The Future Of TV Advertising – What You Need To Know

Last week we talked about how trying to reach millennials through TV ads is a waste of money if you want to reach young people. We described how the young generation of today had moved their media consuming to their laptops and mobile devices, leaving TV executives scrambling to come up with a plan to reengage young people. But although young people spend less and less time of their media consuming in front of the TV, traditional TV sets still attract the majority of time spent watching original TV series across all age groups (albeit  millennials show a higher appetite for watching long-form content on smaller screens). So to completely dismiss TV as a marketing channel would be foolish. In fact, the heyday of TV advertising might actually be ahead of us. Read on to discover why.

future of tv advertising


 

Is TV Advertising Dead?

Although TV viewing continues to slip, digital video streaming is booming. While traditional television viewership dropped nearly 4% last quarter, online video streaming jumped an astonishing 60%. The average American watches more than 141 hours of live television a month (Q4 2014), more than four hours a day. But although that number declined 4% per year as the pay-TV industry lost more than 2.2 million customers, because customers have been “cutting the cord” and dropping pay-TV subscriptions, it’s still a significant number. Meanwhile, streaming of Web video amongst Americans grew to nearly 11 hours a month, up 3 hours from a year earlier. And because devices such as smartphones, Roku, Apple TV and gaming consoles aren’t included, the amount of online video consumed is likely even higher than the numbers suggest. So clearly there is a lot of attention on our screens. And yes, the future of TV advertisement from the big TV companies point of view is looking dire, and the execs know it.

“There’s definitely an opportunity to put products in the marketplace that reach consumers directly” – Bob Iger, Disney CEO

“Industry trends impacting advertising will be larger than previously expected and viewership will continue to migrate to digital platforms.” – Chase Carey, Fox President

“We’re in the midst of a secular shift to on-demand consumption”. – Jeff Bewkes, Time Warner CEO

And because they know that the jig is up there is still some hope for the TV ad industry.

 

The Future Of Television

The TV ad business still runs on Nielsen ratings, an outdated and nonspecific method of counting viewership across the US by means of polling a small number (about 20.000) of households that have a small box attatched to their television set that records everything the household watches (and who watches it). These are the ratings that the whole TV industry have been relying on since the 50s, having media ad companies bid to get their commercial on the air on their desired show, and pretty much all the demographic options they have is provided by the Nielsen ratings. Compared to today’s exact targeting options we have through portals such as Google and Facebook, that seems absurd. Have you ever been watching NFL and thought to yourself during the adult diaper commercial why they couldn’t serve a more appropriate ad for you? Well that’s because that’s impossible. But maybe not for much longer. Google has quietly stepped up to the plate and wants to make TV ads behave like internet ads, with segmenting and targeting options through their Google fiber service. The statement reads:

“Fiber TV ads will be digitally delivered in real time and can be matched based on geography, the type of program being shown (eg, sports or news), or viewing history.”

Although this is just a trail from Google, that sounds very much alike Google AdWords to me. Compared to the Nielsen ratings this would be a major innovation and something that would make marketers exited about TV again. Couple that with Apple’s rumored TV expansion and we have an exiting future ahead of us. The future of TV Advertisement?


The Future Of TV Advertising

Imagine a future (let’s skip the 1984 vibe that inevitably comes with it) where you’d only be shown ads that are relevant to you. From brands that you liked and had a history with. Creepy you say? Well we sure got used to it quickly on the internet. There would be no more adult diapers or erectile dysfunction commercials (unless that’s what you needed) interrupting your NFL game but instead a commercial that showed you that your local pizzeria had a pepperoni special just today, or that your razor blades were on sale in your local supermarket? Its a scenario that offers hope (coupled with the right set of privacy policies) for both viewers, marketers and media companies. It’s a world where potentially everyone could benefit. Imagine a small local business being able to target only their neighbourhood with their offering and only pay for the actual amount of people who actually watch the ad through a bidding system akin to the Google AdWords and Facebook ads we know and love today. Or a big company like Samsung that can target only the owners of a old Samsung Galaxy when they release a new model. Viacom are already challenging the Nielsen rating system and the TV companies have to accept the fact that bundling is going away and they have to figure out how to monetize in a new world. If Google finds success in the ongoing trail run in Kansas City, SMBs, marketers and networks should all take notice and work to implement these kind of innovations to today’s offering. Networks should do it as it might be their last throw of the dice and if they do, marketers will follow. Add to that the inevitable (?) future convergence of offline and online TV and the networks might be smiling again in the not too distant future. back-to-the-future-lloyd-michael-j-fox-e1380729979684


What Marketers Need To Know

Unfortunately this is a future that’s still some way off (but one can dream). The Nielsen rating system has proven to be a particular stubborn technology that refuses to die out, although they are making some modernisations, saying that it recognizes the need to measure the total viewership of a show—across live TV, video on demand and online outlets, the question is if Nielsen (and the networks) can innovate enough? So what should you know and how should you prepare for this eventual shift as a marketer? At the moment you should continue your video marketing strategy, developing a voice in the space that your audience can relate to and engage with on YouTube and other social media sites. In the future, you will have to develop very solid buyer personas that you can target via TV ads. A single targeting choice wrong and the effectiveness of your campaign can take a nosedive. Delivering an ad for a NY Mets shirt to a NY Yankee fan? A CTR of 0% if I ever saw one. The high targeting potentials will mean that you will have to create A LOT of video ads. With less and less ads being televised on a country wide scale, your video ads will have to be much less generic (if you want them to succeed that is) than today. One demographic/segment of your potential customers will need a TV ad that suits their need, and another group will need another TV ad. That means that high end TV commercial productions are mostly off the table, instead you need several similar but not too similar TV commercials that can easily be customized for your demographic. future-of-tv-header


Conclusion

If the TV networks can get it right, by realising that bundling is over, that people want to watch their favorite show at their chosen time, on their chosen device, and get the ad targeting thing right, “TV” might actually have a bright future. What do you think, is there a future in TV advertising or is it a place doomed to be full of adverts for people stuck in a nursing home? Leave your comment below. Do you want free video ad templates delivered straight to your inbox? Try out Shakr and produce agency quality video ads for fifty bucks!


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Co-founder and Chief Strategy Officer at Shakr

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