merger between WarnerMedia and Discovery in the US.
In Europe, the RTL Group is behind most of these mergers and retains high shares and control in the new entities.
The fragmentation of video distribution and power struggles
Long gone are the days when all you had to do was to plug your TV set into a TV socket to get the content. Internet connection has allowed a multitude of new players to appear and offer video (and sometimes even television) content together with a wealth of features, disrupting the distribution landscape. Broadcasters, both emerging and established have to establish how and where their content is available.
What lies behind the availability on homepages is a real power struggle: the better an actor is placed on a homepage, the more likely it is to attract viewers. If the consumer needs to look for you, there are chances that their interest will be caught by another player before reaching your page. Therefore negotiations are constantly taking place between distributors (i.e: Telcos, Roku, Amazon…) and broadcasters (TV channels, Netflix, Amazon Prime Video…) for the latter to get the best spot on the former.
Of course, when you are both a distributor and a broadcaster, like Amazon or Roku, it is easy. But when that is not the case, it can result in difficult discussions. Several players have resorted to moving higher up the value chain, controlling how their content appears by developing their own hardware and integrating personally managed homepages. Amazon Fire sticks and AppleTV+ have made their own dongles whilst ComCast has gone even further, developing their own Smart TV. They will thus be able to choose exactly which content they want to promote. There’s little doubt they will prioritise their own.
As well as manufacturers’ landing pages, the remote control has also become a critical topic. Having a direct button to your platform is a real advantage but not all players can afford it. And the situation is further complicated because number of producers are considering the idea of replacing the numbers on a remote with these ‘platform buttons’, thus risking to disadvantage the TV channels who would have to invest in their own ‘platform buttons’.
The outcomes of these negotiations will have a huge impact on audience ratings.
RTLAdConnect’s partners are all available on Telcos’ homepages but these tend to be abandoned in favour of smart televisions and other dongles. Whilst some platforms have taken advantage of smart TV, (e.g. RTL Deutschland have a distribution agreement with Roku), others (e.g. Groupe M6) prefer to stick exclusively to Telcos.
One alternative to the third-party cookie is “a renewed version of the former contextual targeting, but more precise as it relies on new methodologies such as semantics and AI”
© Clara Desgrand, Senior Strategy and Development Analyst, RTL AdConnect
Accurate contextual targeting and data matching: the new third-party cookies
Two years ago, Google upended the digital advertising world by announcing the move to the erasure of the third-party cookie by January 2023. Broadcasters and publishers, alongside data providers, are working to offer alternative solutions to their clients, structured around three main pillars.
The first option is a renewed version of the former contextual targeting, more precise as it relies on new methodologies like semantics or AI. The links between words, and not just the frequency of them, are used to help define a context. Although it is fully GDPR compliant and offers huge reach, this solution does not allow personal targeting, frequency capping, or cross-domains tracking. Thus, broadcasters and publishers have developed and extended their own databases with logged-in information, allowing them to offer first-party deterministic data. Some advertisers own strong and accurate data about their consumers so certain actors propose ‘database matching’ for precise targeting. This matching takes place in a secure, GDPR-compliant way, carried out by data providers in virtual spaces called clean rooms. These processes are likely to be democratised over 2022.
Similarly, based on the same need for personal and cross-domain data, the ecosystem is developing identity-based solutions. Whether they rely on single sign-on like NetID or UID 2.0, or on the combination of soft signals, the panel is large and keeps developing itself. These solutions are fragmenting an already complex landscape and will need to be harmonised. The market will look for one new solution which will be the standard for all players.
Most of RTLAdConnect’s partners own huge viewer databases based on mandatory login to watch content. With these databases, M6 Publicité, with LiveRamp and ITV, with InfoSum, are offering advertisers data matching offers in clean rooms. More will emerge in 2022 (IPB, AdAlliance Germany and NL) and extend to new fields like ATV (M6 Publicité).
Breaking competition from retail media:
As a result of multiple lockdowns, e-commerce sites and online shopping have seen a boom. The monetisation of these websites’ inventory has led to the birth of a new trend: retail media.
In the first half of 2021 retail search investments reached €293 million (+41% YOY), representing 12% of the search.
Retail media encompasses retail search and display. Retail search is the monetisation of search engines on ecommerce websites such as Amazon or Carrefour. In France, the Union of Digital Sales Houses (which tracks all ad-spend) found that retail search investments reached €293 million in the first half of 2021 (+41% YOY), representing 12% of the search. Retail display, for its part, refers to the selling of banners, video, and special operations on e-commerce websites and represents 37% of the retail media in France.
Links between the retail world and video advertising are wide-ranging and offer promising potential for broadcasters. Some major retailers have started developing their own advertising-funded video platforms as a means to exploit their data, e.g. Amazon Prime Video or RakutenTV.
Data agreements between RTLAdConnect’s partners and big retailers are already in place as are discussions in other markets.
© Chipotle
New realities and the opening of new advertising opportunities:
The metaverse will undoubtedly be one of the trendiest topics of 2022. While the Chinese Baidu launched its metaverse application at the end of December 2021, the recently rebranded Meta company is working on creating a new world. The fierce battle for consumer’s attention is causing a huge uprooting of the way brands operate.
Some advertising firms have already begun adapting their offers for these new universes. Innovation in DOOH offers addressable adverts, customised to the viewer’s profile in the metaverse. The UK company Ocean Outdoor recently announced they will offer real-world DOOH alongside virtual.
Relying on the same resources and technologies, video games are definitely entering a new dimension. Augmented reality, especially, offers new experiences to players, attracting new players. These parallel worlds are not left out when it comes to appealing to advertisers. For example, in 2021 alone, Roblox, saw the installation of a Chipotle restaurant and exclusive Ralph Lauren outfits within the gaming platform. Following the success of these operations, we expect more to come.
As video games studios continue to tread new ground, they become ever more tempting propositions for big streaming platforms. Netflix, in particular, wants to blur the boundaries between series and games. Assassin’s Creed & Tomb Raider have already been announced to be adapted into series for 2022 whilst some iconic Netflix series are rumoured to be developed into video games.
These new worlds and technologies should remain under close surveillance for the potential they open in terms of new experiences for viewers and new formats for advertisers.
2022 will undoubtedly be a year of profound upheaval in the media industry. The entire value chain of video broadcasting will be reshaped on a huge scale and the audio-visual landscape in December will look nothing like todays. This defining year is sure to create a diverse range of new and promising advertising opportunities for both broadcasters and advertisers.
[1] Sources: Yahoo Finance, “Top US Media Groups Including Disney, Netflix Look to Spend $115B In 2022: FT”, December 29, 2021
[2] Source: Company’s annual report, in “Disney upping content spend to $33bn for 2022; plots 60 unscripted series across platforms” on realscreen.com, November 25th, 2021
[3] Front Office Sports, “Amazon’s Aggressive Expansion into Sports Continues”, June 21st, 2021
