Changes in the viewing behaviour of video media have significant consequences for TV broadcasters. Digital mediums offer huge flexibility for modern day advertisers, who demand increasingly customisable content. TV will need to strive for this dynamic approach to continue to thrive, and the sooner the better.

The Future of TV Advertising: Strategies to Keep TV Relevant in an Increasingly Digital World

By Tara Keenan and Julio Püschel

Advertising revenue is key to a broadcaster’s business model. In our increasingly digital world, the pot of advertising spend has grown – just not on TV. Global statistics for advertising spend show that advertisers have not significantly increased their spend in TV for the last decade. By comparison, digital advertising expenditure has eclipsed TV, tracking to grow by $180B between 2010 and 2019[i]. This trend is illustrated in the infographic below. While there is no doubt that TV remains one of the most powerful forms of media, there is a question on how relevant it is likely to stay in the future.

It is also evident that TV broadcasters have been missing out on revenue opportunities presented by online media. Compared to digital, TV is hugely restrictive, lacking options as to when, where and how users are shown advertisements. Before the internet does to TV what TV did to radio, there are strategies that broadcasters can employ today. By combining the technologies that power our online world with the wide-range appeal of TV, broadcasters can not only stay relevant but increase their share of the pot.

Where the World Watches

TV media is consistently shown to be the most engaging, familiar and trusted medium by the world. According to a TiVo report in 2017, the average global viewer consumed 4.4 hours of video a day. In the UK, 92% of the population is engaged by TV on a weekly basis at a minimum. Eurodata TV Worldwide reports that TV consumption in Europe and South America is steady or rising. However, North America and Asia show overall decreases[ii], and in the US, daily TV viewing by 18-24-year-olds decreased by over an hour between 2012 and 2017[iii]. While TV is clearly still widely watched, considering our viewing habits on a global scale, other digital media are driving competition for our eyes – broadcasters could be missing a trick.

Drivers of Change

There are a few key drivers of change which threaten the future of TV advertising:

  • Firstly, viewing behaviour is changing. The boom in Streaming Video on Demand (SVOD) opportunities has led to a substantial increase in one-screen-to-one-viewer media usage, now easily transportable.
  • Secondly, advertisers are spending their money differently. Digital advertisers have more control than ever over who views their ads, where and when. This has come in conjunction with a growth in mobile video watching[iv]. This allows them to be more frugal when it comes to ad spend.
  • Thirdly, messages are becoming more easily tailored - and pre-emptively. Even those who would never have been able to afford TV ads in the past, can now utilise TV as an advertising medium.

Adding Digital Intelligence to TV

When TV advertising is no longer restricted to a uniform, nation-wide release, it creates greater opportunities for the medium and is more likely to stay competitive. Like online advertising, the increased availability and intelligent use of viewer data can keep TV advertising compelling.

Smart analytics allows small-medium-businesses (SMBs), niche and regional businesses, in addition to more traditional clients, to invest in TV advertising that is cost-effective, targeted and trackable. Tailored video ads matched to detailed user profiling can be downloaded and stored in the set-top box (STB) on the TV and will queue to air once a viewer begins watching. For example, Sky’s AdSmart platform in the UK has allowed it to extend its advertiser base to include more niche and local companies. In 2017, Sky agreed to make its platform available on Virgin Media’s cable service. Dish (USA) and Corus (Canada) have instigated similar initiatives with local providers to offer programmatic and native advertising options across their channels.

Smart technology also promotes revenue uplift for broadcasters, allowing them to sell the same ad intervals to multiple advertisers targeting distinct audiences. This functionality is becoming increasingly relevant, namely for digital terrestrial TV (DTT) players who will need to gain an upper hand to remain competitive in today’s dynamic advertising ecosystem.

Long Live TV

Substantial competition from digital media should prompt TV broadcasters to innovate the traditional advertising model. Broadcasters need to provide advertisers the flexibility and control they can achieve online, which can be done using smart analytics that already exist, as illustrated in the infographic below. They can enable advertisers to automatically send personal, user-optimised content to viewers at a competitive rate to online. If broadcasters can leverage this digital intelligence with the strong engagement pull of TV, not only will TV advertising remain competitive, it will thrive.

> Click here to download 'The Future of TV Advertising' infographic

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[i] “Mobile is driving most ad spending growth worldwide”, Recode.net, September 2017.

[ii] “TiVo Insights 2017 Global Study”, Tivo.com

[iii] “The State of Traditional TV”, marketingcharts.com, December 2017 https://www.marketingcharts.com/featured-24817

[iv] “The Future of Mobile Video”, Cartesian and Mobile World Live, March 2017