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By Lindsey Clay
Increasingly the future of TV advertising is in the hands of marketing procurement experts and in-house media agencies
Video vs TV
The potentially brand unsafe, often small screen, often partially viewable world of online video costs advertisers seven times more than TV.
By Lindsey Clay, CEO, Thinkbox
As brands increasingly take more direct control of their marketing through in-housing, the influence of marketing procurement experts and in-house media agencies is growing. They – you – are increasingly responsible for planning TV spend. TV’s future is very much in your hands.
So, I’d like to talk a bit about that future, which means talking a bit about the present. This is because TV advertising’s future is already here; it just isn’t evenly distributed. Advanced TV advertising – a broad term that encompasses new, tech-enabled, data-driven ways to use TV – is rapidly developing and scaling, turning TV into the marketer’s Swiss Army Knife.
I’ll come on to that in a moment. First, some fundamentals to explain where TV is today.
We live in an amazing era of TV
Just think of some of the incredible recent dramas, from Succession to Chernobyl to Killing Eve to The Handmaid’s Tale to Endeavour. Think of Bake Off, I’m a Celebrity, Strictly, and Love Island. And when it returns post COVID-19, consider the top-quality sports coverage. Consider brilliant documentaries like Leaving Neverland or Channel 4’s expose of Facebook and the Cambridge Analytica scandal. It has never been a better time to be a TV viewer.
Nor has there ever been a more competitive time to be a TV broadcaster. New TV streaming services are appearing at a rapid rate, with Disney and Apple two of the latest and largest. Things are changing.
Yet, broadcaster TV remains by far the most popular form of not just TV, but video generally. In the UK, broadcaster TV accounts for over two thirds of total video viewing, and just under half of 16-34s’ video viewing.
And of course this is all before COVID-19 made a significant impact on viewing habits and figures (up 22% since lockdown began, according to BARB) and advertiser schedules, ratecard costs and production challenges.
Digital transformation is preoccupying every business and boardroom, and TV is no different. TV as an industry has transformed itself. This is a huge success story; a story of meeting the needs of viewers.
A decade ago, most TV viewing was linear, but that isn’t today’s TV. Our TV viewing has been redistributed across linear, recorded and on demand. We’re now watching more TV than a decade ago, but the shape of it has changed.
You might not always get that impression, though. Many commentators insist on judging TV by the performance of linear viewing alone, which we now watch less of because we have more options. But that is like judging someone’s outfit by their trousers, or Serena Williams by her forehand. It misses the whole picture.
Digital transformation has had a dramatic impact on advertising. The arrival of internet-enabled tech has meant a host of new media and ways of targeting consumers. In 1998, pureplay internet advertising accounted for zero spend in the UK. By 2018 (the most recent figures we have), it was 24% of all UK ad spend. In the same 20-year period, TV went from 26% to 22%, so fairly stable. Meanwhile, press has been decimated, down from 57% to just under 11%.
The curious crisis in advertising effectiveness
So, the shape of ad spend has changed. Marketers have chosen to invest their money differently, you would assume with good reason.
But something strange has happened. The investment increase in internet advertising has coincided with a collapse in the overall effectiveness of advertising, according to the Institute of Practitioners in Advertising (IPA).
Is this a causal relationship or just correlation? A clue can be found if we look at the world of video advertising specifically. The direction of travel in advertising is undoubtedly towards video (and the direction of video towards TV).
There is a huge gap between perception and reality in the respective cost of online video and TV advertising. Online video accounts for just 4% of the time people spend watching video advertising yet gets 26% of all video ad spend. TV accounts for 95% of ad viewing but gets 70% of ad spend.
Advertisers are spending disproportionately on online video. Worse, they are paying much higher CPMs – probably without knowing. Based on ad spend figures from the Advertising Association, the average cost across TV advertising (linear and BVOD) for 30 seconds is just over £6. For non-broadcaster online video, it goes up to £45.
And that is just the cost – the quantity – it doesn’t consider the vast differences in the quality of the ad exposures.
In a nutshell: the potentially brand unsafe, often small screen, often partially viewable world of online video costs advertisers 7 times more than TV. This doesn’t sound like value for money and perhaps starts to explain why we’re not seeing the improvements in advertising effectiveness that we might have expected.
All is not lost
The good news is that help is at hand. Having digitally transformed TV viewing, broadcasters are now transforming advertising, adding new capabilities to TV’s existing strengths. TV now offers the best of both worlds.
To its brand-building power, TV is now also increasingly sophisticated at the bottom end of the purchase funnel. As TV becomes a mass addressable medium, no other addressable video ad offering comes close. TV can now surpass other online advertising for targeting, but in a high quality, proven, brand safe environment.
TV’s advanced advertising solutions are also fuelled by willingly-given first party data which can be data-matched with advertisers’ own customer data.
And rich contextual tools are giving advertisers access to perfect programming environments. AI is being used to allow DIY retailers to access specific TV episodes where characters are redecorating, for example.
But why should TV’s online ad solutions be better than any other form of the online advertising that has crippled overall ad effectiveness?
TV is in a different league
The clue is in the name: TV represents Trust and Value.
Trust is in dwindling supply these days. Banks, governments, religions, all have seen trust erode. In the world of advertising, the global tech companies have done their bit to annihilate trust, whether it is YouTube facilitating sexual predators or helping fund extremism, or Facebook repeatedly being found out for abusing our privacy, data breaches, giving false metrics or enabling criminality. The future profits of these companies are in your hands too.
TV is a world apart. It is held to a higher standard and viewers know it. All its content is regulated, every minute of programming is pre-vetted, it is 100% brand safe.
And people trust TV advertising more than any other kind because of these qualities. Its popularity means that TV is an incredibly public medium, and sunlight is the best disinfectant. The moment it falls below its high standards there is immediate and justified public outcry. That’s why it happens so rarely.
TV’s incredible effectiveness
TV is 7 times cheaper than online video, great, but price is only a part of the value of advertising. The most important thing is effectiveness. What is the volume of profit delivered to businesses by different media and at what return on investment? What are you buying?
There is now a wealth of evidence to answer this. One of the most recent, wide-ranging and comprehensive studies was by Ebiquity and Gain Theory in 2017. “Profit Ability: the business case for advertising” was based on analysis of the business results of over 2,000 advertising campaigns across 11 categories. It found that all forms of advertising create profit to varying degrees in both the short and long term. Specifically, it concluded that TV advertising
That is genuine value.
But it would be wrong to just look at TV’s effect in isolation. A follow up to ‘Profit Ability’ – ‘Demand Generation’ by Gain Theory, MediaCom and Wavemaker – was published late last year and examined how different forms of advertising work together. It was based on an econometric analysis of £1.4 billion of media spend by 50 brands across 10 forms of advertising over 3 years.
The study concluded that most advertising channels boost the efficiency of others, but that the scale and consistency of the effect differs significantly. TV generates the highest ‘multiplier effect’ across all other channels, boosting the performance of other media channels used in a campaign by up to 54% (the average ‘multiplier effect’ across all channels was around 8%).
We live in an era of incredible TV. The way we watch TV has been transformed, with more choice than ever – but with broadcaster TV remaining fundamental to our viewing diet. As viewers, we are truly spoilt.
Now TV advertising is being transformed, with tech and data giving it powerful, innovative new roles throughout the consumer journey – adding to its continued pre-eminence as a brand builder. TV advertising is being reborn.
Meanwhile, the much-hyped rise of online forms of advertising has sucked in a lot of advertisers’ money, but has blown away advertising effectiveness and value. Online video is a prime example, costing seven times more than TV.
All we can do in these circumstances is trust the evidence, and the evidence says to trust TV advertising. And TV doesn’t just deliver great value by itself, it makes other media investments more valuable as well. TV advertising’s bright future is their bright future too.
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