Future of TV Briefing: Why Latin America is so big on the ad-supported streaming market’s radar

Latin America grows FAST

The free, ad-supported streaming TV market has grown pretty drastically in the past few years. But it’s growing even more dramatically in Latin America, to the point of already rivaling more established markets like Europe. 

For ViacomCBS’s free, ad-supported streaming TV service Pluto TV, Latin America is “our second-biggest region outside the U.S.,” said ViacomCBS Networks International COO and president of streaming Kelly Day. 

That designation is especially notable considering that Pluto TV only launched in Latin America in April 2020, starting in 17 countries and expanded to Brazil in November. By the end of 2020, its app had been downloaded more than 19 million times in the region. Day declined to say how many monthly active users Pluto TV has in Latin America but described the audience segment as “a very significant portion” of the service’s non-U.S. monthly active user base. In total, Pluto TV has nearly 50 million monthly active users worldwide.

“If you look at the growth in streaming consumption and usage — both on the free and [subscription-based] side of things — it really has been taking off in a really substantial way in the last year. It’s now one of the fastest-growing video markets in the world,” Day said.

The fastest, in fact.

In the first quarter of 2021, the amount of time that people in South America spent streaming shows and movies increased by 240% year over year, and 63% of that viewing happened on a TV screen, according to video measurement and analytics firm Conviva.

The key hits:

• Streaming viewership in Latin America has surged in the past year.
• Ad-supported streaming viewership, in particular, has risen to rival more established markets like Europe.
• Adoption among advertisers, however, has been slower.
• But ad-supported streaming viewership will likely only continue to grow given Latin American audiences’ appetites for ad-supported programming.

In light of Latin America’s streaming viewership surge, media and entertainment companies are upping their efforts in the region. Pluto TV, for example, has increased the number of channels on its Latin American service to more than 90, and on May 4, the company rolled out three new channels for Spanish-speaking countries in the region and three for Brazil. Meanwhile, Samsung’s FAST service Samsung TV Plus debuted in Brazil in December and expanded to Mexico in January.

Companies in the free, ad-supported streaming market are not the only ones taking greater notice of Latin America and the broader Latinx audience. WarnerMedia plans to develop more than 100 Latin American original shows and movies over the next two years. NBCUniversal’s NBCUniversal Telemundo Enterprises has formed a production studio specifically to produce streaming shows for Latinx audiences in the U.S. and internationally. And in March, Univision — which is merging with another major Spanish-language media company, Grupo Televisa — launched its free, ad-supported streaming service PrendeTV in the U.S.

For Jukin Media, Mexico and Brazil represent the media company’s fourth-largest supply of ad inventory behind its U.S. sources, according to Mike Richter, director of programmatic partnerships at Jukin Media. “We’re averaging right now in Latin America about 300,000 to 400,000 ad pod requests per day. That equates to [roughly] 1 million available 30-second [ad] requests,” he said. By comparison, in Europe the company is averaging 100,000 requests per day across 10 countries. “From an adoption perspective, it is taking off,” Richter said.

Adoption is somewhat slower on the advertiser side, though. A streaming executive who manages multiple FAST channels said that since December the channels’ volume of available inventory in Brazil has already grown to rival their more established channels in Europe. In the first quarter of 2021, the European channels averaged 4 million available ad impressions per day, compared to 3 million available ad impressions per day for the Brazilian channels. However, the company was able to sell 40% of the European ad impressions, on average, but less than 10% of the Brazilian ad impressions (for comparison, the company typically sells 70% of its U.S. channels’ inventory, which averages 40 million available impressions per day). 

“All the tech and ecosystem are just not quite there yet” in Latin America, the streaming executive said.

As can be expected with any emerging market, advertisers typically take some time to follow shifts in audience behavior. They not only want to learn the nuances of that new behavior to understand which aspects of their existing strategies can be applied and which need to be updated, but they also want to learn how the ad opportunities may differ. When it comes to the Latin American streaming ad market, the process is no different.

“We are in a phase where we need to start sharing different specifics of [streaming] or connected TV to the advertisers. The same thing happened with digital,” said Charlie Alvarez, svp of global delivery for Publicis Groupe’s PMX in Latin America. Specifically, advertisers are looking for stats on ad-supported streaming viewership in Latin America, the advantages of reaching audiences through streaming versus traditional TV or other media and breakdowns of the available ad placements and formats, he said. The comparisons to TV as well as digital video platforms like YouTube are particularly important.

“In many cases, regular or open television is a cheap way to deliver to homes with low CPMs and is still where a major focus is in terms of video,” said Benjamin Gomez, president of PMX Latin America. Similarly, YouTube and Facebook provide large video audiences at low prices to compete with traditional TV, whereas on the streaming side, “Netflix is the only one with high penetration, at least anywhere that can compete with local television,” he said.

That’s changing, however. Multiple executives interviewed for this article said that viewers in Latin America are more interested in free, ad-supported programming than audiences in other markets. “Purchasing power is limited in Latin America, so there’s more appetite for advertising in order to consume content,” said a second streaming executive. 

In a survey of 4,000 people in Brazil, Argentina and Mexico conducted by Harris Interactive in January 2021, 74% of respondents said they prefer to watch free or lower-priced ad-supported programming. It’s worth calling out that the survey was commissioned by ad tech firm Magnite, which is trying to make CTV a bigger part of its business. But the aforementioned ad availability stats seem to substantiate the survey’s results — and why media and entertainment companies are making Latin America a bigger priority. 

“That’s the exact same thing we saw in the U.S. five, six years ago,” said Jukin Media’s Richter.

Confessional

“[NewFronts] has become way too much work because to literally take all that time out of our days is a lot. Clients are pinging you, ‘Hey, what about this Roku OneView?’ And I’m like, ‘Yeah, we’ve talked about that like five separate times. You’re just now paying attention?’”

— Agency executive

Stay tuned: MRC checks Nielsen’s math

After trade organization the VAB alleged that Nielsen undercounted TV viewership during the pandemic, agency executives said they wanted the claim to be substantiated before TV networks use the allegations to claim they fulfilled (or at least came closer to fulfilling) their viewership guarantees and to push for higher prices in this year’s upfront negotiations. Well, now the Media Rating Council — the advertising industry’s de facto measurement arbiter — has weighed in.

Nielsen’s measurements did, in fact, fall short by 2% to 6%, the MRC announced on May 10. There are a couple important caveats to consider, though.

• The MRC only said that Nielsen understated viewership for February 2021.
• The measurement shortfall only applies to viewers between the ages of 18 and 49 years old, which is the prime age ranger for TV advertising.

So what does this mean? Well, it means the allegations by the VAB — and by extension its TV network members — have been substantiated. The MRC’s findings only apply to one age group in one month, but it’s a significant age group and a month that featured the Super Bowl. And, it leaves open the possibility that Nielsen may have undercounted viewership in other months and for other age groups.

More to the point, it means that a tight TV ad market bracing for a tough upfront negotiation cycle may have just gotten a little more tense.

Numbers don’t lie

$100 million: How much money YouTube will spend to pay creators over the next two years to create videos for its TikTok rival YouTube Shorts.

-54%: Year-over-year decline in AMC Networks’ content licensing revenue in the first quarter of 2021, in part, because of pandemic-related production delays.

53.6 million: Number of active Roku accounts, a 36% increase year over year.

36 million: Total number of streaming subscribers that ViacomCBS has across properties including Paramount+ and Showtime.

Trend watch: Streaming “roadblock” ads

The ad-supported streaming industry is increasingly resembling the traditional TV industry.

Connected TV platforms are the new Comcast’s and Charters. Free, ad-supported streaming TV services are the new cable TV networks. And people are often watching streaming programming on TV screens. But a stalwart of traditional TV that has not quite made its way to streaming is the ability for advertisers to reach a large number of people at a given time. That’s changing, though.

During its presentation at the Interactive Advertising Bureau’s NewFronts event on May 6, NBCUniversal unveiled an ad format called Spotlight for its Peacock streaming service that allows an advertiser to have the first ad served to anyone tuning into the streamer during a given period of time.

“It’s a way to combat that [idea that] streaming is not as big as prime time,” said one agency executive. To reach the same number of people tuning into a prime-time show on broadcast TV, an advertiser may need to run an ad for weeks on a streaming service, this executive said.

To be clear, NBCUniversal did not invent the mass-scale, time-sensitive streaming ad format.

• Spotlight is a streaming-specific spin on traditional TV’s “roadblock” format, in which TV network groups like Disney set an ad to run in a certain timeframe across their various TV networks.
• Hulu had adapted the format back in 2009 when the dominant ad-supported streamer was best described as a “web video site.”
• Discovery introduced an ad program in 2018 called Discovery Premiere that offered advertisers exclusivity for a specific set of shows’ premiere episodes, whether people watched them on its linear networks or digital properties.

The streaming roadblock ad format may not be new, but it may become more common, as major ad-supported streaming services build their audiences and can confidently secure a certain reach threshold for an advertiser on a given day and date.

“Advertisers will always love day and date because people are people and have behavior and habits that advertisers want to take advantage of,” said Scott Schiller, a former NBCUniversal ad sales executive who is now global chief commercial officer at Engine. He added, “Day and date gives the advertiser the opportunity to have mass scale at a time and be a focal point.”

Traditional TV may be a cost-effective way to reach a lot of people in a time-sensitive manner. But with Spotlight, NBCUniversal is betting that Peacock can pull off a similar feat. And with viewership for major live TV events like the Super Bowl and the Oscars declining, the bar for streamers to meet isn’t quite as high as it once was, creating a newer opportunity for streaming ad sellers to siphon advertisers’ money away from traditional TV.

“They know that we need scale,” said the agency executive.

What we’ve covered

In this year’s TV upfront market, agency executives expect a return to business as usual:

• After last year’s relatively congenial negotiations, ad buyers expect TV networks this year will try to make back the money they felt they left on the table last year.
• Linear TV ad price increases and flexibility demand extensions will be two of the biggest points of contention.

Read more about the TV upfront market here.

NewFronts’ final day showcased the merging of TV, streaming and social video:

• The event’s fourth and final day featured a social video platform, publishers and a TV network group sharing the virtual stage.
• Nearly every presentation flaunted the targeting tools and first-party data that large media publishers and platforms have at their disposal.

Read more about NewFronts’ fourth day here.

Social platforms and publishers retook the NewFronts stage on the event’s third day:

• Creator-driven short-form shows shared on social platforms took the spotlight.
• Platforms and publishers also highlighted the importance of diversity and inclusion.

Read more about NewFronts’ third day here.

Shoppable video and cookieless targeting steal the show on the second day of NewFronts:

• Condé Nast and Verizon Media pitched their attempts to make it easier for audiences to buy products seen on screen.
• Cookieless targeting options were also a major talking point.

Read more about NewFronts’ second day here.

What we’re reading

Podcasts are the new after-show:
TV networks and streaming services are adopting podcasts as a complementary means of promoting shows and movies and extending their share of audiences’ time, according to The Hollywood Reporter. WarnerMedia’s HBO and Netflix are among the companies to get in on the trend. Still to be sorted out is to what extent movie and show makers are able to cash in on the trend. Per THR, some HBO filmmakers didn’t receive extra money for their podcast participation because the TV network considered it part of their promotional commitments.

Netflix calculates its “plus” strategy:
The “plus” trend may soon claim Netflix. According to Protocol, the preeminent streaming service is surveying people about a project called “N-Plus” that may be the company’s move into podcasting and other complementary programming. The surplus of pluses is already a minus on the symbol’s titular significance (except in the case of Digiday+, of course). Netflix’s potential addition to the mix  will likely only encourage more companies to follow suit or to try their hands at other mathematic operations. HBO to the Max?

NBCUniversal’s regional sports networks face relegation:
NBCUniversal is trying to figure out whether to distribute its regional sports networks on Peacock or sell them off altogether, according to The Wall Street Journal. Owning a regional sports network at the moment seems akin to hanging on to GameStop stock. Sinclair Broadcasting has a whole host of regional sports networks that have been losing distribution from streaming pay-TV services including Hulu’s live TV service and YouTube TV and accumulating billions of dollars in rights fees owed to teams. Meanwhile, with viewership shifting to streaming, it’s becoming harder for regional sports network owners to recoup their money through the traditional combination of pay-TV carriage fees and advertising.

Cable news confronts post-Trump era:
Several months into the Biden presidency, cable TV news networks are coming to grips with the impact of the Trump era, according to Vanity Fair. The central question seems to be whether viewership will ever return to the peaks of the past four years, and the consensus answer seems to be no, or at least not on traditional TV. News networks seem like they should be O.K., though. They’ll need to recalibrate their costs as traditional pay-TV revenues erode, but as streaming news outlets like Disney’s ABC News Live and ViacomCBS’s CBSN have shown, the flexibility of streaming may be better suited to adapting to the news cycle.