How actors’ strike may accelerate shift in viewing habits and disrupt ad budgets
As Hollywood A-listers join screen and stage writers in demanding better pay structures and protections around the use of AI in the entertainment industry, advertising insiders weigh in on how the strike could impact ad spend on broadcast and streaming television.
Hollywood's actors are rallying to create guardrails around AI – and the impacts could trickle down to advertisers / Adobe Stock
Nearly two and a half months after the Writers Guild of America went on strike, actors have joined in on the efforts, with the Screen Actors Guild-American Federation of Television and Radio Artists (Sag-Aftra) voting late last week to join the strike against leading television and film studios. The groups are striking over residual payments – comparable to royalties – in streaming versus broadcast television. They also seek to establish rules around using artificial intelligence (AI) to reproduce actors’ likenesses.
The development has created new roadblocks to TV and film production and is increasing pressure on the Alliance of Motion Picture and Television Producers (AMPTP) – an industry body representing most of Hollywood’s top studios and streaming platforms – to reach an agreement with the laborers.
It also raises potential hurdles for the advertising industry. Though industry experts told The Drum in May that the impacts of the writers’ strike would probably be minimal on ad spend, if the dual strike drags on, it may become more difficult for media owners to serve up audiences, which can ultimately lower advertisers’ returns on spend.
In light of this possibility, some brands may adapt their media strategies. “We may see temporary shifts in ad spending to other channels such as out-of-home or shorter-form, user-generated video that have less of a direct correlation to writers and actors,” says Darrick Li, vice-president of sales, North America media owners, at media planning firm Guideline.
And the impact on ad spend is a concern among many in the industry. “There will likely be spending cuts from the entertainment accounts, which is one thing we are looking out for and working through,” says Stacey Stewart, US chief marketplace officer at UM Worldwide, an IPG-owned ad agency. “The longer this drags out, the more areas it can impact.”
Stewart says UM is currently focused on “managing contingency plans on a client-by-client basis.” For many brands, that entails shifting ad spend to the available programming, which includes an abundance of sports and reality. Late-night programming, the area that has suffered the most immediate impacts of the strike for lack of writers – and now guests, potentially – “remains the biggest area of concern this calendar year,” according to Stewart.
Audiences are still up for grabs
But even without late-night programming – and potential delays in serial and film releases later this year – many in the ad industry are confident that the eyeballs are still there. “[The impact of the strike has been] minimal thus far, especially in terms of connected television (CTV). People are not completely abandoning TV during the strike, but rather tuning into alternative content,” says Hunter Terry, vice-president of solutions consulting and general manager of CTV at data solutions firm Lotame.
Even Guideline’s Li, who warned that media planning and buying strategies could shift toward other channels should the strike be prolonged, agrees that he’s yet to see a “direct impact” on advertising. He points out that the modern television landscape is designed with contingencies to help weather short-term storms. “The TV – across linear and digital – advertising industry has been a healthy ecosystem for the last decade, driven by technology advancements, consumer adoption and rapid supply increases in digital video,” he says.
Li says: “Even as recent as the pandemic, advertising expenditure in video rebounded quickly after a short blip in ad investment – which may have been an advertising knee-jerk reaction rather than a result of changes in supply.” For now, he’s confident that media owners and studios are equipped with a backlog of new content to release, creating advertising opportunities potentially for months to come.
What’s more, although actors – including Meryl Streep, Ben Stiller, Jennifer Lawrence and other A-listers – have joined the cause, Sag-Aftra commercial contracts are distinct from television and theater contracts. This means brand partnerships with Sag-Aftra members aren’t likely to be disrupted unless these partnerships rely on cross-referencing film or TV programs.
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Viewing habits are evolving
According to many in the industry, the most impactful outcome of the dual strike is likely to be a shift in consumers’ viewing patterns. “It seems that Hollywood is closed for business right now, which could serve to further accelerate the dramatic shift in television viewership patterns we’ve observed over the past three years,” says Tony Marlow, chief marketing officer at LG Ad Solutions.
In particular, he estimates that, with broadcast TV reliant on unscripted programming, we’re likely to see a boost in streaming adoption, as most platforms have a deep catalog of available programs as well as stores of programs ready to be released at the drop of a hat. And with demand for entertainment likely unimpacted, consumers will still watch broadcast programming, tuning into sports and reality TV.
These shifts could have lasting repercussions on the shape of TV – and the advertising that goes along with it. “The present situation may end up serving as a catalyst, potentially reshaping the future of living room entertainment choices and preferences,” says Marlow.
Other experts, including Li and Terry, share Marlow’s prediction. As Terry puts it: “The viewers are here to stay; they just need to find their next Truman Show now that their favorites may be coming to an abrupt end.”
With an influx of eyes on streaming platforms, these publishers may need to release content they’ve been developing. They may also seek to bolster their licensing strategies and develop new partnerships to ensure they meet demand and create sufficient opportunities for advertisers.
Linear TV publishers, meanwhile, have an opportunity to lean into what they can provide to viewers. In particular, Li predicts live sports programming could be a boon. “Live sports has been a continued reason why many consumers hang on to cable subscriptions and have yet to cut the cord,” he says. “In addition, the availability and adoption of streaming live sports continues to grow. And as audiences continue to remain strong on live sports programming, advertisers will be attracted to TV with large audiences and live sports may be a winner in all of this, especially if we see a strike that continues late into the fall or even into the new year as professional sports like NFL, NHL and NBA begin new seasons.”
Ultimately, many in the ad industry will have to wait to see the full impacts of the strike. As Terry puts it: “The strike may alter viewing patterns, but it may not directly affect the advertising industry as people are still engaged with television in some form. It will be interesting to see how the fall lineup is affected on linear television, especially in light of advertiser commitments [made earlier this year] during the Upfronts.”
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