Wible's Weekly: Social, Mobile, and Cord Cutting Updates - Janney/MediaEntertainment

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Mobile Advertising – FB has restarted a mobile ad network test that would display ads on 3rd party sites and apps based on a FB user's activity on FB. Separately, GOOG noted that YouTube mobile viewers are three times more likely to watch a pre-roll and click on it vs. skipping, if they have the option to skip it (advertisers only pay if ads are clicked on). GOOG shared that mobile now constitute 25% of YouTube views and noted that TrueView ads are used for 86% of the site's ad inventory. Lastly, research by IAB/Ovum shows that brand budgets for mobile have grown 142% in the last 2 years, and the use of rich media in mobile has grown to 35% from 19% of marketers in 2011. However, only 19% use mobile video advertising currently, leaving ample room for growth.

Cord-Shaving Survey – OTT viewing is on the rise, although cord-cutters comprise less than 5% of consumers, according to consulting firm Altman Vilandrie. The research noted that: 1) 26% of subscribers have cut back on services such as VOD, 2) over 40% of subs under 35 are seriously considering dropping cable service, 3) 80% of this group watches TV shows and movies online weekly, and 4) only 32% are aware of MVPD TV Everywhere offerings. While we don't see an imminent demise of pay TV, this study reinforces some of the risk facing the industry if prices continue to rise while cheaper online alternatives improve.

Programmatic Ad Buying – Automated ad exchanges have become key to AOL's video ad strategy. In addition to its recent acquisition of Adap.tv, AOL participated in the first "upfront" for programmatic ad buying, sealing deals with several ad agencies. AOL predicted that programmatic ad buying could become a $100 billion industry over time - driven by its ability to let buyers target large audiences across multiple sites/publishers. AOL also committed with partners MSFT and YHOO to converge on API specifications that will help automate display advertising for premium ad inventory. Although it may aim to gain market share from TV, we do not see any significant shift given the separation of ad budgets and the distinct advantages/disadvantages of each platform.

Social Media – Twitter is amplifying its ad platform as it prepares for its IPO via deals with CBS and the NFL. CBS will use Twitter to showcase content from 42 products (including TVGuide.com and its fantasy football site), which in turn will help sell more advertising and increase the reach of its advertising. Twitter is also teaming up with the NFL to provide game highlights and is pursuing an initiative to get Wifi access in all stadiums for the attending fans. This relationship may also allow it better monetize The Super Bowl.

Tony Wible joined Janney Montgomery Scott in 2008 and is a Managing Director covering the Media and Entertainment sector after spending the previous 10 years at Citigroup Investment Research—most recently covering the Broadcasting and Entertainment Services industries.
Tony can be reached at twible@janney.com.

Janney Montgomery Scott LLC, is a U.S. broker-dealer registered with the U.S. Securities andTony WibleExchange Commission and a member of the New York Stock Exchange, the Financial Industry Regulatory Authority and the Securities Investor Protection Corp. Disclosures may be reviewed at Wible's Weekly.

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