Myers/Nathanson: How the Challenges of 2020 Will Inform Advertising and Media Trends in 2021

The two renowned forecasters agreed that while the media economics of the past six months could hardly be called good the third quarter for the advertising sector has been surprisingly strong Both expressed that the Upfronts had gone off as fairly quotnormalquotamp160with several longterm Upfront marketers wanting to keep their historical positions rate bases and a focus on increased flexibility in cancellation options as the biggest change According to Myers quotTaking out categories like Travel and QSRs that have obviously been hurt it39s only 10 down dollar for dollar vs the anticipationamp160of being up 5 It was not the radical decline that the networks initially experienced when the lockdown began CPMs at the big broadcast and large cable networks were up low to midsingle digits which may have been lower than they would have been without the pandemic but still not in negative territoryquotNathanson does believe that the pandemic has caused a permanent shift in both media consumption and marketer ad spend due primarily to the dramatic move to eCommerce quotIn two quarters we just saw four percent of all consumer spending shift to eCommercequot he says quotYou just had billions of dollars shift That39s a big deal eCommerce39s share of all retail went up 430 basis points That39s as much share shift in six months as there had been in the previous four yearsquotWho does Nathanson see benefiting most in advertising from this share shift The walled gardensamp160Facebook Googleamp160and Amazon quotNearly 100 of the growth in online advertising that we have seen in this downturn has been Facebook Googleamp160and Amazonquot he notes quotWhat Facebook has achieved in the past few months is remarkable Editor39s note This despite a wellpublicized but seemingly impotent advertiser boycottamp160We39ve raised our forecast for digital ad spend especially Facebook because these are the companies that are best positioned to take advantage of this massive shift to eCommerce This will be the narrative for the next three to four yearsquotBolstering that position Nathanson points to the marketplace changes around privacy and data that may negatively impact the open marketplace quotPart of the big 39aha39 here is that Amazon Googleamp160and Facebook are walled gardens As it becomes harder and harder to target us through either the new Apple OS or through the end of cookies by Google or from privacy law changes those big three platforms just have better information They have the dataquotAccording to Nathanson quotWe are now seeing cord cutting around six to seven percent In the next few years we could be seeing 5060 million homes that are not in the cable bundlequot Crediting his partner Craig Moffett he says quotThere39s a second cycle comingquotHe explains that the first wave of cord cutting was triggered by nonsports fans who when given OTT options like Hulu Netflix and Amazon realized that the bulk of their cable bill was going to content in which they had no interest Now in order to stay competitive with companies that have committed huge production budgets like Netflix and Amazon traditional media companies such as Disney CBS NBCU WarnerMedia Discovery and others are going to have to redirect resources into supporting the voracious appetite of consumers for new content on these platformsquotOn programming they are going to do more to get you excited about their over the top productquot Nathanson asserts quotSome of it is noncommercial and they are going to try to drive people to these new products It is going to even further weaken the entertainment offerings in the bundle making the bundle really all about live sports news and events That39s the next few yearsquotTo be continued in Part 2 of MyersNathanson Round 3To watch the entire video discussion with Jack Myers and Michael Nathanson you can access the content on MediaVillage hereClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNetamp160

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Myers/Nathanson: How the Challenges of 2020 Will Inform Advertising and Media Trends in 2021

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Jeff Minsky

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