Turning TV advertising back on
September 10, 2018
September 10, 2018
TV advertising remains an extremely valuable commodity. It’s a significant part of TV companies’ revenue mix (predicted to be more than one-third by 2022). And changes that can deliver relatively small percentage uplifts on the industry’s multi-billion-dollar revenues will have a decisive impact on the bottom line. But to reignite growth and turn advertising back on, TV companies need to harness the power of new technologies and make significant changes to their operating models and organization.
In 2017, internet advertising revenue surpassed TV for the first time. And it’s a trend that looks set to continue. Yet TV companies—with some exceptions—have been slow to respond to the challenges of meeting advertisers’ expectations in the digital age. Those have been reset by digital advertising platforms, with their ability to target and personalize ad campaigns to individual consumers. What’s more, new ways to buy digital advertising inventory—e.g., programmatically—have set new benchmarks for efficiency.
With many TV companies unable to respond with what advertisers expect in terms of data-driven approaches and tools, the linear TV advertising market has suffered. Unless they take action, the majority of TV companies will face the continued migration of advertisers’ dollars from linear TV to digital channels. But with the right operational, organizational and technology strategy, these TV companies can do more than simply compete with digital. They can drive significant new revenue from linear advertising.
New set top box (STB) and smart TV technologies are creating the possibilities of understanding audiences better and serving more interactive and targeted ads to specific consumers or audiences who can be defined by much more than broad demographic categories.
What has been a barrier to TV companies developing more advanced advertising—technology—is now becoming an enabler.
New broadcast standards are also expanding what’s possible for TV advertising. ATSC 3.0 is one. Advanced advertising is a key component of this new standard, with ATSC 3.0 enabling dynamic ad insertion into live feeds and video-on-demand. And because with ATSC 3.0 data can flow in two directions, TV companies will be able to capture information about consumers’ real viewing habits at an individual level, greatly enhancing the ability to target ads.
Digital advertising has forced TV companies onto the back foot. But technology developments could help them to spring out of the corner and fight back. What do they need to do to take advantage?
Explore how M6 segments audiences based on online behavior enriched by anonymized offline data and drives enhanced forecasting leading to greater advertising yield.
view the reportBy harnessing the possibilities of digital technologies, many TV companies can now not only claw back some of the growth that they have lost to the digital platforms but also drive wholly new revenues from digital capabilities. But while technology is an enabler, the changes required to take advantage are both organization-wide and ecosystem-wide. New operating models, organizational reinvention and digitally astute talent are all essential. TV companies that get it right, will see the rewards from combining the unique power of linear TV advertising with the agility and data-driven targeting of digital. It’s time to turn TV advertising back on.
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