TV Advertising is a Changing Game. Don’t be Blindsided.

What does the idiom “to bury one's head in the sand,” actually mean? Well, simply to ignore or refuse to think about a problem.

The origin of this idiom comes from the incorrect belief that ostriches put their heads in the sand to hide from danger because they thought that if they couldn't see their attacker, their attacker couldn't see them either.

It's a ridiculous idea and not true but humans can be a bit naive at times — especially when trying to pretend there isn't a problem when there is one.

How Does this Apply to the TV Ad Business?

There is a perfect storm brewing that is creating a giant monster of total change, meanwhile brands and agency execs alike iterate that TV works. I don’t think that has ever been up for debate. The question is how efficient it is if you’re hitting the same audiences 40+ times.

Linear broadcast TV has also increased in price. We are on the precipice of change driven by consumer pull — and brand — push needs.

Is avoiding the problem an example of hubris, similar to the situation with Blockbuster who had a chance to buy Netflix for $50m but thought the business wasn’t worth it and had no future?

 Consumer Pull and Brand Push Suggests that the Change is Real

Consumer Pull

-       Consumer behavior is switching to streaming devices. A recently released report from Roku projected 60 million TV households (out of 128m) will access video on their TV exclusively through streaming within 5 years. If you think that is outrageous just realize that Comcast lost 209,000 residential video customers in Q2 2019. Charter lost 150,000 video customers in Q2 2019 in comparison to 73,000 in 2018. The US’s second wireless carrier, AT&T, lost nearly 1 million video subscribers in the second quarter.

-       We are still in the early adoption phase of streaming devices and usage; however, we have an armada of ad supported and subscription streaming services launching that will all have marketing pull behind them. Disney will push their services in parks and alongside movies. Don’t forget that includes ESPN and Hulu. Apple is bundling Apple TV+ into their devices, apparently for free. Peacock, Disney+, and AT&T’s many streaming offerings are all part of the onslaught that will turn the heads of all ages, ultimately turning consumers into revenue drivers.

-       User expectation is becoming always available content that doesn’t require the vagaries of managing recordings.

-       Ad supported streaming services are growing rapidly (TubiTV at 23%, PhiloTV with 14% growth, YOY), adding to the content available.

-       Satisfaction of the streaming services tops traditional TV (TiVo trends report 2019-Q2) which will cause more defections.

 AVOD 35% (advertising based)

SVOD 35% (subscription based)                                                                           

Traditional Pay TV 27%   

 Streaming Pay TV 17%

Broadcast TV           14%

 Brand Push

-       The linear TV audience is getting older, moving away from the demographic that brands in the past have desired (18-35) which will force money to move to the increasing audience in streaming.

-       Brands want to see more outcome-based metrics that conform to an omnichannel, audience- based marketing world. They want to know if you drove the right eyeballs to my site, location, in store purchase, ship to store or online. This is all becoming possible in a digital world and companies are out there that can provide this.

-       Technologies like CDP are starting to drive marketing integration of touchpoints, using audience-based data to serve creative by media, including video.

-       A request by marketers for better targeting and creative to match that target, which can be delivered by IP-based TV with tailored experiences built into the ad path (program pauses, home page splash). Recently Hulu ran a campaign that asked: “what type of ad do you want to see?” A choice of two paths were possible.

-       Brands want speed of execution and results, forcing automation, which digital can provide.

 This Yin and Yang effect will require monthly re-assessments of strategy as the tornadoes descend. Hopefully all the money won’t be tied into upfront commitments that can’t be moved.

 Successful brands will be the ones that are planning the change now.

 Unseen Impact Until 2021

What of the short term? In the next year we will have elections that will drive huge sums to linear TV as the streaming business continues to grow. $6bn will hit the TV market.

 Successful brands and companies in this space will be the ones that can deliver addressable linear/OTT campaigns with integrated metrics as OTT gradually gains share. Moves are afoot to deliver that as witnessed by recent announcements in the industry to drive delivery and measurement in this way. This is the bridge to avoid the hubris.

 Successful local TV stations will be the ones that drive automation. Solutions like Videa’s will be able to make it easier to drive the buying and selling of spot TV, helping stations participate in the many changes of TV including linear to OTT.

 Don’t treat the changing TV business as hubris — plan, prepare and execute today.