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Threat to TV Ad Revenue and to Marketers Jeff Bronikowski, President, Tribeca Shortlist As President of Tribeca Shortlist, a new streaming movie service focused on great movies and featuring expert recommendations and curation, my primary goal is to build our brand and profitably acquire customers.
Running a new SVOD service while seeking marketing channels to reach potential subscribers at scale puts me in the unique position of being on both sides of an evolution in video consumption with significant consequence for the advertising and marketing ecosystem. The evolution is the decline in the availability and arguably, the effectiveness, of television advertising and the difficulty of outlets to replace TV traditional scale and effectiveness. Historically, television was cheap charms for pandora a remarkably effective way to reach a mass audience. In the 1970 there were only three national TV networks, so advertising on one or all of them was a surefire way to introduce a new brand to a vast swath of America. Throughout the 2000 technology entrepreneurs and pundits were quick to point out the of buying television and predicted the rise of the more measurable and targetable digital media on the horizon. Yet, throughout the onslaught from digital advertising, television spending in the US continued to grow, reaching $69B in 2015. Although digital spending has exploded during the last 15+ years, much of that growth was driven by response marketers and other companies that weren that likely to advertise on TV, with Google being the primary beneficiary. Large budgets did not rush online. Why? There are many factors. First, ad executives and CMOs are not stupid. This is why it has continued to capture the lion share of media from big categories such as Autos, Alcohol and CPG. Digging deeper, television has worked likely because of the fantastic canvas on which to display the message. It typically displayed on a big, beautiful screen that has occupied an almost religious presence in most American homes. A TV ad is full sight, sound and motion, with the creative budgets to match. There have been some fantastic commercials through the years and they undoubtedly helped build brands. At the same time, digital has primarily depended on sorry looking banners and been fraught with fragmentation, measurability issues, ad blocking and an absurd amount of fraud and viewability concerns. We now at a point where many CMOs are truly beginning to worry about the effectiveness of TV advertising. While it was always a concern that viewers would have the temerity to change the channel or leave the room during YOUR commercial, today challenges are far more severe. DVRs seem to have peaked but are in 50% of homes, enabling ad skipping with gleeful precision. Cable VOD has not yet mastered the right pandora charm collection ad load and has measurement problems of its own. Another huge factor is that with a cell phone or tablet in EVERYONE hands while watching actual TV programming, you can imagine where attention drifts the moment a commercial break starts. Another factor beginning to worry CMOs seeking scalable and quality impressions for their brands is the growth of ad free SVOD streaming. According to one calculation, Netflix replaces 160 hours of commercials per year in its subscribers households. As we know, Netflix is ad free, as are SVOD services from Amazon, HBO, Showtime, Starz! and Tribeca Shortlist. Together, these capture a huge chunk of video time that was likely going to ad supported television. Consumers have spoken: they love commercial free premium video and content platforms are delivering it to them else they cede viewing hours and subscription dollars to competitors. If the trend continues and marketers continue to lose hours of prime television video advertising time to streaming providers, DVR ad skipping continues unabated and distraction while watching TV increases, what a marketer to do? The obvious answer is to quickly follow your target audience online, where they spending more and more of their time. Native advertising? Product placements and influencer marketing? Still relatively small businesses, nowhere near the scale of TV. But surely there is quality video on the Internet supported by advertising, where marketers could reach a scale audience with a compelling 30s or 15s ad unit on a big, beautiful connected TV or laptop? If only it pandora bracelet charms online were that easy. Taking a look at Hulu, it was an extremely promising vessel to suck up migrating TV advertising dollars. If you watched Hulu in January over the last three years, you certainly saw ads from my old employer, DailyBurn, as where to buy pandora beads well as many other brands that loved its experience and clutter free ad environment. But Hulu is fast becoming less friendly to advertisers as it emphasizes SVOD. You can still reach a Hulu audience, just one that too frugal to pay to avoid ads, a similar problem with otherwise promising platforms like Pandora and Spotify. Yes, there are trillions of display ad impressions available for dirt cheap rates through programmatic exchanges, but you what you pay for and it difficult to build a brand through display advertising. What about YouTube? YouTube offers TV like scale and advanced targeting and tracking, but many marketers have had trouble driving results with YouTube advertising. Perhaps it the ephemeral nature of its content versus the engagement of longer form streaming platforms like Hulu or the distraction of a myriad of other video links on the page. YouTube is a huge business for Alphabet, but it can readily and legitimately absorb a material portion of TV $69B of advertising spend. What about broadcast and cable TV networks TV everywhere apps, or Crackle? These platforms are tiny compared to even Hulu, let alone traditional television. You know where this post is headed: it following an ever larger portion of your ad budget directly to Facebook. In its decade long history of truly brilliant moves, going headlong into video might be one of its most important. It leapt into the video fray as YouTube was irritating some of its creators, live video seemed dead and CMO were looking for new video outlets. Facebook sucks up 50 minutes of an average user day, with an increasing percentage of time on the platform spent with video. Video is clearly a focus for Facebook, and we know what happened when founder Mark Zuckerberg turned his attention to mobile advertising, which has propelled the company to $2.1B in profit in its latest quarter. While the platform doesn offer you, the marketer, quite the same experience for video as television, its got a lot going for it. It intimate, as the device is right in a potential consumer hand. A compelling ad can be shared easily among friends. You can track clicks and conversions, there less ad fraud and ad blocking to worry about on Facebook than the broader Internet and they have lots of data to help targeting. Along with Google, easily the best data in the history of marketing. To be clear, there no mass exodus from TV advertising at the moment, because it still the best way to reach a scale audience with quality video impressions.
But the threats to its hegemony are stronger than ever, perhaps led by the surging growth of ad free SVOD services like Tribeca Shortlist. If enough audience hours migrate away from TV, brand dollars will need to follow. With a relative dearth of premium video inventory online, one beneficiary will certainly be Facebook.
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