There’s a lot of doom and gloom in the air surrounding television advertising. But TV remains a popular and effective local marketing tactic for multi-location brands, and there are signs that technologies for more precise targeting, media planning, and buying are finally reaching critical mass.
According to big ad agency Magna Global’s research, U.S. TV ad spending continues to shrink, with local TV suffering the most. Street Fight surveys confirm that both brands and small businesses are shifting dollars away from traditional media toward digital tactics. A Fox executive suggested that networks need to make TV more like digital video by dramatically reducing the number of spots per hour. He didn’t have much to say about how to raise the value—and price—of the remaining inventory to make up the revenue difference.
But 39% of big brands Street Fight surveyed still use TV for local advertising, and, as shown in the figure below, it’s one of their top 5 most effective tactics. More rated it so than search, local sites, or any of the usual traditional media.
At the same time, many brands are getting into online video, whether that’s traditional programming delivered via digital over-the-top services like Hulu or Netflix, YouTube, social media streaming video, or content they stream themselves. Our survey showed that nearly as many (36%) use local streaming video of some kind regularly, and over a quarter rated it in their top 5 for effectiveness.
Besides streaming video, there are other TV ad technologies starting to add spice to the game. When asked about relatively new tech their companies were interested in exploring in the near term, nearly a third of the brands we surveyed cited addressable TV and/or programmatic local ad-buying in their top 3 technologies to watch.
Those brands that showed interest in addressable TV were also more likely than average to say they were allocating more of their overall digital marketing budgets toward local objectives. They said they were increasing digital spending on social media, display ads, and mobile, and they rated social media, TV, and online display as their most effective tactics. They were also more likely than other brands to be collecting third-party location data.
Here’s a quick take on these technologies and other disruptive forces in local TV advertising:
TV targeting. The ability to apply Internet-like audience data to TV ads and deliver them to specified homes and screens is building momentum. A Forrester survey of big ad buyers confirms Street Fight data; Forrester thinks addressable TV has reached the proverbial curve of the hockey stick. The Interactive Advertising Bureau’s guide to advanced TV targeting says that there are 64 million addressable households in the U.S. That’s over half the country, but they’re fragmented across at least 7 providers with different platforms, making targeting and analysis at scale extremely difficult. The IAB says there are 51 million OTT households. But advertisers there face even worse fragmentation. And although programmers are starting to open up, there’s usually only 2 minutes per hour of ad inventory available for addressable targeting. Chipotle says it is going to focus on addressable TV at the expense of traditional this year, but most brands should experiment judiciously rather than expect to switch over.
Programmatic TV. Programmatic is an umbrella term for a variety of buying operations. For TV it can mean applying automation to purchase orders, but there’s very few applications of the real-time auctions prevalent in programmatic online or mobile display advertising. Companies like Adobe, The Trade Desk, and Zypmedia offer demand side platforms (DSPs) that help in buying audiences rather than buying specific video media—another characteristic of programmatic—but their reach is often limited to streaming inventory. Google is even more restricted. Simulmedia has for years used set-top data to analyze viewing habits, initially in support of selling tune-in promotions to networks and more recently for brand advertising. But much of its focus these days is integrating that data with third-party or CRM info for media planning.
Broadcast consolidation. Amid TV spending shrinkage and FCC regulatory overhaul, there has been a lot of consolidation in broadcast station ownership over the last few years. One could argue that with cable, satellite, and OTT distribution, local stations don’t bring much to the table in the TV ecosystem. They’ve always done minimal original programming aside from local news, but they do still have local sales forces. Sinclair’s purchase of Tribune’s stations might add scale to the targeting Sinclair has been fairly aggressive in developing. And already Sinclair, Tegna, and Nexstar have collaborated on standards that, if they don’t really enable programmatic cross-station buying, at least offer some transparency for analysis and media planning.
TV fans are suggesting that new tech plus brand safety concerns offer television a better chance to compete with Google and Facebook for ad dollars. There may be truth to that argument, and brands that experiment with the newer techniques will gain experience that will pay off when cross-platform video convergence becomes a reality. But that’s still a few years away. Meanwhile, Nielsen says that users watch five times as much video on live or DVR’ed TV than on either PCs or OTT-connected TVs, and 25 times as much as on smartphones.
David Card is Street Fight’s director of research.
Click here for more on the Street Fight Insights report, Enterprise Local Marketers 2017: Benchmarking and Best Practices.