What Media Consolidation Means for Local Advertisers

NOTE: This blog is a transcript from a podcast and therefore may contain errors.

Shannon Allen: Welcome to Digital Marketing ROI. I’m your host, Shannon Allen, and I’m joined by my co-host, Krystal. How you doing, Krystal?

Krystal Vivian: I’m doing great, Shannon. How are you?

Shannon Allen: I’m good. It’s… gotten through to the holiday. it’s hot. We’ve had a lot of good weather.

I’m back from vacation. We got a lot of good things going.

Krystal Vivian: Yeah, I think it’s been a busy summer, but it’s been a good summer. I feel like we’re just like rocking and rolling. We’re-

Shannon Allen: Yeah. I sent you something back in June, I sent it to the team, that I thought would make for a really good podcast idea,

This isn’t a training session. This is really just what’s coming in digital, specifically in the CTV world. What I want to talk about today was something that really came out in mid-June. It’s, it hasn’t happened yet, but it’s on the table, and it probably’ll take another year. But the big announcement was Fox just bought Roku for about a lot of money.

Krystal Vivian: Yeah.

Shannon Allen: And Roku is- Like 22 billion do- 22 billion. The big thing I want to talk about is what does this mean? Because when I sent this article out, I sent it to the team, and one of the things I said is, “Right now when we do our programmatic CTV, one of the biggest platforms we deliver on is the Roku TV, the Channel, all of that, right? I want to talk about this, and I thought it would be a great opportunity for you to ask me some questions, and we can just talk about what this means as we look at more and more media companies becoming bigger and bigger, we have so many deals that have already happened that were TV groups buying each other out, and they…

There’s a little worry that they’re gonna own everything, and now this is a step in that direction, and I want to talk about that. So-

let’s fire away.

Krystal Vivian: I think it’s super interesting because the digital streaming landscape is ever-changing and ever-growing, and there’s so much happening, and it really does affect how we consume streaming, but also obviously advertisers.

So let’s start with the big picture. So Fox is paying $22 billion for Roku. Fox is a content business, and they’re buying a platform, a streaming platform. Yeah. Walk us through what actually happened, and why you think this is more than just any other media deal that’s happening.

Shannon Allen: Fox actually already owns their own content, right? They own NFL, MLB, they own World Cup, Fox News, Tubi, right? people probably don’t know that. So Roku brings the platform side.

This is the demand side platform. This is how, inventory can be delivered on, right? So more than 100 million households, as well as what is considered first-party data. So that’s the basics. Let’s talk about scale. When you think about this buy it’ll take about a year to be official and legal.

Combined they will become the third largest player in US television by share of viewing, and this viewing is really important. When we talk about viewership, we split it into streaming, which is about 50% of total viewership, and then we talk about linear TV and cable, right?

Linear would make up the Fox, the CBS, the NBC, the ABC, maybe a little bit of CW, right? So those are really fragmented viewerships. You have cable that’s about 18% sitting at right now. So when we look at all of those as a whole their share of viewing, what they decided it was like, “I gotta reach more people the right way.”

They also wanna have a bigger piece of their owned and operated inventory, right? So it is really, when I think about it, it’s an extremely smart move, right? This is not about hardware. It’s really about audience ownership because when we start to look at audience data and what we want, we know who that viewer is and what they like.

So now when we talk about the programmatic world, which is I need multiple platforms to be able to serve the inventory and target the way I want to, if you’re just living on somebody’s, one station or one Fox only, they do have some really good owned and operated content, but what if they could just get bigger and bigger?

Now, they are becoming what I would say is a walled garden, right? The walled gardens we think of, Facebook is a walled garden. Amazon specifically is a walled garden when it comes to Prime, right?

So The pattern we’re seeing is that Paramount is also buying Warner Brothers Discovery.

Disney has folded Hulu into Disney Plus, which includes HBO Max. I’m working with one of our providers right now that, we can buy Hulu by itself, but we can also buy the package of everything, of all their content. So the biggest names are all racing to own more content, but they also want the pipes and the data along with it, which is super smart.

Krystal Vivian: So it’s not about the hardware. It’s not about the TVs. It’s not about the streaming sticks. It’s about the audience. Why is that so valuable that Fox is willing to shell out all of this money?

Shannon Allen: So the reason audience is so important is we know that content is everywhere. So Roku sits in your living room, right? So it is the operating system for TV. We basically know who logs in, we know what you like, we know what you don’t like

And Netflix is a really good example of this, right? You can go to Netflix, it knows your viewer habits, it knows everything you’re doing, it’ll ask you, “Do you like comedy? Do you like this?” You get done watching something, it’ll say, “Do you like more of this?” So what we’re trying to do is really establish a pattern and I would almost link this to the cookies, right?

Cookies is dead, but the way that cookies was tracked at one point is the industry spent years preparing for the death of the cookie, which was we were able to start identifying audiences and what they like by what they were looking for online as we delivered display. Now we’re just replacing that with this logged-in user, and instead of accepting cookies online, now we’re logging in to all of these platforms, specifically Roku, and knowing not only everything that those Fox people are…

now we’ve added 100 million users to Fox that they’re like, “Oh my gosh, this is a gold mine.” We can deliver them whatever we want because we really understand what they need, what they love. It’s Amazon shopping, right? Amazon does such a great job of this. Fox is just leaning into that so that they’re starting to create, in my world they’re their own DSP, right?

They’re becoming a demand side platform that’s stronger than ever before, that’s not just their owned and operated. It’s taking it a step further.

Krystal Vivian: So then that leads into, you had talked a little bit before about walled gardens, and for years CTV is supposed to be this open alternative to YouTube, to Meta, to Amazon, to all of these walled gardens.

With this buy, are we just recreating the same closed system in streaming? Was CTV ever really that open, or is it

just a multiple walled gardens, then you just figure out which one you’re trying to walk through?

Shannon Allen: It’s a scary thing because it is a little bit of both, and this is what I’m struggling with a little bit because I train all the time about how valuable programmatic is, and programmatic is just a fancy word for saying we can collect all these different platforms together, identify an audience, and you don’t care about where they’re watching it.

When it comes to a walled garden, if I wanna layer in Amazon Prime or I wanna layer in YouTube TV or I wanna layer in YouTube on its own, then I have to go through their doors and do it differently. So it becomes fragmented, right? And so the walled garden model is the Google, the Meta, and the Amazon.

They control the data, they control the inventory, and the measurement side inside the walls, and they own first-party data better than before. Roku’s one of the largest platforms that we deliver on as a demand side platform because of that 100 million viewership, right?

So the promise of what I would say programmatic CTV has always been that openness. Buy hundreds of publishers through one independent platform that we can be consistent with targeting, we can control the frequency, we control the strategy. It makes the best sense ever, and so there is a huge value in that.

And so we sell on that all the time, which is why go and decide that all your viewers are sitting there watching everything on CBS or Fox? Why decide that- … when the viewership is so small, when I can go and reach, anywhere from 40 to 50% of viewership and you don’t have to buy four different platforms to get there?

It’s one purchase. So that is where it gets risky. But the truth is CTV has never been fully open, that we’ve always been preparing for this. I think there’ll always be a happy medium, and you have to decide as somebody who is an advertiser what fits best into your plan. I personally think it would be crazy for them to shut down, as large as Roku is and the money they’re making being part of the programmatic buy, it would be crazy to shut that lever off.

But they could also make a higher profit margin if they shut the doors. So the risk really for advertisers is if you can only buy each one platform, you’re gonna lose that cross publisher. You’re gonna lose that consumer journey that we sell so well. And it’s the whole point of digital marketing to me is the consumer journey.

And when you start having to close that off and go directly to that buy, then you have a problem. It’s like in radio, this is the next logical step for radio someday, and you read lots of articles about this, that local radio become programmatic someday so you don’t have to just go to one company and buy or one station.

You have a more of an approach that is more fluid and done what’s right. Especially with everything with AI. There’s companies popping up all over that called AI platforms or AI programmatic that is gathering all the DSPs and doing this for you. It’s the most logical next step.

Krystal Vivian: And truly the best thing for advertisers is that programmatic buy And it will be interesting to see how Fox handles it with Roku because there are all of those other partnerships that Roku has, and they’re playing Paramount. They’re playing NBC Universal.

But let’s take the, devil’s advocate approach, if all of the big players become walled gardens, What does that mean for independent programmatic buying or for an agency like FDS?

Does open buying, programmatic Buying even survive?

Shannon Allen: The short answer is yes, 100%, because this is gonna take a longer time. And I guess the best example I can give is where Netflix decided when they first launched their business model, they were gonna live as a subscription-based video on demand and always live there, right?

And they were gonna be the best at it, and they did for years. And they were affordable. And then all of a sudden they’re like I gotta raise my subscription price to even compete. My numbers are changing. I’m getting less and less viewership,” because we became more fragmented, right?

Netflix was the main game in town when it came to streaming. So they had to change their business model and say, “Look, I’m gonna give you different levels of where you can buy into.” And Peacock followed suit, and, Prime has some of that with bringing in Paramount. So this is why it gets so confusing to the average advertiser.

I just did the training on this in the last month and, this is why I always say the average media person that just sells TV or radio or billboards, the expertise to understand the CTV programmatic world, you have to be a rocket scientist half the time to be able to explain it to a client, right?

Which is why we go back to the consumer journey. So to answer your question, do I think does open buying even survive? Absolutely. We’re always gonna be part of it, and it’s gonna continue to evolve. My guess is Fox is gonna not change a lot when it first happens with Roku. It’s gonna live on its own, and eventually they’ll figure out how to do it.

They’ll probably have different tiers. They’re gonna hold something back for anybody that’s buying first party, and they might open up some of the inventory. But we will get to a point where inventory will be a little bit more scarce, Like the way we sell live sports now, they’re pre-curated lists the way we sell live sports, and there’s only so much inventory available, right?

If it’s a Monday Night Football, there’s only so much inventory. We’re not anywhere near that yet with how much streaming is going on, but that’s probably what it’s gonna look like down the road, is the walled gardens at some point will all be bought programmatic, maybe, but also have different premium levels and tiers.

That’s my prediction. Let’s talk in two years and see if I’m right, but I really believe that’s the takeaway

Krystal Vivian: Let’s bring it back to the topic of our podcast, which is ROI. With all of this consolidation and all of these walled gardens, how does this tie back to revenue, to return on investment for the local business owner?

Shannon Allen: So let’s first follow why they’re spending in the first place. So the whole reason these giants are paying billions is to tie an ad to an outcome. They’re not buying it for content, they’re buying it for advertising, first and foremost. That tells you exactly where to put your attention.

So ROI does not come from owning a platform. For how we take this back to our clients specifically is really back to what I said about the consumer journey. So when you’re placed with options of what you can or can’t do, I’d say, number one, don’t get distracted by these headlines. That means more to me because I wanna make sure I’m staying up to date and when this article came out, I sent a brief to everybody and said, “The reason why our clients work with us is because it’s our job to be the most educative of what this means to them, and why should they care,” right?

What’s the number one thing I tell us? Think about it from your client’s perspective. So am I gonna go out and talk about this with our clients? No, not necessarily, other than to say programmatic is always your best bet because why decide where your consumer is when we can just follow where the audience is?

And, we were on a call with a vendor not too long ago that’s one of our partners, Madhive, and I said that on the call, and he’s like, “Amen,” right? If we all think that way- then that is my job as a marketing agency, a digital marketing agency, to, to kinda unclutter the fog that gets presented to them at all times.

‘Cause there’s a lot of misinformation out there, and Half my job is asking them for reports and billing so I can really clearly understand what they’re buying, and 90% of the time it’s not what you think. And that’s the sad part

yeah. So I know that we just touched on this.

We’ll revisit as it gets, down the road, but I think it’s really interesting. I think it’s great. I mean, I hope Fox is cheering and high-fiving and, it’s gonna make a lot of other guys are all thinking about what’s next, what I can do. But the truth is it tells me that what our plan is at Federated Digital Solutions is following the consumer journey is A1, yeah. We’re number one there. Yeah. Number two is show the ROI, and that comes in our reporting. And so that’s how we differentiate ourself to then go and help business owners that can be very much overwhelmed with, five different people approaching them to try to buy A, B, C, and D. If I can put it all together and make that decision for you and just help you with the strategy- that’s how ROI follows.

Krystal Vivian: Yep, absolutely. There’s always gonna be shakeups like this in the streaming world, and also in the traditional world, like your point earlier. But I think having a trusted partner who can help you navigate through that, it’s like having a financial advisor to navigate the stock market, right?

Shannon Allen: I’m not gonna do it. Yep.

Krystal Vivian: Yeah. Exactly.

Shannon Allen: Thank you, Krystal, and thank you to our listeners for tuning in today, and join us for our next episode of Digital Marketing ROI.

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