Out With TV Ad Spend & In With Digital?
Television advertising is getting seriously bad PR. We’re talking, “How much longer until they breathe their last breath?” headlines bad. This is nothing new. Search online for “television ad spending” and you will find gloomy articles written even a few years back.-
Yet the fact remains that, despite all the talk about cord-cutting and Netflix and streaming–oh my–television ads are still alive and well. TV ad spend is still on the rise (albeit a slow rise), and the Super Bowl commercials remain a big attraction. Rentrak’s Ad Retention Index revealed that in 2015’s Super Bowl, which had a record-setting TV audience, “Ad exposure was almost equal to viewership of the game itself”(source). There is enough “light at the end of the tunnel” to make all the woeful predictions seem a bit…premature.
But we have to admit that with all the information out there about the decline of television advertising, it can’t all be smoke and mirrors. There is enough evidence that the way businesses are planning their ad budgets has changed, and that a growing amount of ad dollars are now being allocated towards digital spend. Great news for us, right? We’re all about creating and tracking digital paid campaigns. In a way, wouldn’t it be in our best interest to jump on the “RIP TV” bandwagon?
Thing is, we’re not so sure it would be in our clients’ best interests, or any business’ best interest, to kick television ads to the curb–at least not yet. In this post, we’ll be catching you up on the shifting budget situation, and determining whether commercials could still be worth your time and money.
The Case Against TV
Even though it’s been proven time and time again that none of us are very good at it, many of us still insist on multitasking. At work, it’s a source of pride. While watching TV…well that’s become sort of a given. According to an Adweek article covering Accenture’s findings on Digital Video and the Connected Consumer, “87% of consumers use more than one device at a time,” with the second device most likely being a smartphone.
But of course, when anybody tries to multitask, he/she does each separate task worse than he/she would’ve been capable of with singular focus. In other words? Advertising messages get lost.
In a study done at Ohio State University, viewers ages 20 and over were split into groups of those who focused on just a TV screen and those who used their phones and tablets while watching TV. Those who’d been focusing on just the TV were able to remember 2.43 out of every three brands that popped up on screen, while those who’d also been using smartphones or tablets only remembered an average of 1.62 brands.
People are now fully capable of avoiding most commercials by recording, downloading, or streaming shows online. Netflix, Hulu, and Amazon are only a few companies offering online streaming options, with memberships that provide ad-free experiences.
According to a study done by cable-equipment maker Arris, 84% of respondents “want to fast forward through the ads they watch,” and “60% of those surveyed said they download or record a TV show just so they can fast-forward through commercials” (source).
It doesn’t require a stretch of the imagination to understand why this may be. Television does not provide marketers with the fine-tuned targeting capabilities that digital does. How many times have you had to sit through a commercial that was completely irrelevant to you? With digital, companies can hone in on a certain demographic and provide that audience with appropriate messages–ones that they’ll be less likely to want to avoid.
Reflected in the Money
Companies understand their audience uses mobile, social and digital media all the time, and there’s been a trail of money following this trend.
Research has shown that between 2011 and 2016, “almost 40% of […] traditional TV viewing time [by 18-24-year-olds] has migrated to other activities or streaming” (source). The group of millennials in the study has been decreasing their TV viewership by about 1.5 hours a day in the past 5 years.
In reaction to this drop, companies have been decreasing their TV ad spend. According to eMarketer:
“Television will grow 2.5% this year, compared to 4.5% forecast in Q3 2015. In the long term, TV ad spending will continue to grow by about 2% a year. But by 2020, TV ad spending’s share will drop below one-third of total media ad spending for the first time in the US.”
With that drop and those predictions, it’s easy to understand the epidemic of “TV is Dead” articles and blog posts. But there’s more to the issue than the above arguments, and the additional information is what’s keeping us skeptical.
The Case for TV
Despite the rise of digital media, TV ads have remained effective in driving conversions, virtually untouched by the growth of online marketing.
A study done by MarketShare and covered by AdAge revealed that “TV’s effectiveness in driving sales dipped just 1.5% between 2012 and 2014, whereas online’s lift suffered a 10.3% decline” (source). Our last post covering ad blockers explains some of the losses digital marketing, online commerce have suffered due to the growth of ad blockers. MarketShare’s findings show that even with DVR and online streaming opportunities, TV sales have not been hit quite as hard as online media.
WiFi Has Not Caught Up
Another reason online content cannot truly replace TV is due to the weaknesses of WiFi. Visit another country, city or even state and you will quickly find out that WiFi quality is far from global.
In a report by Accenture, this less-than-perfect situation comes to light as “89% of consumers watch long form video on connected devices, but many report issues with their viewing experience” (source). Such issues may not be such a big deal for supplementary content an audience may want to watch, but what about live events? Big sports games? Season premiers?
As long as WiFi remains fairly unpredictable in quality, TV will stay the number one screen to go to for engaging, timely programming.
Video Content Success
Data shows that television is still the dominant video consumption source. Though streaming and mobile video are on the rise, the numbers are still in favor of TV. In weekly hours of viewing among millennials, linear TV is in the lead with 8.2 hours to streaming’s 5.7. Among adults, the numbers are in favor of TV in a ratio of about 4:1.
True, digital video is predicted to surpass TV in the coming years. However, as Paul Verna, senior analyst at eMarketer, remarked, “The reality is that digital video is growing not at the expense of TV, but because video content is more popular than ever” (source).
The assumption that media consumption is a zero-sum game is incorrect. Audiences may be seeking digital video to access additional video content on top of what they’ve already seen on TV–in other words, digital complements to television. One does not have to eliminate the other.
They Go Together
Realizing that digital and traditional marketing are not an either/or decision can make a marketing strategy stronger. YuMe, the operating system for TV 2.0–a media mix of TV and online video–partnered with Nielsen in a study that proved this.
The pairing ran a study “[assessing] the impact of a $500,000 online video ad buy for a PHD client’s $2.6 million TV flight” (source). This initiative ended up enhancing existing TV placements, increasing reach by 7 percentage points, frequency of exposure across screens, and Gross Rating Points by 34%.
It seems that it’s all about leveraging TV and digital to work together, so they can compensate for each other’s weaknesses and enhance strengths.
There’s certainly quite a bit to think about when it comes to the future of TV and TV advertising. While viewership of linear programming may be down compared to the past, and may in fact be surpassed by digital, is that truly a sign of an end? We’re not so sure, and neither, we think, should anyone be.
As it stands, TV’s audience is still too large and engaged for advertisers to pass an opportunity to use it as a platform. Meanwhile, digital effectively targets your audience on the platforms that have become an essential part of everyday life.
How can you give your ads (and business) the best shot possible? Create advertising that entertains, speaks to, and holds value for your audience on BOTH. Two really is better than one.
Where do you stand on the matter? Do you think the days of TV advertising are on their way out? Or do you believe in the value of commercials? Let us know in the comment section.