Mindgruve attended the Digiday Future of TV Summit in Palm Springs this past April. The conference hosted brands and agencies from around the country to discuss TV advertising in the streaming era. Television ratings are down, TV ad costs are up and the state of the tactic is in flux as new publishers emerge and monetize their offerings. The single biggest takeaway was that the future of TV planning and buying is unclear.
The State of Traditional TV Advertising
Traditional TV advertising, or linear, still boasts massive audiences. Brands are comfortable with it and the associated metrics, perhaps because of its 50-year legacy. It’s simple and safe to keep buying on rating points, reach and frequency. However, those ratings decline as viewers steadily shift to streaming services. The question becomes how sustainable is buying the same linear plan year after year?
Advertising on Connected TV
Meanwhile, streaming, also referred to as connected TV (CTV), can be expensive for marketers. On top of that, their advertising is held to digital standards of performance despite the similarities to watching commercials in a linear format. Data applications and the ability to target more granularly liken it to digital. The problem with this is that attribution is difficult, much more so than other digital tactics that leverage cookies. Streaming requires vast amounts of data to ensure statistical relevance and prove out KPIs such as sales lift. If brands aren’t willing to invest, linear will keep winning the day even though it isn’t accountable for sales and streaming is quickly gaining ground.
By 2022, 36% of U.S. households will be cordless. Last year, there were 500 scripted shows for television. More than one third of them were produced for streaming platforms, which was more than the number of shows for cable, and more than the number of shows for broadcast. 80% of Hulu’s audience is composed of “light TV viewers” and half of them will not see an ad in linear format.
These statistics depict the tug of war currently happening in the industry. It’s clear that the landscape is changing and the shift to streaming isn’t slowing down. However, brands don’t seem to be comfortable with streaming as a tactic yet, not to mention the associated prices and measurement options as well.
How Can Brands and Agencies Continue Advertising on TV Effectively?
There’s a long road to bridging the gap. Eliminating silos between buyers is a good first step. If they compete against each other, the media mix will inevitably suffer. Brands and their agencies need to merge their digital and traditional teams.
Addressable TV will also aid progress, though there’s confusion in the industry as to what it means even amongst vendors. The conference hosted a roundtable discussion on the topic to help clear things up, and debates were heated. The true definition is linear or live TV targeted at the household level. It’s expensive, but brands consider it valuable because they aren’t paying for wasted impressions in the typical “spray and pray” approach. If the data is correct, they’re reaching only the people they care about. To date, about 36% of TV households are addressable. Check out our latest blog post on addressable TV for more information.
At Mindgruve, we’re optimistic that the future of TV planning and buying will include all types of inventory, across screens, based on hyper-targeted audiences. As measurement capabilities improve, ROI will follow. Eventually we’ll see the rise of democratized and biddable inventory alongside programmatic capabilities. In the meantime, the conference confirmed what we’ve long believed about TV advertising and every other tactical approach we employ. Full integration between teams and constant testing are crucial to clients’ success.