How advertisers can keep pace with the changing television landscape

1. Summary

Despite television ad spending crossing $75 billion in 2013, the industry’s core business model is in flux. Shrinking audience ratings and the fragmentation of television viewership across second and third screens could drive marketing and advertising dollars online and confirm the view of digital and direct marketers that television advertising is inefficient and doesn’t even deliver the reach it used to.

And yet television viewership is at all all-time high. Programming is as diverse as it has ever been, and viewers’ choices are driving new opportunities.

Media-measurement oligarchs are struggling to keep pace with seismic shifts in video-viewing behavior. Advertisers demanding accuracy are forcing programmers and distributors to cobble together what one industry leader calls Frankenmetrics. Driven by a combo of consolidation and new players, a fragmenting audience, and social media technologies, TV ad buying and selling is facing major disruptions. Advertising techniques that arose in online media are finally having an effect on traditional television. Trends are clear, while the TV industry response is less so:

• Online video spending is peanuts, and mobile is just getting started. Nonetheless, the Association of National Advertisers (ANA) estimates that multiscreen ad spending will grow from current level of 20 percent to 50 percent of budgets within three years.
• Social media’s titans are achieving audience reach that may surpass that of U.S. TV networks’, and the social networks are emerging as sources of several TV-enhancing services including combination buys, increased audience engagement, and media metrics.
• Lack of industry standards for cross-channel performance measurement is hindering broad adoption and market growth, and it is frustrating all constituents of the television supply chain. But multichannel video distributors are well-positioned and able to collect real-time click stream data analogous to web and online media channels.
• The first-place digital-derived TV techniques will play out in any sort of volume is for addressable inventory on cable-owned local spots and video on demand.
• Intelligent cross-platform media buying and planning is in a maturation phase. Key challenges still lie in the methodologies for data aggregation and standardization for things like de-duping viewership and the impact that has on impression valuation (for ad buyers) and viewership metrics (for buyers and sellers), but advertisers and program networks are moving quickly to adopt where they can.