TV Makers Are Quietly Shoving Aside Cable

Can companies like Samsung establish a more central role in advertising?

Hello!
This week, I’m including a survey on the State of YouTube Advertising with my partners at Precise.TV. The results of this survey will help inform a report on that category coming this October.

Please check it out here:

One of the things I’ve noticed lately is that it’s a pain in the ass to turn on my TV.

I don’t mean the actual buttons - I mean just trying to throw on live television. What used to be a simple task seems to have been deliberately hijacked by my TV manufacturer. In this case, LG clearly really wants me to start my TV journey using its interface, its operating system, before anybody else’s - instead of letting me jump into live viewing.

Yes, before you say anything, I still have cable. I’m not proud of it, but its the only way I can get basic channels I want and also get YES (Yankee games) and MSG (Knicks). Before you start, I’ve explored all these other scenarios up just thought of (Hulu Live, Fubo, Judo, etc.). Cable is just easier.

Anyhow, somewhere along the way, the cable EPG (electronic programming guide) lost its prominence - at least for me (I realize that everyone’s individual smart TV, cable system, wifi connection, remote, etc setup is different). Yes, I can and often do jump straight to Netflix or Amazon through buttons on my remote. But if I want to go to Max or Peacock or just live NBC, I gotta go through LG. And it’s not exactly - perhaps purposefully - very smooth.

This speaks to how the big smart TV manufacturers are getting more and more aggressive in trying to control as much of the TV viewing experience and navigation process as possible.

They seem to have several goals:

• Driving viewership of their own channels

• Building up their own high-margin advertising businesses

• Playing (and monetizing) a larger role in TV measurement and optimization

A recent survey conducted among 2,517 US consumers by Hub Entertainment Research bears this out. The researcher found that while 38% percent of viewers say the first thing they see when they turn on their TV are apps - only 19% see a show in progress from a cable company.

“There is no question of just how important that real estate is,” said Jason Platt Zolov, former HBO executive, now a consultant at Hub.

In some ways, that’s not a huge surprise - consider that 50% of viewers typically open a specific app to find something to watch, per Hub. It doesn’t matter what kind of TV you have when you just want to watch Netflix.

However, consider the Hub found that:

• 26% of respondents said they pick shows featured on their smart TV home screen.

• 24% use their smart TV’s universal search function

• Half (51%) of respondents said that they installed a new TV app based on a recommendation from their smart TV operating system during TV setup.

Clearly, the OS is becoming a vital gatekeeper.

Still, does that make them a major advertising player? What about a legit programmer?
I wrote about this a few months ago a during the NewFronts, when I asked whether it’s better to be a TV portal vs. a TV programmer. I’m still not sure.

I had Michael Scott, VP, Head of Sales & Operations, Samsung Ads, on my podcast this week. One area where TV makers like Samsung seem to have a clear opportunity is to disrupt TV measurement and even currency, even if they claim that is not their end goal.

That’s because Samsung, like most of the TV OS companies, has a lot of proprietary data on what people are watching, and what ads they are seeing.

“We’re in 45 million households,” Scott said. “It would be the biggest single cable operator back in the day. So from that, we're able to see a few different data signals.”

So much so, that you might wonder whether they know their viewers better than say a Nielsen or Comscore.

“Typically, we're working off of delivery from ad servers,” Scott added. “We do still work with some [brands] that want to be able to use some third -party measurement. But for us, where we really add value is the ability to take the insights from our unique data.”

To his point, Samsung has both a product called Optimal Reach, which helps brands with insights across linear and streaming campaigns, along with a 5,000+ person panel called TV & You, which helps brands better figure out who exactly is seeing particular TV campaigns.

LG, Sony and others have similar products and promises. What’s interesting is that just as TV is trying to change its primary currency, its future may be a lot more like digital media - in that you just have to trust the platforms.

However, for these TV makers, I wonder just how great of a business that data/optimization play is. Hub’s Platt theorized that far more money is likely changing hands between TV manufactures and major apps that are pushing subscriptions, top shows, and more importantly, bundles.

“It’s about that home page,” he said

Of course the Samsungs of the world are also looking to push advertising by promoting their own FAST channels. Yes, but to really matter in TV advertising, don’t you need great shows and lots of viewership?

After all, you don’t hear Samsung crowing about how advertising is becoming a huge profit center for its company, like you do with say Walmart. You don’t see Toshiba or Sony suddenly turning on ads and building a billion dollar business overnight like say an Uber.

For its part, Vizio reported that its “Platform+ net revenue” jumped 27% to $160 million during its last quarter as a public company prior to being acquired by Walmart. 80% of that revenue is from ads. Not bad, not a juggernaut either.

For Samsung, Scott noted some brands use Samsung TV Plus Fast service to distribute their own branded content. A few like Mattel even have their own Fast channels.

But the bigger ad sales opportunity for Samsung right now appears to be a tonnage play.

“If you're a volume advertiser and you're just looking for scale and you're looking to be able to control reach and frequency on a weekly basis Samsung TV Plus provides you with a fantastic platform,” Scott said. “We have over 500 channels across a myriad of genres.”

Sure, but you’ve yet to see Samsung, LG, Vizio or others FAST services showing up much on the Nielsen charts. When you have 500 random channels, you could argue, you have nothing that stands out. Which is why I wonder if these guys start making their own shows.

So far, Samsung seems pleased with where things are headed. “I will say that this has been our best ever upfront slash new front in terms of the commitments that we've seen,” Scott said.

I’m surprised that we don’t see the Samsungs of the world more aggressively insisting on selling portions of big TV apps’s inventory. You could make a case that with their proprietary, cross-TV-data, Samsung might even do a better job than Netflix or Paramount.

The challenge always is, how many brands only want to reach Samsung households?

That’s why ultimately, I wonder if you’ll see some kind of Smart TV roll up, or data collaboration. Especially as Amazon and Roku get more aggressive in this space, and Walmart assumes control of Vizio.

In the meantime, I’ll just be flipping around via my cable box.

From flipping to scrolling

I chatted with Canvas Worldwide EVP, Chief Product Office, Greg Johns recently, and we talked about everything from AI’s role in media planning, to whether certain creators will start selling during the upfronts.

I asked Greg about whether his clients see social video - YouTube, TikTok, Reels, etc. - as a true alternative to TV for brands. He said while that question usually results in ‘five different opinions’ his take is that something has fundamentally shifted in both presentation and user behavior that may level the playing field.

“There has been a shift in digital media, with platforms like TikTok and Facebook creating a lean-back experience similar to TV,” he said. “YouTube and TikTok can be considered TV for that reason. The effectiveness of advertising depends on the algorithm's ability to keep delivering relevant content.”

Check out the full interview here: