"On TV And Video" is a column exploring opportunities and challenges in advanced TV and video.
Today’s column is written by Dini Mehta, vice president of US at Drawbridge.
TV as an advertising medium is much like the film “La La Land” – it hearkens back to a golden era, is heavily choreographed, is backed by big budgets and paints a rosy view of the consumer.
It’s an interesting coincidence that in the same year that the nostalgia-driven movie debuted, TV slipped from the greatest share of US advertising spend, with digital usurping its place. Behind the scenes, there is growing awareness among brands that TV viewing habits are changing rapidly, and the golden era of TV advertising is going with it.
By no means is TV advertising going to disappear – it still captures more than one-third of all US ad spend, as US adults spend an average of more than four hours per day watching the TV screen. But today, more than one in five households have ditched cable completely, and streaming services are used in 50% of US TV households. Pew Research indicates that 83% of consumers 50 or older have cable or satellite service at home, compared with 65% of 18- to 29-year-olds.
Given the dramatic shifts in TV consumption habits, it's getting increasingly crucial for brands to be able to get the most bang for their buck on TV as they fight for screen time among other devices. But brands and agencies can’t afford to wait for change to come from within the TV networks and cable providers. Marketers must drive programmatic TV advertising from being fantasy to reality.
As a category, programmatic TV has been subject to a lot of confusing, vague definitions that play in favor of the traditional players, who can claim the technology is years away.
But it doesn’t have to be this way. Brands are not so happy with the status quo. Due to shifting viewership habits, advertisers are forced to straddle their budgets across two buckets – the loyal cable subscribers and the cord-cutters.
At the same time, they are confronting the uneasy fact that when they buy TV ads upfront, they are relying upon a model that uses very little data for targeting or measurement to back it up, keeping their return on investment stuck in a black box. For all other screens, programmatic has enabled great targeting features, including retargeting, location targeting, contextual targeting and, more importantly, measurement. TV is the last holdout.
As the global proliferation of devices continues, brand advertisers recognize that TVs are just another channel in an ecosystem of touch points people use throughout the day. The traditional TV players want to keep the TV screen as its own walled kingdom – a separate experience that cannot be commoditized.
But lots of substitution across screens is already happening, and consumers have become channel agnostic, switching between their phones, laptops and tablets to get content in every environment. The leader in programmatic TV will understand that TV is not going away, but that its relationship to the consumer is no different than to any other device at hand.
Data-driven advertising will to a certain extent commoditize inventory and decrease prices on premium TV ads. That’s why brands will be the ones leading the charge demanding for programmatic TV to get greater transparency, targeting and measurement abilities. There's too much at stake in the traditional upfront model to catalyze change.
Right now, brands tend to slice their TV budgets in multiple ways, such as traditional upfront, addressable/connected TV, digital video and mobile. But this fragmentation won’t be tenable for long, and the cracks are beginning to show.