‘Brands tend to be selective’: OMG report offers options to media buyers facing upfront inventory crunch

Complicating matters is the strong desire on the part of advertisers to get back to spending on brand advertising. MAGNA’s most recent Ad Forecast in March predicted a $240 billion U.S. ad marketplace in 2021, which represents a 6.4 percent increase over 2020. Television, including broadcast, cable and long-form AVOD will grow collectively by 4 percent, according to MAGNA.

So what are marketers, and the agencies that negotiate on their behalf, to do? Omnicom Media Group recently issued a report to its clients that paints a grim picture of diminishing returns on linear TV (40 percent erosion of adults 18-49 gross ratings points from 2015-2020) and suggests the following alternatives for advertisers:

1.  Diversify ad spend across OTT platforms, including the streaming services of the major broadcasters. Though negotiations may be tougher this year, with the major broadcasters trying to secure better value for their streaming options, shifting dollars to the likes of Peacock or Paramount+ will help with frequency issues and makeup for the audience shortfalls on traditional TV.
2. Consider alternatives like content integrations, custom content and sponsorships. The opportunity to embed messaging directly into the content has the potential to carry the message across platforms. OMG even recommends expanding on these opportunities over the next few years.
3. Expand video investments beyond traditional media sellers, including the bigger resellers such as YouTube, Roku or IMDb, among others.  

Ben Hovaness, OMG senior vp and director of market intelligence, and one of the report’s authors, sees a sea change of sorts with this year’s market, which will only become more pronounced in the future. Ultimately, the shortages of valuable inventory both in linear and the major streaming services require this more varied approach.

“When we look at pricing, there are enormous spreads between what we’re paying for long-tail user-generated content and some of the long-tail channels on Roku, for example, versus what we’re paying for premium scripted content. I think there’s a supply crunch on the latter, [and] we’re not as convinced there’s as much a crunch on video ads on connected more broadly,” said Hovaness. “It’s just that brands tend to be selective about the context in which they want to appear.”

His ultimate recommendation to clients and buyers alike: if you need to be on TV, think more broadly across that long-tail environment, where there’s a much larger pool of inventory and better pricing and negotiating options.