At the beginning of each television season, the major networks hold what they call “upfronts,” where they present their upcoming programming to potential advertisers. Now, remember that the recent industry wisdom has been that traditional television’s vaunted days as the premier advertising platform are on the wane, and that eventually digital video will supplant it altogether. And indeed, the past few years have seen upfront sales continually dipping as digital outlets have siphoned off a greater share of the domestic marketing spend.
But YouTube hasn’t killed the boob tube just yet: This year’s upfronts saw a huge increase in demand, even as networks began raising their rates significantly for the first time in almost a decade.
The key measure in TV advertising sales is “Cost per thousand impressions” (CPM). Last year NBC was asking for a 5 percent bump in CPM. The network’s ratings still aren’t what they were in its heyday—nor any other network, for that matter—but increased demand for airtime has led to a sizeable increase in their ad rates: “NBCU’s NBC broadcast network has pressed for CPM hikes of between 11% and 13% in deals for primetime inventory, according to media buyers…”
Radio and print media like newspapers and magazines also took a hit from the emergence of digital advertising, but unlike television, they don’t appear to have much hope for a rebound. At their peak they accounted for 40 percent of all advertising. Today that number is closer to 10 percent.
The Allure of TV
So why is television proving more resilient? For one thing, it’s still incredibly engaging as a medium. There is much talk about the interactivity and social-connectedness of digital platforms, but the passive and relaxing format of TV is still highly desirable to many. Not everyone wants to drive the car at all times. Sometimes it’s nice to just be driven.
Digital video is also typically much shorter, unplanned, and less “sticky”—so still not quite as valuable as TV broadcasting. The day may come when a Super Bowl spot streamed online costs as much as one that is televised, but that day hasn’t come yet.
This year, consumer packaged goods (CPG) companies, quick-service restaurant chains, and pharmaceutical companies in particular have made big investments in the coming TV season. Many of the top domestic advertisers are in markets that don’t significantly benefit from the hyper-targeted, youth-oriented, and somewhat ephemeral world of digital advertising. Massive CPG firms like Procter & Gamble, Unilever, and Nestle that manage entire fleets of brands still see the value in broad-based marketing, because they have products in virtually every home and have worked for years to engender lifelong customers.
Still, even the big guys can see the writing on the wall and understand the need to adapt with the times. The Millennial demographic is moving away from TV in growing numbers (over the past five years, TV time dropped 34 percent in the 12-17 demo, and fell by 27 percent for the 25-34 age group). Brands hope to develop relationships with young people that stick with them. If you can make a loyal customer out of a teenager today, that is potentially decades of repeat sales down the road.
Furthermore, TV is beset on all sides by upstarts gunning for their advertising market share. Netflix, Youtube, Hulu, Facebook, Amazon, and dozens of smaller players have their own far-reaching plans on attracting eyeballs with original, purchased, and user-generated video content.
If that wasn’t enough, DVR ad-skipping has eroded some of the confidence brands used to have that their ads would even reach their target markets. Other than live events like sports, most programming is ripe for time shifting that obliterates their hard work with the press of a button. (“Furthermore, rampant multi-tasking has marginalized much of the time that still remains. For millions, the television has actually become the “second screen” experience…”)
Adapt to Survive
So while traditional TV still has fight left in it, there’s definitely cause for rethinking the old paradigms. Highly interruptive commercials are disfavored, so native formats, sponsored content, and reduced commercial loads are being reconsidered.
For example, on Leap Day, NBC replaced 18 minutes of commercial time on Late Night with Seth Meyers with programming sponsored by American Express. Fox’s hit drama Empire has had limited commercial interruptions since its inception, which helped keep fans engaged and increased the value of the airtime.
Turner’s subsidiaries, including TNT and TruTV also set a goal of a mere ten minutes of ads per hour during some shows: “Using methods from focus groups to eye tracking, Turner research found that reducing commercial clutter gives viewers a better experience and advertisers better results, a spokeswoman said, with gains in both ad recall and purchase intent.”
The other big change in TV is newer metrics. The tube still lags far behind online platforms in their extreme granularity and speed when it comes to analyzing user activity and engagement, but the gap is not quite as wide as it once was.
Cablevision has invested heavily in “addressable advertising,” the ability for brands to select audiences rather than programs when buying airtime. According to Cablevision media sales president Ben Tatta: “In the last three years it’s grown faster than any other capability on the ad side.”
In the end, if TV hopes to survive into the next generation of media consumption it needs to accept that it is now part of a much larger omniplatform ecosystem. “It’s no longer a debate between TV and digital, said Adam Harter, VP-cultural connections, PepsiCo. ‘It’s how do we bring those two things together?’”