COMMENTARY

Virtual Pay TV May Become 'A La Carte' TV

• by Wayne Friedman , Staff Writer, July 6, 2020

There is more evidence virtual pay TV providers may not be a deal for consumers versus traditional pay TV services. Are so-called “a la carte” consumer decisions taking over?

YouTube TV just raised its price an eye-opening $15 to $65 a month. This was followed by Fubo TV upping its packages $5 to $10. Last December, Hulu + Live TV raised its price from $10 to $54.99 a month.

By way of comparison, the average price for pay TV service in the U.S. declined 9.5% from 2016-2018, from $84 to $76, according to Parks Associates. Still, many pay TV packages can be priced near $100.

If you are looking to cater to cord-cutters/cord-shavers, what is the savings here? The answer may be: not much.

Key in the price rises -- to no one’s surprise -- is the cost to virtual pay TV operators to carry major TV content channels. YouTube TV pointed directly to adding a new ViacomCBS agreement as the reason for its price hikes.

When it launched, YouTube TV’s plan was to ensure it had the big broadcast/cable networks for its service, which tend to pull in higher viewers/users. YouTube TV has more than 2.3 million subscribers -- just a tiny part of the overall pay TV provider business.

At the same time, a number of these digitally-based pay TV services are now seeing eye-opening subscriber declines. What is going on?  In January, Sony’s Playstation Vue shut down. Profit margins are thin for many operators.

In part, single-focused, somewhat more narrowly targeted premium apps continue to do well.

This includes Netflix, Disney+, HBO Max, Apple TV+ (with Peacock and a bigger CBS All Access to come), as well as set-top box/smart TV providers like Roku and Amazon Fire TV, which allows consumers to pick and choose what apps (free and paid) they want to use.

The focus here goes back to decades-long complaints about legacy pay TV providers not giving consumers the ability to pick and choose exactly the channels they want.

The lack of “a la carte” buying of individual networks frustrated consumers.TV industry leaders claimed such a system would end up costing consumers more in the end.

No matter. Seems consumers are now picking and choosing their own $5 to $15 individual networks apps. This also includes tacking on growing devices/interfaces. Roku and Amazon Fire TV each claim around 40 million monthly users.

All that is telling TV business streamers something: Even if we pay the same or a bit more, if you don’t give us exactly what we want, we’ll figure out how to do it ourselves.

Something for your local direct clients to consider...as well as local media reps seeking new direct business ideas during this pandemic. Philip Jay LeNoble Ph.D.

Commentary

The Rush To Recovery: Brands Are Sending More Email, And Consumers Are Responding

• by Ray Schultz , Columnist, June 4, 2020

People trapped at home crave email. They want your offers.
That’s the way it looks based on a 22% increase in B2C open rates between May 15 and May 31 compared to those seen in January, says Jay Schwedelson, CEO of Worldata, speaking in a webinar on Thursday.
B2B opens rose by 18% and email newsletter opens increased by 17% during the period, while email sign-ups surpassed January’s by 41% and total inbox activity is up 18%.
What's driving this?
“Email is this place of happy offers and wonderful things,” Schwedelson says.
But Schwedelson warns that it’s time to “suspend what you know to be true.”
Case in point: the use of urgency. Before COVID-19, you couldn’t miss with lines like ”Today only!” But things moved to suable urgency in March and April, as in “Don’t miss out!”
“The game is over,” Schwedelson says. “The sense of urgency is back more than ever.”

B2C emails with some form of a date in the subject line see a 38% lift. In B2B, it’s 41%. And in general, B2C emails with offers that expire have 67% higher response rates and 51% in B2B.
Then there are subject-line words. Here are the ones that are working:

• Free — 41%
• Today — 32%
• Last chance — 28%
• June — 25% 
• Tomorrow — 25% 
• Hours — 24%
• Hurry — 21'% 
• Exclusive — 20% 
• Delivery — 17%
• Home — 16% 
• Remotely — 16%

Note the lift you get for mentioning June..”What’s so important about June? It’s not May,” Schwedelson jokes.
Seeing this, some brands are sending more emails. Before May 20, the typical frequency was a three-times touch over two weeks and two times in B2C.
Now the B2C average is a four-time touch, and three times in B2B. Some marketers are sending the same offer on a daily basis.
And it’s working: Send four times vs. two times, and the increase is 64% in B2C and 47% in B2B.
Will people unsubscribe if you send them too many emails? Here’s why they opt out:

• Receive emails too often — 28% 
• Content is irrelevant — 26%
• Never signed up for the list — 15% 
• My interests have change — 12% 
• Other — 19%

Add it up, and “72% said nothing to do with how much email you’re sending,” Schwedelson notes.
He points to a stat showing that “92% of people who unsubscribe have not opened or clicked an email from that sender for over 12 months.”
Here are a couple of tips. First, make sure the image on your landing page is the same as the one in your email.
Second, stop asking for the person’s work email in B2B. Many people are unemployed — open up your forms to consumer emails.
Schwedelson concludes that “it’s the right thing to do.”

76% Of U.S. Households Have OTT Services, Vs. 62% With Traditional Pay TV

• by Karlene Lukovitz  @KLmarketdaily, 9 hours ago

Three-quarters (76%) of U.S. households had OTT video service subscriptions, versus just 62% with traditional pay-TV services, as of the end of March, according to a new analysis from Parks Associates based on a survey of 10,000 U.S. broadband households.
With movie theaters closed and cinematic productions and live events cancelled or postponed due to the pandemic, “services are lacking some high-dollar content at the same time overall video consumption is accelerating,” says Steve Nason, research director, Parks Associates. “OTT services responded by adding new releases and extended free trials. As a result, OTT subscriptions have increased, while the churn has declined slightly since last year.”
“But we will see, as lockdowns ease, if these strategies lead to sustainable growth or if the OTT industry needs to adjust again to new viewing patterns," he adds.

Of the 41% of households that took trial subscriptions for at least one OTT service in the last 12 months, 69% adopted at least one paid subscription, according to the survey.

"Trial offers can be successful in attracting new users, but as competition increases and household budgets shrink, providers will need to explore new service models, such as making a portion of content free or offering discounts to longer-commitment subscriptions," Nason asserts.
Among all households that report subscribing to at least one OTT service in the last 12 months, the most-cited reason (nearly 30%) was wanting to watch a specific program, followed by being offered a free trial (chart above).

America Reopens: Miles Traveled Approaches Normal

America Reopens: Miles Traveled Approaches Normal

• by Joe Mandese  @mp_joemandese, May 29, 2020

The average number of miles traveled daily per American has climbed back up to 14.0 for the week of May 18, according to the most recent weekly tracking data from Geopath and Intermx.

That represents the sixth consecutive week of increasing per capita mobility since it bottomed out the week of April 6 an an average of 9.7 miles daily

Tesla Being Pushed By Shareholder To Use Paid Advertising

Time to get to your Tesla dealer and create a relationship! Philip Jay LeNoble Ph.D.

Tesla Being Pushed By Shareholder To Use Paid Advertising

• 
  
• 
  
• 
  
• by Laurie Sullivan  @lauriesullivan, May 29, 2020

Tesla shareholders will vote on whether the company will use paid advertising at the company's next meeting on July 7. The monumental move would change the direction of the car company, which has avoided such practices since July 2003.

Tesla CEO Elon Musk has made it clear that he intends to avoid advertising.

Musk, who tends to reinvest the company's revenue in improving products, has publicly said that Tesla will not advertise or pay celebrities to drive its cars. 

The vote to begin buying paid advertising is being pushed by San Diego-based Tesla shareholder James Danforth. In his proposal, he wrote:

“Advertising became necessary the moment Tesla announced in Q1 19 that it would shut down retail stores and start focusing solely on website based sales instead.” He added: “Tesla’s call to action via advertisements will ring loudly and credibly with billions of consumers, many of whom who don’t know who Tesla is at all. This call to action has never been more necessary or important than right now.”

Danforth’s proposal is included in Tesla’s proxy statement. 

Not all agree with Danforth’s proposal. Brand-name recognition sells the car in the case of automakers like Porsche and Tesla. These companies invest the money back into innovation.

“Think of Tesla as a phenomenon and phenomenon don’t need advertising,” said Trip Chowdhry, managing director at Global Equities Research. “It make more sense for them to reinvest the money into innovation.”

Chowdhry said the smart move is to use the money to create innovation, industry and factories because the company sells cars through brand recognition and provides jobs. He said smart companies like Tesla build gigafactories, which are very large manufacturing facilities.

Tesla’s pushback against using paid advertising is not new.

In April 2019, Musk replied “We don’t buy advertising” and “Our competitors do” to a tweet from a first-time Tesla buyer asking Musk how he and Tesla became “bad buys” in the #MSM? “I’m not conspiracy theorist, but there are a lot of other businesses at stake if you succeed I guess.”

The company has used influencers in China to promote its products, but that is about the extent of its use of paid advertising in the past.

AUTO BRAND LOYALTY ON DOWNWARD TRAJECTORY

Might be a good idea to continue an ongoing relationship with you client dealer during these crazy times! Philip Jay LeNoble, Ph.D.

Auto Brand Loyalty On Downward Trajectory

• 
  
• 
  
• by Tanya Gazdik , Staff Writer, 22 minutes ago

According to pre-pandemic research from Mintel, there’s no love lost between Americans and automakers as consumer loyalty is minimal at best.

Over two-fifths (44%) of consumers say they are looking to change automakers for their next vehicle.

Mintel research shows that U.S. consumers are split on the idea of being loyal to one auto brand: 31% agree, 34% disagree, and 35% aren’t sure where they stand. 

When considering the reasons why consumers are switching, poor vehicle experience (35%) is the top reason why they say they won’t purchase their next vehicle from the car brand they currently own. 

Other reasons include: newer technology (32%), cost (26%), and personal lifestyle change (such as having children) (23%). What’s more, given that emotion plays a big role in the car buying process, more than half (53%) of consumers say they feel that their needs are not being understood by car manufacturers, causing them to be brand disloyal.

While these findings were from early this year, just before the pandemic hit., it’s unlikely that much has changed regarding consumer sentiment in regards to brand loyalty. If anything, consumers appear to be assessing brands even more critically in these trying times.

Mintel’s research shows that many Americans are switching to different auto brands because they say their vehicle isn’t reliable and brands do not understand their needs.

“What consumers want from automakers is the same thing they want from any relationship: trust, transparency, understanding and reliability,” says Hannah Keshishian, Mintel automotive analyst.

Loyalty is a priority for automakers, or should be. Companies make huge investments to ensure consumers are repurchasing their vehicles. 

“To clear this divide and create more opportunities for consumer loyalty to take root, automakers must actively work to meet consumers’ needs, demonstrate that they are invested in building a better relationship, and fix some of the systemic issues,” Keshishian says. 

All hope is not lost for automakers as Mintel research indicates certain criteria will help drive consumer loyalty. Top among them is low vehicle maintenance, with 75% of consumers saying this is their top priority when buying a new car.

Manufacturers should also pay special attention to Gen Z and millennial car buyers: 61% of Gen Zs and 64% of millennials say that if they feel that a car manufacturer understands their needs they would be brand loyal. 

At the moment, however, if millennials are going through a lifestyle change such as getting married, having kids, or buying a home, more than a third (34%) say that would encourage them to purchase a different auto brand than their current vehicle.

Despite the fact that other factors outrank brand loyalty for many U.S. car owners, the desire for brand loyalty is there. In fact, more than half (55%) say they would prefer to be loyal to one auto brand. 

However, consumers don’t think that or don’t know if automakers care whether or not they are loyal (55%). Reliability (77%) is at the top of the list for what consumers say leads them to repurchase from the same brand. Pointing again to the role emotion plays, over half (53%) of female consumers said that they would be brand loyal to an automaker if they felt like the brand understood their needs.

“Consumers and auto brands both need to show they’re invested,” Keshishian said.  “If consumers believe that automakers don’t care about their loyalty, then it’s just one more reason to not become brand loyal.”

Car manufacturers need to break away from the industry status quo and doing things simply because that’s how they’ve always been done, she adds. 

“Implementing a consumer-first mindset is the first step to developing brand loyalty,” Keshishian says. “Manufacturers need to be better at addressing consumer needs, making consumers feel understood, and showing that they are reliable through better service at every point in the car buying process.”

BIA Lowers Station 2Q Ad Revenue Forecast

BIA Lowers Station 2Q Ad Revenue Forecast

Its projection drops 5% to $18.5 billion, saying political, OTT and digital advertising will slightly balance the negative effect of the pandemic on local advertising.

The report shows another reason for the need for station ownership and management to make local-direct a primary target for new more profitable and controllable revenue. A great benefit to consumers for local-direct advertising are the shoppers who now can pick up orders "curb-side" from preferred local businesses. Plus...local-direct ad dollars provide higher net margin profitability to the station! Philip Jay LeNoble, Ph.D.

By Mark K. Miller | May 21, 2020 | 6:23 a.m. ET.

BIA Advisory Services has lowered its early second quarter 2020 forecast for U.S. local TV advertising due to the COVID-19 pandemic. Its new revenue estimate is $18.5 billion, broken down to $17 billion for over-the-air revenue and $1.5 billion for digital revenue, compared to the $19.4 billion forecast earlier this year. Overall, the numbers still reflect the election year and a slight increase over 2019.

In addition to accessing the quarterly estimates in BIA’s Investing In Television Q1 Market Report and MEDIA Access Pro, BIA has published a new area in BIA ADVantage offering access to individual Local TV Market Profiles and Station Overviews.

“Local television stations, like all media, will see significant decreases in advertising from many business verticals like travel, leisure and retail,” said Mark Fratrik, SVP and chief economist at BIA Advisory Services. “Political advertising will buffer those decreases in many markets that have competitive senatorial and gubernatorial races and in presidential battleground states. Plus, continued growth in OTT and digital will help to soften the impact of the pandemic on advertising revenue.”

When examining the local advertising marketplace for television stations, areas the least affected by COVID include political advertising, over-the-top and digital advertising. BIA estimates that $7.1 billion will be spent on local political ads through 4Q this year. Of that, over-the-air will get 45.8% share of the political ad spend. Additionally, as political advertisers grow their spend in OTT, local TV owners will also benefit.

The forecast also reflects $10.44 billion in retransmission consent agreements between local television stations and cable/satellite companies/virtual MVPDs expected in 2020. BIA predicts that on a market-by-market basis, retransmission fees will continue to rise, based primarily on rate increases in each market.

Speaking to the forecast, Fratrik says: “Since we completed this forecast in early April, over 25 million Americans have filed for unemployment insurance and there is continuing economic concerns as the country moves to open back up. We expect political advertising will increase very quickly, and we anticipate certain verticals will rebound more quickly than others. It is going to be a dynamic marketplace this year, and we will continually monitor the nationwide and local economies to update our forecast based on new information.”