A version of this article was originally published in the January 2018 issue of Rapid TV Everywhere, a Rapid TV News publication.
TV advertising is a tried and trusted business model that’s gone largely unchanged for nearly seven decades. Of course, nothing can last forever. In only a few short years, the most reliable communication platforms have undergone tremendous upheaval on multiple fronts. As we move into 2018, these changes won’t only continue; they’ll accelerate.
This new path for TV advertising is being shaped by technological advancement, reimagined business strategies, and an evolving regulatory environment. This transition is surely a source of anxiety for some, but as with all big changes, there are also lots of opportunities for those who prepare properly.
Here are six big trends in TV advertising that will make an impact in 2018:
1. Continued consolidation
It is widely expected that the Sinclair Broadcast Group will complete its multi-billion-dollar acquisition of Tribune Media early in 2018. This deal would make Sinclair the nation’s largest holder of local stations, with a combined reach of 72% of US households.
This isn’t the only major media merger currently in the works. While on less-certain ground, AT&T will continue to pursue its acquisition of Time Warner, Discovery Communications announced that it would acquire the Scripps Network, Meredith Corp recently made a successful bid for Time Inc., and Disney is pursuing a mega purchase of a majority of 21st Century Fox’s expansive TV properties.
A loosening regulatory environment cleared the way for some of these deals to take shape, but technology is the true driving force behind the formation of these mega platforms. Technological evolution (particularly streaming content, smart TVs and ubiquitous wireless broadband) is bringing data-driven ad paradigms born on the web to new mediums. Marketers have gained the ability to reach highly targeted audiences on web pages, in sponsored social posts, and now – maybe most important to many – during a break in your favourite TV show. The bigger the platform, the more opportunity there is to capitalise.
While not all of these mega-mergers will be finalised in the next 12 months (and some will surely hit roadblocks and never come to fruition), expect to see more media companies gobbling each other up in a bid to form larger media networks of various configurations.
2. Broadcast TV will become a digital ad ecosystem
Pay subscription streaming services such as Netflix, HBO and a few others will continue to flourish for the foreseeable future, but that doesn’t mean the ad-supported broadcast model is going away – in fact, it’s about to become more relevant than ever.
As alluded to above, this year marks the first time that automated ads will be available on broadcast TV in the US. As this trend expands, TV advertising will increasingly resemble advertising online, ie, a data-driven undertaking in which ads are delivered to the right eyeballs with surgical precision.
Right now, there are a variety of services that exist to help marketers parse Web users by microsegregated demographics, just as there are services to help create and distribute Web ads. However, when it comes to programmatic ads on TV, the infrastructure is still in its infancy. But be assured, it will mature quickly.
To this end, a consortium of local television broadcasters including Nexstar, Sinclair, Tribune and Tenga launched the TV Interfaces Practices (or TIP Initiative), which aims to standardise, streamline and accelerate electronic advertising transitions for local broadcasters and their media agency partners. This will be a fundamental change in the way local broadcast stations conduct their business. Speaking of local TV ad ecosystems…
3. This transition will reinvent local broadcast TV
Ask any local broadcaster and they’ll tell you the biggest threat to local stations isn’t other local stations, it’s Google and Facebook. These Web-based ad platforms allow local companies to buy highly targeted (and therefore, highly efficient) ads with no minimum ad buy. With addressable TV ads, this pool of advertisers will have both the reason and ability to pour their limited marketing budgets back into local broadcast.
With today’s broadcast model, a local diner would have to launch a major TV campaign to secure a predictably meaningful effect. In the addressable age, the owner of said diner could use their limited marketing budget to launch a smaller, but hyperefficient TV campaign. For example, they could tout new menu options that would be guaranteed to reach 1,000 residents in specific areas who already like the restaurant’s Facebook page. The latter example would presumably be a far more effective campaign, even if it was more expensive per impression.
4. Video ad dollars will migrate en masse from digital to TV
Marketers will favour video ads built around TV broadcast over those on the web for two reasons: 1) the big TV in the living room is still extremely important and 2) smart TV analytics are far more reliable than those on the web.
Studies have found that a majority of all web traffic is from bots including an estimated quarter of online video impressions – this false data is much harder to pull-off with a television. If advertisers want to have guaranteed impact for their video ad buy dollars, TV will become an extremely attractive option.
Aside from issues related to fraudulent impressions, ads on the TV are inherently more viewable. The concept of ad viewability has come to rule the digital world in recent years, so you can be sure that marketers who work in the web video world will be absolutely enamoured with the promise of 100% viewability.
5. Expect more experimentation with TV advertising
Not only will new technological realities provide marketing teams with new ways to target ads, but the ads they create will be able to tap into things like interactive functionality. There aren’t many successful examples of interactive TV ads out in the wild yet, but we can be assured we will see a lot more experimentation over the next 12 months. Following a period of trial and error, someone will be the first to do it successfully. Keep an eye out for it.
6. Analytics will move away from a Nielsen-centric endeavour
In a previous era, the TV industry was built entirely around approximate age/gender demographics, which were just about all that was available with the analogue technologies of the day. As we move into the new data-driven addressable era, marketers will demand more granular data that will pull in data from various sources to pinpoint users based on not only their age and gender, but on their Facebook likes, past Google searches, Amazon purchase history, device that they’re streaming on, etc.
New approaches to TV advertising are still emerging. The rules are being rewritten, making it an exciting, pioneering time to be in marketing. As they say, if you want to build a new kingdom of your own, the best place to start is a new frontier.