Sorenson Media has a unique vantage point in the TV industry. The nature of our products let’s us have an equally close relationship with both broadcasters and advertisers. With that unique perspective, I wanted to share some valuable “insider” info we at Sorenson Media have learned about advertisers. After this set, I’ll reverse it and share what advertisers should know about broadcasters.
This week’s post explores a couple trends and thoughts in the advertising industry around the relationship between TV and digital.
Ad budgets are starting to blend
Once upon a time, ad budgets were neatly compartmentalized. Print budgets were separate from TV budgets. Digital budgets were separate from radio budgets. Today, budgets have more fluidity, or at least advertisers are starting to use a different method of budget classification. Instead of having independent digital and TV budgets, advertisers increasingly use a single “video” budget covering TV and digital.
In a blended format it doesn’t matter if an ad runs on YouTube or NBC, it will come out of the advertiser’s video budget. This trend has started to gain momentum because the line between digital content and TV has blurred in recent years. OTT, DVR, smart TVs, connected TV, and other technologies offer viewers a blended experience. It then makes sense that a blended advertising approach would follow.
In one moment viewers might watch a live episode of The Bachelor, and in the next moment they watch last week’s episode of Game of Thrones through the HBO app on their tablet. One is traditional TV; the other is digital. In both cases, the advertiser would use video as the creative. A report from IAB and Advertisers Perceptions shows that 26 percent of advertisers now develop creative intended for cross screen use. In other words, an ad campaign video would get created with the intent of using it in both digital and TV. Only 20 percent of advertisers separate their creative execution by specific platform.
The takeaway here is that “video” has started to include both TV and digital advertising. Advertisers will look to spend that video budget wherever they can hit their goals. Broadcasters, if you want your share of that budget, you’ll have to offer ad options–with capabilities such as addressability and advanced reporting–that compete with digital video.
Advertisers are looking for a common currency
TV advertising has long relied on a ratings economy for all its transactions. It’s true the decades-old system is familiar to the whole industry, but advertisers have started evaluating other measuring sticks. They want consistency across platforms.
It makes sense that as TV and digital ad budgets start to blend advertisers would hope to measure their ad spend within each medium with a common currency. Imagine the pain a marketer must feel when she has to decide which platform to advertise on. Digital can offer her a price based on cost per thousand impressions (CPM) and traditional TV offers her a ratings-based price.
It’s like comparing apples and oranges. Which will have better yield? If they both offered impressions the decision would be easy.
An honest advertiser would likely claim that neither the ratings system or the digital currency, impressions, is ideal. They both lack the accuracy an advertiser might hope for. But in a duel, impressions wins the draw, proven by a shift of budgets from TV to digital in recent years. Impressions offer a more detailed, straightforward understanding of ad performance.
Impressions enter the TV world
Since the first digital banner ad, the digital ad market has used impressions as its primary audience measurement unit. The concept, though, has already begun to enter the TV world. Addressable TV ads get measured in impressions, and advertisers have started allocating their budgets to it in response.
Advertiser Perceptions recently conducted a survey that asked advertisers who had run campaigns with addressable TV what made it most valuable. Other than reasons related to targetability, the most cited element that made addressability valuable was “detailed post campaign measurement and insights.” In other words, advertisers are excited about the prospect of simplifying their metrics to a common unit of measurement across platforms.
The takeaway? As addressable starts to build scale, advertisers will begin pushing for a universal currency to simplify their fast-blending TV and digital ad experience.