Fluidity: The Art of Letting On-Demand Video Costs Flow Upward

It is said that Louis XIV was obsessed with dress codes. He demanded that his court was always appropriately dressed for any occasion. It is also said that this obsession made the noblemen and women play a continuous catch-up game with the latest fashion to assert their position in the court. Those among the chicest, …

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It is said that Louis XIV was obsessed with dress codes. He demanded that his court was always appropriately dressed for any occasion. It is also said that this obsession made the noblemen and women play a continuous catch-up game with the latest fashion to assert their position in the court. Those among the chicest, were close to the King. Perhaps King Louis also understood something about politics. While he kept the court busy with concern for dress codes, he felt less worried about conspiracies against him.

One of the fun things about working in an ecosystem full of communications people is that language evolves quickly. You are always playing catch-up with the latest buzzword. An unspoken goal of every ascending advertising professional is to drop one of those words at a Zoom meeting– as if it’s obvious that EVERYBODY is talking about it– and see the other faces turn to a paler shade of “what the heck is s/he talking about?”. Most will discreetly turn off the camera and frantically google the word. And when they return, they’ll look for the first opening to talk about what they just learned… as if they were fully involved in the topic from the very beginning. Who wants their place in the court to be in jeopardy for not having language improperly dressed for the occasion?

And if you are waiting for herd immunity to keep you safe, forget about it. If you are not part of the solution, you are most definitely part of the problem.

In the same way that Engagement, Transparency, Viewability, and so many other words entered our vocabulary at a certain point, ‘Fluidity’ is now making a debut. You’d better be prepared. If you are just an advertising courtesan, know what it means and look good saying it with confidence. If you are a decision maker worried with the efficiency of your costs, try to figure out what is behind it.

About the explicit meaning: Fluidity deals are agreements by which a network can deliver on its audience commitments either through its linear venues (say TV and risk to be banished) or any of its on-demand platforms. In other words, if a spot planned to air in a show tomorrow fails to harvest the expected impressions– (and it will!), the network can compensate the advertiser with impressions delivered online by that show or any other in the cohort established in the deal structure.

There is something intuitively good about this type of deal. Rather than relying on the chance of finding a person who happens to be 10 feet away from the screen at the exact moment the spot airs–(remember that buzzword “appointment viewing”?), the said spot is shown to viewers who specifically choose to watch something at that very moment. Did you hear “Cross-Platform” or “Omni-channel”? Yes, I did too. I’m only missing ‘TV Everywhere” for Bingo!

That is exactly what media vendors want you to think: you will start receiving a higher quality audience for your spots, and you don’t even have to issue a different IO (insertion order). They will be a natural outcome of the linear buy you are used to placing. And since you are such a good client, they will do it at the same price.

How nice of them!

Let’s dig into a small comparison between Linear and On-Demand.

Back in 2018, a Prime Time CPM in a major National Broadcast TV Network would cost, let’s say -just for the sake of argument- $50. A spot in the VOD/FEP space in the same network, same advertiser, same demo would cost $25. Just about half.

By 2019, those deals grew a bit due to inflation, etc. Maybe $52.5 for Linear (+5% inflation), and $27.5 for FEP/VOD (+10% inflation). At this pace, by 2033, both would be the same cost ($104, if you are curious).

Please note: Values above are not real. Proportions are. From actual data.

Advertisers and agencies did not fail to notice the gap. Leaving traditional media is an attractive proposition to push in board meetings. And so, a migration trend started to happen. Agencies recommended it cautiously, knowing that hurting the Linear TV business structures currently in place would be a bit like spitting upwards. But clients clutched onto it as if it were the last cup of coffee before an early morning budget meeting.

That is when media kings and queens realized that they needed to impose a new dress code for the upfront meetings. And this is how Fluidity Deals were born.

All of a sudden, there was an excuse to bring the VOD/FEPs up to the level of the old linear CPMs. And it even makes sense conceptually: higher quality viewers, engaged with their programming of choice, at the time of their choosing.

With this movement, media vendors are trying to accelerate 13 years of progressive pricing catch up.

People from ancient times in advertising remember that when Cable TV started carrying advertising, it did not have a plan for an accelerated catch-up with Broadcast. Many projected that Cable would, eventually, catch up, but the momentum slowed when the Cable TV offering fragmented so dramatically that it could not justify the increase. With alternative on-demand venues mushrooming across the globe, these guys now in board rooms applied the lessons learned.

And so, this winter the word Fluidity started to echo in the virtual ballrooms of the conf-call-sphere. Behind it, there were promises of lakes of data to feed your data-driven decision making. All of it so appealing. So fashionable.

But, my Noble Count of Media Buying, and Marquee of Accountability, there is something you can do: Rather than waiting for the upfront meetings to start with Linear TV reps graciously giving you these on-demand impressions through ‘Fluidity Deals’, skip directly to talking through the digital team and set your old VOD/FEP costs as the starting place for cost conversations. Whoever anchors the first price in the conversation will have gained the most terrain. That’s negotiation 101.

There is a short window of opportunity to do this, and it will be over by the next Upfront cycle. The pressure may be too strong, and it may be impossible to reverse the flow. But that margin is in play this year and soon someone will own most of it. We have our bets on you. It is in your power to see that the emperor has no clothes.