An Insider View of the US Advertising Market

He spent the last twelve years in America, first working for a small advertising start up and now runs accounts for Snapchat and the University of Phoenix for one of the biggest media agencies in the US.

Two words: challenging, but incredible. 

However, despite the turbulence of the socio-political context it was also surprisingly stable – budgets remained very similar from 2020 to this year. This evidently was not the case for all industries – travel massively suffered whilst streaming saw explosive success. 

One of the big changes we saw was the speed with which projects happened; there was a huge demand for fluidity and flexibility in the world of media because there was a constant need for change.

Streaming saw a huge turnover with numerous people subscribing to accounts, some for only a couple of months to take advantage of the initial deals, whilst others opened several accounts and became ‘multi-streaming channels’.

This depended on the advertiser– older, more traditional industries maintained their established expenditure balance between TV and digital, whilst newer businesses or those with a younger audience, shifted almost completely to streaming. 

In comparison with the past – when streaming was purchased separately to TV, as an add-on – we have recently seen a shift to the purchase of packages.

The CTV advertising rates from Connected TV advertising companies are more costly than linear television impressions. The median CPM for broad­ cast/cable linear television ads is between $10 to $15 CPM while YouTube CPM is around $20 to $25 and CTV CPM is between $35 to $65. 

The justification for the much higher CTV ad cost is the value of the targeting (only spend against your exact audience) and non­-skippable ads within shorter ad breaks result in a less expensive CPCV (consumers completely view up to 95% of the CTV ads) and impact more positively brand health metrics.

Although it’s true that ad breaks in the US are often longer than the TV segment itself, this doesn’t affect consumption. 

However, lots of planning is re­quired in order to not show the same advert too frequently in the space of one show. Oversaturation of the same advert negatively affects customer engagement with a product or brand. It is for this reason that smaller brands without the means to access prime advertising spots who are forced to oversaturate their adverts often suffer. 

This general trend has greatly benefitted streaming services which tend to have a much lower incidence of adverts.

Pre­-Covid, the average American subscribed to two streaming services, and this has risen to around five/ six today. 

Yet, this trend sees no sign of halting; most people have continued subscriptions and many people have stopped subscribing to cable TV in favour of streaming. 

The premium content available exclusively on streaming sites makes this mode of consumption very attractive, as we have seen with Disney+, which has been the most successful over the course of the pandemic.

Yes and no. There was a huge but saturated increase in demand for news coverage which meant prices inflated; the Cost per Click for buying advertising space on Twitter practically doubled. 

However, what had an even larger impact on the industry was the Black Lives Matter (BLM) move­ment. It has completely uprooted the way advertisers think, com­municate and buy. Many brands have changed the way they make purchases in order to support BIPOC communities and funnel money back to black crea­tives – Snapchat insists that a significant part of its digital US budget is spent against BIPOC creators and networks. 

This revolution is anchored in history, so we hope this shift to ethical consumerism will be a long-term change. OMD has been a champion of diversity for a long time and is at the forefront of this movement that is attempting to reconcile the economic divisions between communities despite political inaction.

I reckon that streaming will continue to grow in popularity and will be bought together with TV. The biggest challenge the future holds, which emerged before Covid-19, is the development of new technologies which allow for ‘mass-personalisa­tion’. 

Big brands can access the tools needed to gain nuanced insight into their consumers’ habits allowing for closely targeted ads. Small businesses without the funding to access these new trends will suffer.

This depends on a multitude of things, but in general, older, more traditional establishments main­tain a 50/50 split. 

Meanwhile, new emerging companies tend to have a split of up to 80% balance to digital. It completely depends on who is advertising and how they access their clients.

Streaming will obviously grow, but in general it is quite difficult to say. Without wanting to toot my own horn, Snapchat is one of the current leaders in the industry. It is moving away from being just a social media platform to become a multi­faceted platform, streaming its own content and introducing new technologies and experiences to users. 

For example, the company is launching a new technology that will act as the future image search engine, and new lenses that let the users try clothes from famous stores and then buy them online (a new interactive shopping experience). In fact, what we will likely see happen is that new media will not emerge, but the certain current players will triumph and become global powerhouses.

The key for brands today is to catch up and keep up. Successful brands, like Snapchat need to consolidate their audiences in places where they are already popular and try and obtain a greater market share in places where they don’t have the same audiences. 

In the last year businesses have suffered massive economic losses. Going forwards, brands need to adopt a policy of adaptability to effectively respond to any crisis.

New challenges are constantly emerging, so the OMD strategy teams have developed new processes that allow us to rapidly analyse and understand crises in less than 24 hours to update our buys and strategies that are currently in-market; bringing us immediate flexibility when needed. 

Vincent Cevalte, Senionr Digital Activation Director at OMD USA