Linear TV saw an impressive triple digit increase in ad spend in the last year, and it’s all thanks to improvements made to targeting more granular audiences. Linear TV ad spend jumped 273%, and programmatic linear TV impressions jumped 840% in the last twelve months, according to a report released last week from Videology.
“With the growth in advanced TV capabilities, marketers are embracing solutions that go beyond age and gender to find linear TV programs, networks or dayparts that index highest for their strategic audience,” the report stated. “As demand for advanced TV solutions grows, more TV supply sources are opening inventory to be bought and sold programmatically.”
Programmatic ad buying for linear TV has experienced bouts of growth and lulls, as has addressable TV – both of which promise to deliver audience-driven targeting. TV ad sellers have been slow to sell inventory on programmatic exchanges, and the market for addressable TV is largely run by local pay TV providers selling local ad inventory using set-top box data to segment audiences.
Last year, pay TV provider AT&T launched a private marketplace with Videology for programmatic TV; and NBCUniversal began selling some of its national ads on programmatic TV exchanges. AT&T also acquired addressable TV software firm Invidi. But by and large, linear TV advertising is still mostly sold without being data driven. eMarketer has forecast that programmatic TV will reach $2.16 billion in 2017 and grow to $4.4 billion by 2018, while addressable TV advertising will reach $2 billion by 2018.
The data revolution is well underway in the digital advertising market, and marketers are now leveraging first party data in linear TV media buys. While the majority of marketers rely on third-party data to inform marketing campaigns, Videology found that over a quarter of marketers used first-party and CRM data for targeting on linear TV campaigns during the second half of 2016, a steady increase over years’ past.
“Brands and agencies have a huge amount of owned data, created through their direct relationship with consumers,” said Scott Ferber, founder and CEO, Videology. “By layering this first-party customer data into TV campaigns, brands deliver a far more tailored and granular advertising experience, ultimately resulting in greater ROI on their ad spend. This should be, and is becoming, a priority for anyone with access to owned data. I expect we will see this trend grow exponentially in the coming years.”
And there’s another factor in play here: the growth of connected TV advertising. For the past 5 years, all new TV models are smart TVs, meaning they’re connected to the Internet. And consumers are increasingly using Internet-connected net-top boxes and game consoles to watch digital and linear TV. That’s led to a surge in TV apps, where viewers stream TV shows and watch advertising. The rise of connected TVs will bring even more digital intelligence into the world of TV advertising, and further blur the lines between screens for marketing campaigns. But for now, the connected TV advertising market is tiny. Videology’s report found screen-agnostic advertising (that used the same ad across smartphones, desktops and connected TVs) grew 11% over the last year.
Marketers are eager to bring targeted advertising to linear TV, which is still seen as the most important platform to advertise on for reaching wide audiences. Some brands expect advanced TV advertising to grow in the near term. “The space just continues to evolve. Inside the next two years, we’ll see real addressable TV audiences, potentially where digital cable providers will be able to serve hyper-relevant ads to specific households,” a spokesman for Mercedes-Benz USA said. “That’s something that’s on the horizon that we’re really excited about.”
The renewed excitement in linear TV advertising is tempered by the growing body of evidence that, for key demographics, advertising on social video networks is a best bet for seeing sales lift. A report released last week from Brightcove found that three-quarters of consumers link social videos with purchase decision-making process. Of those surveyed, Millennials showed the strong tendencies to link social video advertising with purchase decisions. And Millennials are also most likely to trust online video “social influencers” brand endorsements over brand-made videos.
That’s why brands are so keen to advertise on platforms like Facebook and YouTube. And that’s not great for linear TV ad sellers. “YouTube for us runs the gamut. It’s a great above the line advertising platform,” the Mercedes-Benz spokesman said. “YouTube would say that they match up right next to any cable network, and actually have a broader audience.”