Opinion - Generation Media

2023 is set to be a challenging year - and making the right decisions when it comes to media selection will be more pivotal than ever. Arming yourself with the right data and insight to make sense of the ever-evolving landscape will be crucial.

Back in January’s edition we laid out our guiding principles for marketing in a recession. Principle among these was maximizing Share of Voice (SOV) over your competitors, and identifying and focusing on the key battlegrounds for this. The streaming giants Netflix and Disney+, with their new partially ad-funded models, provide the toy industry with a new frontier. As new platforms, they offer the opportunity for early adopters to dominate SOV. Given what we currently know about the platforms however, would this be the right decision?

Despite streaming services experiencing incredible growth during the height of the pandemic, 2022 saw their popularity amongst 4-9 year olds achieve new heights. According to the latest wave of the Giraffe Insights’ Kids and the Screen study, subscription based streaming services accounted for 45% of time spent watching video content in Q4 2022 (this figure stood at 41% in 2021, up from 27% pre-pandemic in 2019). On the other hand, both Live TV and Online Video (predominantly YouTube) control 23% each of viewing time. Looking at this evidence in isolation would suggest that the streaming services warrant the lion’s share of media budgets.

However, this doesn’t take into account what proportion of viewing on Netflix and Disney+ will be on their partially ad-funded services and therefore will be available to advertisers. As most will be aware, the providers are reluctant to share detailed viewership statistics, while commercial audience projections are equally safeguarded. Based on our experience of working with Netflix’s commercial platform to date, and viewing panel data, we are projecting Netflix’s inventory of advertising impressions to grow impressively over the first half of 2023.

Nevertheless, such growth would still leave it a long way short of commercial competitors on Linear TV. By June, we estimate that Netflix’s commercial audience is still likely to be only 9% of ITV1’s total audience, but it may rival channels such as Comedy Central, Sky Max and even the free-to-air Dave:

Disney+ will likely follow a similar trajectory when its much-anticipated ad-funded model launches in Europe (likely to be H2 2023). The key difference will be that the percentage of advertising impressions delivered to children’s audiences will be much higher; not only due to the nature of the platform, but also because it will allow advertising to be run before and during some of its children’s content. To date, Netflix’s stance has been that no adverts can be run against children’s content or when a child’s profile is in use. However, there are some workarounds for toy advertisers, such as running ads in family movies. The problem with this approach is that Netflix is still reviewing and upgrading how advertising is sold, meaning at the time of writing, the best option advertisers have to choose from is either top 10 lists (which attracts a premium price), or genres (which can be very broad, creating high amounts of wastage). Therefore, Netflix will primarily be a platform for talking to parents and gift givers, pitching it against highly cost-effective Social Media platforms for ad spend. This competition will be even tougher when you consider the premium cost placed on Netflix inventory at launch, even in comparison to Linear TV and Broadcast VOD platforms (such as ITVX and All4):

Broadly speaking, Netflix is - on the face of it - an expensive solution for toy advertisers, with sub-optimal targeting options and therefore not something toy advertisers should be blindly investing in with the aim of capitalising on SOV

opportunities. This is speaking on behalf of the toy industry as a whole, which is of course a much more nuanced market. Every product will have its own unique set of variables and targeting challenges which means Netflix, for some, could be a very viable platform for targeting parents and gift givers (in board games, for example).

But what of Disney+? Early indications are that the cost will be less prohibitive, and the targeting parameters more advantageous, meaning it will warrant serious consideration for a greater percentage of toy brands in 2023. The limiting factor in the equation will therefore be the inventory of ad impressions. Based on the projections that it will take Netflix 6-9 months before its inventory level is fully serviceable, even if the ad-funded Disney+ launched in Europe in March 2023, it is likely to take until 2024 before it can be considered a core component for the majority of toy brands (but could certainly play a vital role as support media in 2023).

2023 is set to be a challenging year - making the right decisions when it comes to media selection will be more pivotal than ever. It will be crucial to arm yourself with the right data and insight to make sense of the ever-evolving landscape, so do get in touch with Generation Media if you want support in making a success of 2023.