Commentary
TV Ad Industry Terrible At Marketing
- by Dave Morgan , Featured Contributor, November 6, 2014
I believe that these perceptions are significantly out of touch with reality. The TV ad industry hasn’t been doing a very good job telling its story, extinguishing perceptions in the market that media users have abandoned TV and TV advertising for pure digital media.
I’m not a Luddite. I started in digital ad tech in the early 1990s and was there for the births of the banner, the ad server, the ad network and behavioral targeting. Today, however, I work at the intersection of digital and linear TV -- and I am shocked at the disconnect between belief and reality among so many in our business today. Here are some of my favorites myths:
advertisement
advertisement
Belief: No one is watching TV, certainly not Millennials. Reality: According to the Nielsen Cross-Platform Report, the average American watches more than 34 hours of television every week, up more than 25% from 15 years ago. Not only do Millennials watch TV, they watch six times as much of it as they do digital video, and 35 times as much as they watch video on a smartphone.
Belief: TV viewing is collapsing; just look at the ratings of the top shows. Reality: Ratings of top shows have been declining for years and years, but not because viewership has been dropping -- see the stat above documenting the 25% surge in viewing from 15 years ago. What is different is that viewers are watching many more different shows, on many more different networks, at many more different times. It’s called fragmentation. The Web was born with it, and TV now has it in a big way. Two-thirds of all TV viewing in the U.S. now occurs on an episode with a rating under 0.5. Yes, that’s two-thirds of all viewing!
YouTube is biggest platform today for video advertising. YouTube represents more than 50% of the digital video consumed in the U.S. today. However, as an RBC Capital Markets analyst has reported, the syndicated TV show “Judge Judy” will deliver twice as many U.S. audience ad minutes in one half hour as YouTube will deliver in a day. Now you know why she is paid so much. Just imagine if you compared the numbers for all of CBS versus YouTube.
Why do these perceptions persist?
First, many are crystal-balling it instead of paying attention to present events. There’s no question that Internet Protocol video is the long-term future of video entertainment and advertising. It’s easy sometimes to miss what’s happening now when everyone is focused on what might happen 10 years from now.
Second, the TV ad industry doesn’t market itself well, because it never needed to. It’s not used to an ad world where it’s not the bright shiny object. When the competition was print, radio and direct mail, TV’s sight, sound and motion made it sexy. Unfortunately for TV today, if you’re not a digital, mobile, social-first marketer, you’re not likely to get promoted.
Third, the TV ad industry is small and relatively insular. TV folks usually don’t talk to the broad advertising marketplace, but just to other people focused on the small screen. Only recently has the industry discovered the importance of putting digital folks into significant roles in their businesses. And TV folks spend more time fighting for share of TV ad budgets than fighting for a bigger industry share of marketing budgets overall.
What to do? It’s time for TV media owners to wake up and tell their story and be willing to take on the digital ad and marketing world on their own terms. This means talking about more than sex/age GRPs. It means measuring, accounting, and guaranteeing not just GRPs, but actual media outputs.
TV advertising’s unfair competitive advantage is its massive, fast reach and action-driving impact. It puts butts into seats. It moves products off shelves. It drives massive numbers of people to websites. TV needs to track all its ads from impression to impact and compete with pure digital channels on the numbers, not just on the past.
What do you think?
Dave Morgan your analysis is flawed! The Judge Judy daytime audience is older women with a median age of 60 and skewed towards lower income and education. Advertisers know this since most of the commercials are for car insurance, personal injury attorneys, title loan companies, or cable TV providers, which is not a proxy for Millennials. Compare apples to apples man !
Good point Leonard. Let's look at a show with strong Millenial viewership. The Big Bang Theory on CBS cumes more US audience ad minutes in a single 30-minute episode than all of YouTube does in an entire week.
articles like this are very important for the industry to read because facts rule, and the narrative in the echo chamber is always based on ungrounded opinion. TV is definitely the number one medium. Radio is number two, or tied with online. facebook and online video represent a tiny fraction of time spent vs. TV. TV advertising is growing and will continue to grow, despite the ungrounded predictions of Forrester and Bob Garfield. Readers might be interested in my hit or myth quiz... http://blog.joelrubinson.net/2012/09/take-the-hit-or-myth-quiz-which-marketing-beliefs-are-true/
Your points about TV being an insular segment due to the prevailing narrative and their own lack of public discourse are very important. When we work with marketers who have specific strategies in mind, it can be difficult to challenge their assumptions-- popular sentiment influences decision making better than data, unfortunately.
Precisely, Dave. And as Wayne Friedman's story last month (http://www.mediapost.com/publications/article/235368/more-revenue-traffic-for-internet-brands-that-adv.html?edition=) shows, even the biggest digital players rely heavily on TV for the awareness that sparks site visits.
p.s. I say precisely re: "I believe that these perceptions are significantly out of touch with reality."
Elephant in the Room = Ratings are a measurement of the "program" audience. The masses have figured out how to enjoy their "program" WHILE avoiding traditional commercial breaks. This week alone I enjoyed 34+ hours of viewing more than a dozen programs and avoided all but a handful of ads. It was wonderful.
PS. The Nielsen reports are mostly paid propaganda for the broadcasters at this point.
Given that many of my clients might be reading this, I must give a measured response here. Suffice it to say that I see the view from the inside, which has a different perspective.
Let us start with this.
"According to the Nielsen Cross-Platform Report" (insert statement).
Interesting. But here in Media Post, this article - http://www.mediapost.com/publications/article/234390/how-networks-counts-of-mobile-tablets-will-chang.html?edition=
discusses that Neisen will only begin tracking mobile and tablets in 2014. Nice, but I have many massive media companies and they are seeing FAR higher number from mobile devices via their own metrics than anything Neilsen says. Yes, yes, I know, the value of 3rd party verification and all that, but where the real work is getting done, the focus is on devices and streaming delivery. Budgets are being made with a distinctly "digital delivery" flavor.
"Belief: TV viewing is collapsing; just look at the ratings of the top shows." Who gives a hoot about ratings? Let's talk REVENUE. While live TV still commands fantastic numbers, there's been a steady decline in CPM for prerecorded programming. It's not that ALL viewing is collapsing, it's that SOME viewing is collapsing, and that is the prercorded kind.
"YouTube is biggest platform today for video advertising. "
Judge Judy? JUDGE JUDY? Really? You compare the ad minutes of Judge Judy (most of which play to an empty room as people use the toilet while the ad plays) to Youtube, the single biggest direct platform ever made?
Here's the thing. I've heard all of this stuff about "invincible" industries so many times over the years that it's getting tiresome. In 2000, I attended an industry conference for Newspaper publishers as a guest speaker. They sounded like this article. Same year, another event, this time for Travel Agents. Change a few nouns here and there and you have the same story.
No industry is too big to fail. No sector is immune to deconstruction by changing consumer whims and new technologies that make their core business worse than obsolete. Consider the film business - Kodak in particular. Kodak's revenues peaked at nearly $16 billion in 1996 and its profits at $2.5 billion in 1999. the whole film/photography ecosystem was worth at least as much as the TV advertising ecosystem of today, perhaps more if you factor in in professional users.
TV is a huge, powerful industry, no question about it, and I certainly don't think it's at the same risk as other "fast fail" industries such as Consumer Film Photography, but I do think that while "awareness building" is a huge benefit of television for advertisers, there's a whole lot more to think about these days with digital.
A very good piece, Dave. What amazes me is the way digital fanatics rave on and on about their "enemy" TV, citing preposterous notions about most of TV's ads being zapped or ignored while millions of people dash for the toilet, not once but every ten of fifteen minutes, one might assume. Absurd. The reason that TV will continue to dominate branding ad spending for years to come is simple----advertisers know that it works. Perhaps if the digital is king people did a little homework they wouldn't sound so wacky. There are plenty of facts out there, if anyone can be bothered to note them. Another point you made is also appropriate. Why aren't the TV people---especially those at the networks and the major cable channels--- speaking up? Can't they see that the "digital" guys are bombarding us with their zealous and vastly overstated claims, while "linear TV" folks are allowing this incessant propaganda barrage to go unanswered? Take the example of tweeting allegedly being a vital driver of TV program tune-in levels. Is that really so? Surely the networks know. Are the numbers really there?
This was a very interesting article, myself being a millennial, I agree with you that it is a myth that no one is watching TV, especially millennials. I believe that television will and will remain a huge part of every ages life for a while. I think as times have changed and things are evolving there are many different ways that one can view their favorite shows; whether that me Netflix, Hulu, or YouTube. Many people try to avoid ads on television, but we are all consumed by ads at some point during the day whether we think we are or not. I do think that television shows viewings are collapsing, I think this simply because there are so many different shows that one person can watch. Not only are there more then just the big networks that are premiering their many different shows, other stations are coming up with so many different options to watch compared to what their used to be 10 years ago. I think that we also have to remember people are watching their favorite shows and shows they consistently follow on Netflix, Hulu, and even the TV stations own website. I think that advertisers have woken up and know the correct ways to go and target that audience, they have adapted a digital strategy, and as much as we want to avoid ads, they are never going to be able to disappear.
Martin, you make many great points, and I agree that it can sound a lot like newspaper conferences from the 90's and '00 ... I was at many of them as well. However, unlike newspapers, TV doesn't have a user problem. TV viewership is still extraordinarily strong. While I cite Nielsen data, I can tell you that viewing data taken directly from tens of millions of TV set-top boxes tells the same story. Of course, I used Judge Judy as an example to make a point - no one would think that it alone was bigger than YouTube. But, as I wrote in my comment above, The Big Bang Theory on CBS is 7X bigger than all of YouTube in delivering audience ad minutes. There is no question that the TV business is in for some cataclysmic disruption - and soon. However, that doesn't detract from the core point that the industry is quite insular and bad at telling its story to folks who need to hear it - marketers who are inundated daily with stories of the need for social, mobile, video first strategies.
Funny, I spend 90 minutes having this same conversation with a couple of colleagues yesterday. In my opinion, this article is pretty on point.
I think some folks missed your point here, Dave, even though you were pretty clear. TV advertising garners the most money and yet it is one of the cheapest mediums to buy. TV has lower CPM's than almost anything in the media mix. That CPM price point problem is all about the lack of targeting capability, as Dave points out. TV still commands the largest share of media dollars though because of scale. Dave, your point about Judge Judy is spot on . Heck, you probably could have used episodes of Barney as an example, and you would still come to the same conclusion. Digital advertising scales one person at a time and every :30 unit on Judy scales at an exponential # compared to that. Exponential like distance from the sun vs. distance from the moon exponential! Can't we just enjoy both celestial bodies and all get along. The main point is that Dave wasn't making a case for either/or - he was making a case for both!
Great points Rich. You were able to say it more simply and clearly that me. Thanks!
Apples to apples comparisons need equivalent metrics not sample polling versus real time metrics. TV has been selling ever smaller audiences on the big hit TV shows for significantly larger monies the past two decades. The price of ads sold for incremental reach of TV scale is magic given the facts. Tonight show audience reach 1992: 52m Tonight audience reach 2009 8M - can Jimmy Fallon recoup all of the lost ground on traditional TV or combined with views on YouTube? hmmmm
Leonard, the fact that TV audiences are fragmenting, due to the proliferation of channels does not mean that it has lost its reach. You simply buy time on more channels than was once the case and you get your reach. As for higher prices for TV ads, so what? If advertisers were finding that their results were not in line with TV's rising CPMs, rest assured, they would switch to other media. As for the lack of comparable audience metrics, even though Nielsen is a survey, not a census of all 116 million TV homes, this doesn't mean that it is putting out substantially wrong data and, in reality, TV audiences are far smaller than is being reported----hence overpriced.