Under Pressure, Local TV Advertising Still Shows Lots of Opportunity

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Local TV ad spending will take a big hit next year, projected to decrease at a double-digit pace after an election and Olympics year, and in the face of a tough new car sales market. Nonetheless, local TV represents solid opportunities for smart media and marketing tech companies as TV remains U.S. consumers’ primary time-sink and advertisers look to better integrate TV campaigns with digital media.

Forecasters like Borrell Associates and MyersBizNet are predicting 13% to 17% declines for 2017 — depending on segment — but U.S. local TV is still about a $20 billion business overall. And for all the talk of cord-cutting, over-the-top streaming, and mobile or social media video, TV is still king of all media. Consider these statistics from a recent Nielsen study:

  • Monthly reach: 93% of U.S. adults watched TV. Meanwhile 45% watched video on a PC and 64% watched video on a smartphone. The smartphone figure is up almost 10 points from a year ago, but it’s cannibalizing PC usage, which is down by 5 points. TV reach is flat.
  • Weekly time spent: U.S. adults spent 32 hours and 32 minutes a week watching TV, which is down by about 10 minutes. But in comparison, they watched only an hour and 49 minutes of video on their PC, and a mere 24 minutes on their phone. Both of those figures are up, but small-screen video is still small potatoes. 

Marketers still like TV, too
Big brands and retailers that market locally rated local TV a more effective medium than any digital technique other than email marketing, according to a Street Fight survey earlier this year. Twenty-eight percent put it in their top five list of tactics, compared with 22% who did so for social media and 21% for local branch websites. Those that rated TV highly effective didn’t list any digital tactics at the top of their list, but they did indicate they were increasing their spending on local sites and search, as well as on social media and mobile marketing. 

Borrell did some useful analysis on a survey of smaller and medium-sized TV buyers, the ones that buy the bulk of local broadcast inventory. Some of their findings included the following:

  • Local TV buyers are relatively big spenders: their average annual ad budget is three times that of the average local ad buyer in general. And over 80% of them also buy digital media.
  • Local TV buyers are planning on increasing digital spending (68% said they were increasing or starting to buy digital) and 70% said they were upping mobile budgets. Like the big brands we surveyed, they rated TV as more effective than digital tactics but were increasing their efforts in social media and search. The majority (63%) of Borrell’s buyers plan major changes to their website in the next year, with over a third planning on spending over $5,000.
  • Local TV buyers said they were reducing or eliminating spending on traditional yellow pages, newspapers, and magazines. 

TV trends to watch
Local TV advertisers may be a little set in their ways, but both national-to-local marketers and local merchants are already buying digital and are increasing their digital budgets. Digital marketing providers should find an opportunity to integrate and cross-pollinate digital and traditional media and metrics for TV buyers, helping them translate digital measures to only semi-comparable stats like Nielsen ratings and GRPs.

And though the dollars are probably small, there’s interest in several trends driven by newer technologies, including:

  • Social media video is frothy, but mostly in a good way. YouTube is the biggest game in town, but Facebook, Twitter, and Snapchat are sexy names. Facebook still won’t allow video prerolls, and is pretty negative on video content marketing. But the big social network is starting to actually fund professional content, and it is enabling daypart ad-buying alongside its established geographic targeting. And it needs lots of help on measurement.
  • Programmatic TV is more buzzword than reality, but it’s a buzzword that has some traction with the national-to-local marketers. Online, “programmatic” means automated real-time bidding, with lots of data-driven targeting. In TV, there’s very little inventory available to buy in a truly automated fashion, and addressable ads are sold and managed by another part of the seller’s organization. Key for would-be suppliers is to identify which elements of “programmatic” the buyer is keen on: whether they’re operational, price-based, or targeting-focused.
  • Driving store visits. On-air (or online) to offline attribution is a key challenge for the hyperlocal industry overall. Working with Acxiom, PlaceIQ is trying to connect the dots between addressable TV and store visits. It has modeled correlations between mobile location data and targeted TV campaigns for big brands in automotive, retail, and tourism.

David Card is Street Fight’s director of research