Are we on the verge of a TV advertising doomsday? Or a gold rush?

Teens On Screens
Boris Felts, Ericsson
Opinion
June 9th 2017 at 1:39PM : By

Boris Felts, Ericsson's head of video advertising, media solutions, thinks we may at the beginning of a boom in TV advertising

The common media wisdom that "content is king" in attracting a large audience has shifted to "audience is king": content is crafted to address a specific target audience. Data and viewership analytics have accelerated this trend as they have become part of the creative process. Netflix regularly explains how its massive amount of viewership data allows them to create specific content narratives that satisfy each specific audience segment.

In advertising, “audience is king” is even more true. From the traditional “one to many” broadcast approach of traditional TV advertising, brands and advertisers want to move to “one to one” conversations with targeted audiences and measure the direct impact of these engagements. They are now looking at the best way to engage their target audience across a wide variety of platforms and types of media. The advertiser may not know or care who is distributing the ad. Instead, they care whom their ad is reaching. They are looking for people with a certain purchase intent, income segment, location, age or other factors, and not necessarily for people who watch specific shows.

While TV programmers retain a large audience and broad access, they have limited knowledge of their viewership on an individual basis. They cannot compete with the Internet giants who have gathered large amounts of individual data allowing them to better satisfy their potential buying appetite. Furthermore, the traditional way of monetizing TV advertising based on TV ratings is being challenged by more sophisticated online metrics which are tracking purchase intent and conversions.

The competition between the different advertising models has an impact on how advertising is being sold, how it is being displayed, how it is measured. This evolution will require important changes in the TV space. Will this be a doomsday for TV advertising or the advent of a new El Dorado?

TV advertising doomsday coming?

All recent reports point that online advertising will surpass TV advertising before 2020. Most of the advertising spending growth today is on social and mobile platforms. TV advertising spending, while remaining high, is staying flat.

TV is more constrained by regulations and technology (tracking the content viewership across all types of platforms and consumption models is still hard to achieve) and still relies on an established ecosystem of intermediaries and partners. Any change or adaptation is slow to put in place, as agreements, regulations, and technology need to be updated across the board.

On the other hand, all the major digital players are not subject to the same type of regulation. They have a complete end-to-end platform: they can gather data from all sides, and they can evolve faster, allowing them to monetize their audience more efficiently.

Will this mean the decline of TV advertising? Not so fast…

Targeted TV advertising: a new El Dorado?

TV remains one of the premium avenues for brand and advertisers. It has a massive reach and associates brands with events, atmosphere, cultures, which amplifies their message. Advertising opportunities remain scarce on TV, and therefore are highly valuable.

Meanwhile, new technologies are enabling targeted advertising to be displayed to various audience segments during the same time slots. As the same space can be used by multiple advertisers going after different segments of audience, the cost of the TV campaign is split among them.

By targeting a smaller and better qualified audience, the initial entry cost for TV advertising is lowered and can give access to a wider range of brands who would normally not spend their marketing budget on TV ads.

If TV could offer the audience reach and attractiveness it has today with acute audience data and targeting that’s available online, it would be in a thriving position.

Mining the TV data

In this quest for better data to increase advertising value, TV programmers will not succeed alone. They need the partnership of distributors who own the TV subscriber information, have the technical ability to distribute targeted content on their TV platforms and can derive a lot of viewership information from their network.

New relationships between programmers, advertisers, and distributors need to be forged in order to take advantage of this opportunity. This would give them immense benefits:

  • for the advertisers: focus on a smaller qualified audience segment, the ability to tailor campaigns and tap into new brands that would normally not spend budget on TV advertising
  • for the programmers: get to know precisely their audiences, create new ad inventory, enhance the advertising value, and gain new revenues
  • for the distributors: gain new revenues from their subscriber knowledge and their ability to distribute targeted content

 

Like the early days of the gold rush, this new landscape is pretty much Advertising Far West:

  • regulations and agreements vary country per country
  • business agreements are yet to be formed
  • standards are not established
  • content and Adtech company acquisitions are the trend
  • ecosystems are still very fragmented

 

Through innovative TV analytics and dynamic ad replacement, programmers and distributors can begin their transformation journey, harnessing the opportunities ahead to deliver positive business outcomes.