I just wrapped up my report on the future of television: “Digital Disruption Rattles the TV Ad Market.” And, while I was interviewing and exchanging views with advertisers and senior TV industry executives, a clear and surprising find emerged…
I wasn’t surprised to hear visions of dynamically targeted ads to deliver the right message to the right household. Neither was I surprised by the dream of synching messaging on the living room screen to the screen in people’s hands. Nor was I surprised that many in the industry still want to shoehorn these new ad opportunities into the old Nielsen rating model of the TV ad market.
What surprised me was the general optimistic outlook that these new developments will bring even more dollars to the TV ad market.
For decades, talk of the impact of cable television, VCRs, DVRs, online advertising, etc. has usually predicted the end of TV’s reign as marketing’s most powerful medium. New technologies would sap advertising effectiveness and splinter the audience. New advertising opportunities would be more engaging and measureable than the soft branding of TV.
But the fact is, the opposite happened: TV is stronger and more important than ever. Even as prime time TV audiences have shrunk, fragmenting across hundreds of channels on the cable spectrum, the rest of the media landscape has fragmented and faded even faster.
But perhaps I should amend my statement that TV is more important than ever: something like “video entertainment content originally created to be broadcast on television networks is stronger and more important than ever.” As these programs find new audiences, on new devices, at new times in viewers’ lives, it creates opportunities for video advertising to draw more dollars and more advertisers to it.
Every few years we marketers think we have digital figured out. First it was websites, then it was about eBusiness strategy, then came social, and more recently, we're all about mobile. These are all good things, to be sure, but conquering any one of these – or all of them together – still misses the larger point: Digital disruption is bigger than any of them on their own, and it is nowhere near finished turning the marketing and advertising world upside down.
Consider the Super Bowl. Every year the big game captures more eyeballs and, along with them, more ad dollars. Some point to continued TV spend as evidence that people are in denial about the role of digital, as Adobe did with its clever spoof on Super Bowl ads this year. But note that some of the most prominent ads in Super Bowl 2013 encouraged an expressly digital component – from Budweiser's name-the-pony campaign to Oreo's crowd-pleasing Cream or Cookie campaign, tagged with "Choose your side on Instagram @OREO." The most elaborate of these was the Coke Chase, a Twitter-based real-time voting campaign that earned @cocacola nearly a thousand more Twitter followers on game day, according to Twittercounter.com.
These are worthy – and relatively cheap – forays into making TV ads more, rather than less, relevant in a digitally disruptive era. But these all miss the broader point about the power of digital. Digital won't just disrupt the way brands communicate with consumers, it will afford those brands the chance to build a direct digital relationship with those consumers. If they don't blow it, standing idle while someone else grabs that relationship first.
NBC recently announced that it would be streaming its coverage of the 2012 NFL Super Bowl online. NBC has streamed big events before (2010 Olympics, Sunday Night Football), but the big difference here is that it is selling video ads that will run exclusively on the online stream independently of the TV broadcast. This is a huge step for NBC as an ad seller since it is recognizing its untapped online audience and attempting to monetize it. Although the Super Bowl streams (restricted to the US only) are expected to greatly pale in comparison to linear TV viewership, Forrester expects the streaming audience of the Super Bowl to grow dramatically in years to come.
2011 has seen some major change in advertising. Although TV is still king, there’s no denying that online video, across a wide variety of devices, is experiencing strong growth. TV advertisers must now contend with smartphones, computers, and tablets as alternative sources of premium video content for engaging viewers with targeted ads.
As media fragmentation increases, marketers will need to rethink their strategies and start to look at online video and TV as two sides of the same coin. In our latest report, “Why Marketers Must Integrate TV And Video Strategies” (subscription required), we make the case that marketers will merge their online video and TV advertising teams to more efficiently reach their audience across whatever screen they happen to be watching. Next month, our VP Practice Leader, David Cooperstein, will be speaking at the ANA TV & Everything Video Forum in New York about how marketers’ attitudes and strategies are shifting in the face of this new media convergence.
Last week’s financial market roller coaster is so far not affecting fall TV upfront buys, which are due to convert to orders in late August/early September. MediaPost reports that media agency leaders aren’t seeing any signs of adjustments to the TV upfront buys and expect Q4 to remain strong despite economic uncertainty. Steve Lanzano, president/CEO of the TV station association TVB says, “Back-to-school consumer spending should provide a good barometer for retail spending in the upcoming holiday season . . . But at this time it is not expected that planned advertising spending will be affected."
This attention to the TV market reflects its continued advertising power position. Despite frequent proclamations of TV’s demise, the fall 2011 TV upfronts showed that it remains the go-to media for many advertisers. What is new, though, are signs that nascent TV and digital convergence is now being led by the ad sellers themselves. TV networks like Fox and The CW are following their consumers to multiscreen viewing by offering integrated video ad deals that span on-air and online. What does this mean for marketers? To stay connected with their consumers, marketers must get off of the couch and out of the living room to reach consumers through and beyond linear TV programming. Check out my report “The 2011 TV Advertising Upfronts Preview Convergence Of TV And Digital” to learn more about how these trends will affect brand marketers.
Our Researcher Mike Glantz has been tracking the changes in TV media buying for us. Here are some thoughts from him on a new announcement from Nielsen and Kantar:
Although TV controls the lion’s share of the budget for most marketers, it has rarely been the most innovative or accountable medium. However, as TV becomes more fragmented and has to compete with digital, mobile, and over-the-top (OTT) video for viewers’ attention, marketers will need more granular data sets that allow them to track viewers across multiple platforms. In our Q4 2010 report “TV’s Currency Conversion” we made the call that set-top-box (STB) data will emerge as a parallel data currency with Nielsen for TV marketers. STB data allows marketers to accurately measure audiences across the tiniest cable networks, measure second-by-second commercial data, and compare audiences across TV and digital. We argued that STB data adoption would start with local marketers, since local marketers:
Brand marketers don’t spend much online. It’s been a long-time frustration for me, but it’s undeniably true: According to our most recent interactive marketing forecast, marketers in brand categories spend less than half as much of their marketing budgets online as marketers in direct response categories. Brand marketers also continue to spend a huge portion of their marketing budgets on TV.
I’ll be honest: Five or 10 years ago, this made sense. Although lot of us were shouting from the rooftops back in 2000 about the scale and power of the Internet, the truth is back then its scale and power were relatively limited. The majority of the population still wasn’t online, Internet usage averaged only a few hours per week, and the brand stories we could tell online were constrained by both tiny banner ads (anyone remember "half banners"?) and tiny bandwidth (broadband access, and with it online video and other rich creative, was years away from the mainstream).
In that environment, it made sense that TV was by far marketers’ most important channel for building brand. After all, it offered brand marketers by far the largest media opportunity (more total users, and way more total hours, than any other media channel) and by far the richest brand impact of any platform. Marketers would have had little choice even if they wanted it: 30-second TV spots were the be-all and end-all of how they explained the meaning of the brands, and all other channels — online, radio, print, outdoor, and everything else — were simply a chance to reinforce the messaging in the TV spots.
But the conditions that made TV the de facto heart of our brand messaging no longer exist. Today, interactive marketing is ready to lead your brand campaigns, for four key reasons:
Overall, the conference featured an excellent lineup of presenters and speakers:
Nielsen announced that it is adopting Ad-ID standards into its local and national TV measurement methodologies. If marketers embed the Ad-ID tracking code, Nielsen will be able to report on brand-specific commercial ratings.
Bob Liodice, CEO of the ANA, announced that the ANA is forming a joint consumer panel with Canoe Ventures to test the effectiveness of Interactive TV (iTV) ads.
Al Gore discussed the importance of multichannel media planning and how CurrentTV is working to reach its audience across TV and digital.
A shift is occurring in the relative importance to marketers of Social Media and Super Bowl advertising. Of course, the 2010 Super Bowl isn't the first we've seen of the marriage of Social Media and Super Bowl ads. Last year, Doritos struck gold with a UGC (User-Generated Content) ad produced by two unemployed brothers, and the brand is back this year with more UGC ads competing for even greater prize money.
If you track Social Media news, I'm sure you saw the eye-catching headline: "Pepsi's Big Gamble: Ditching Super Bowl for Social Media". For the first time in 23 years--23 years!--the brand will not be purchasing a Super Bowl spot. Instead, it is sinking $20M into a Social Media program called Pepsi Refresh.
...(Subtitled) Or at Least Marketing as We Know It!
But first, since this is my first blog post as a Forrester analyst, I thought I'd make a quick introduction. I'm Augie Ray, a new Sr. Analyst of Social Computing serving interactive marketing professionals. Prior to joining Forrester's Bay Area office, I was a Managing Director at Fullhouse, a social and interactive communications agency in Milwaukee, WI. I'm very excited to be part of the Forrester organization and eager to help clients with research, data, and consulting on the profound and exciting changes underway with Social Media Marketing.