Fragmentation in video platforms and the marked shift in content consumption away from linear TV schedules has thrust more power into the hands of consumers, and is now forcing TV marketers and programmers to rethink the traditional TV advertising model. This was one of the hot topics at CES this year.
“The biggest threat is doing the same thing today that you did yesterday because it worked,” said Lynne Biggar, chief marketing and communications officer at Visa, speaking on a Fortune panel at CES earlier this month. “We need to not think that the success of yesterday is going to be the success of tomorrow.”
It’s become increasingly obvious to marketers that in today’s consumer-centric media landscape, advertising needs to take on a similar consumer-first perspective. The days of consumers sitting through a linear TV broadcast as basically over.
“We need to get much closer to media owners,” said Roel de Vries, VP of marketing, communications and brand strategy at Nissan Motor Corporation, at CES. “We need to work in partnership. We need to change the agency structure and how we allocate budgets. I fear we are not moving fast enough. The consumer is ahead of us. Our world has become very complex and we have to catch up.”
Across the industry, no one wants to admit – nor appear to believe – that TV’s role in advertising is eroding. Instead, operators, networks and advertisers alike are working feverishly to keep TV advertising relevant.
One of the things we heard repeated endlessly this year at CES is that the advertising space is re-organizing itself around consumer-first media buying. That means, among other things, that emphasis is placed around using data across screens to glean information about customers, and designing marketing campaigns that deliver a singular message across those screens.
“I’m a big believer in TV. I’m a big believer in the mix, and I think TV’s a core component of the mix,” said Jennifer Betka, CMO of StarHub. “But I don’t think that it is, in and of itself, the only means for connecting with an audience or telling a story. I think TV has a core anchoring purpose in an overall media mix.”
For TV networks, creating a holistic lens for advertisers to take advantage of, means creating an holistic view of measurement, too. “One of the things we’re trying to do is create a 360 experience. Digital is one part of the 360 program that includes television and mobile and social,” said Aaron Gallagher, SVP of digital ad sales for Scripps Networks Interactive. “The key there is always making sure we’ve got the 360 measurement. So click rates might be one part of the puzzle, but the overall program is how holistically is this 360 idea, driving brand awareness and product sales. Those are big, big programs that require big, big research efforts.”
Cross-platform measurement of viewership continues to elude television marketers, which throws a wrench in TV networks’ ability to offer cross-channel advertising programs. “The ability to measure in digital and the ability to measure in TV – they both have their problems. They both need to evolve. TV is inching forward,” said David Christopher, CMO of AT&T Mobility.
Nielsen has attempted multiple times to address this issue. Christopher said Nielsen’s work in measuring addressable TV is “an interesting evolution, and one that’s very much needed.” Amid the shifts taking place in consumer viewing behavior, linear TV audiences have all but evaporated for scripted series, and have seriously dwindled for live television. Networks have had a hard time translating their own cross-platform viewing measurement into an advertising currency that marketers will accept.
Nielsen, meanwhile, is struggling to adapt its own ratings systems in order to track cross platform viewing. Its latest answer is the total content ratings (TCR), a metric that looks to codify viewership of TV shows across platforms and devices. The TCR system seemed promising initially, but has quickly drawn ire from networks like NBC as being prematurely released. At the end of 2016, NBCUniversal’s Linda Yaccarino, chairman of advertising sales and client partnerships at NBCUniversal sent a letter to Nielsen arguing that the ratings system wasn’t ready for primetime.
“The whole industry eagerly awaits total audience data, and we recognize no solution will be perfect,” Yaccarino said in her letter. “However, a reasonable degree of accuracy and transparency must be minimum requirements for the launch of TCR. TCR is far from meeting these requirements, and it is premature syndicated release is irresponsible.”
NBCUniversal and other networks still see incredible value in live TV for driving viewership and consequently advertising dollars. NBCU bragged, for example, that it had generated record revenue for advertising during the 2016 Rio Olympics, despite the fact that ratings for the Olympics were down significantly over past games.
Marketers see that value in live TV, too. “For us, it’s all about live TV: the NFL, the World Cup, the Olympics – all of which we’re sponsors of,” said Biggar. “That’s where we spend a lot of our TV money. A lot of the rest of our money is spent on digital and other areas.”
Biggar added that for 2016, the top programs in terms of audience size will be live events, dominated in particular by sports (like the Olympics) and politics (like Brexit, or the US presidential election coverage).
According to AT&T’s Christopher, marketers were surprisingly interested in spending more on TV advertising in 2016 than in years past. “Last year, in the media landscape, you saw money actually move back into TV, into some of the premium inventory of sports and other genres,” he said. That’s because those are the only programs that can aggregate an audience on linear TV anymore.
Another important trend we’ll see continue this year is the proliferation of live televised events. Take the sudden resurgence of musicals being broadcast live on network television: from Fox’s “Rocky Horror Picture Show” reboot, to NBC’s recent production of “Hairspray,” to ABC’s live production of “For the Record.”
Networks are hoping to drive more tune-in with live broadcasts, but they’re also beginning to experiment and innovate in how they monetize these events. NBC, for example, aired a handful of live ads during its broadcast of “Hairspray” – reminiscent of the early days of TV advertising, where marketers essentially read their radio ads on live TV.
Another tactic that’s being explored is bringing native advertising to live TV in the form of branded content. NBC, for example, tapped show producers to craft a few marketing messages for sponsors. “The early data we’re getting back is it was a grand slam home run, across awareness, likeability and consumer experience,” said Yaccarino.
At the end of the day, innovation in linear TV advertising models will offer viewers a welcomed change to the tired forms of commercials that consumers have quickly grown tired of. Another comprise we expect to see more of in 2017? Reduced ad loads for must-see content. NBCU suffered such major backlash to a perceived increase in ad load during the Olympics that the network is now scaling back ad load for some of its other programs. We expect to see other networks forced down the same path, now that the viewers are calling the shots.