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Media Companies to Advertising Industry: As TV Evolves, So Must You—And Fast

New Imperatives
While there’s no shortage of hand-wringing over the complexities that digital disruption is causing the media and advertising universes, there are plenty of silver linings to be found. Sure, consumers continue to adopt streaming (almost 50% now, according to Deloitte), but Pay TV is still holding steady at 74%.  And yes, the entrance of platform and tech giants Facebook and Google is making the market more competitive, but there’s more and better content than ever. It’s true that more are watching video via PCs, tablets and smartphones, as this study shows, but traditional TV is still the largest video consumption source, according to Nielsen.

Clearly, in this brave new world of innovation and fragmentation, it will be harder for media and advertisers to get attention using the tried and true strategies of the past. On the upside, as content and platform options for consumers proliferate, so will the touchpoints for reaching them. And certainly, we’ve seen media companies revamping their business models to stay relevant throughout this evolution. Now, according to Turner CEO John Martin, it’s advertising’s turn to do the same.

“The advertising industry needs to move with a much greater sense of urgency because we are now competing against advertising supported platforms,” Martin, said at a CES panel discussion with Randy Freer, CEO of Hulu. “The way we monetize audiences has to be much more contemporary and progressive.”

So what should advertisers be thinking about?

Less is More
Reducing ad loads. The industry has been experimenting with this since 2008, but interest in the strategy increased significantly after Turner announced in 2016 that it would cut its ad load on truTV by 50% as a way of competing with the ad-free experiences offered by Netflix and Amazon. Viacom followed suit with a decision to reduce loads on shows such as BET and MTV—a move that drew lots of media attention but little in short-term revenue payoffs. Nevertheless, when questioned about it on an earnings call, Viacom CEO Bob Bakish took the long view, saying “Ad load reduction is an investment we’re making in the health of our brands, which we believe will pay strong dividends.”

While the industry may have hesitated at first (Pivotal Research suggests ad loads have actually increased since the Turner and Viacom announcements), a fuller embrace of the tactic may be coming. In the last few weeks both Fox and NBCUniversal have made definitive announcements on reducing ad loads that may help bring the strategy into the mainstream. In late February, Linda Yaccarino, NBCU’s chair for advertising and client partnerships, announced a decision to air 10% fewer aids in prime-time original shows and reduce the number of commercials per breaks by 20%, along with other ad innovations designed to improve the viewer experience while amping up the efficacy of ads that do play. And in early March, Fox said it is reducing the commercial time in its Sunday night programs with the ultimate intent of getting advertising down to two minutes per hour by 2020. Yaccarino echoes other industry titans in saying it’s all about making TV smarter and getting advertisers to pay more for better scale.  Whether it works is yet to be determined, but advertisers would do well to focus on how to use content and targeting to reap dividends on bigger ad investments.

Invest in Tech for Targeting
Another way networks and advertisers can compete against platforms that are non-advertising supported is by investing more in addressable TV. As we noted in an earlier blog post, advertiser and publisher interest in the format, which allows TV advertisers to target specific households, is gaining traction but still represents only a small segment of the TV ad landscape. Martin noted that Turner has had both a data strategy and addressable products in place for the last four years that are specifically designed to help marketers make the format a more prominent part of their ad campaigns.

While addressable TV offers performance, cost and measurability benefits over traditional TV targeting, its greatest advantage is that its hybrid format allows advertisers to capitalize on the best of both the TV and digital worlds. With addressable, advertisers can tap into the reach offered by traditional TV, while also utilizing the data-driven advantages associated with online.

Have A (Online) Back-Up Plan
Another way advertisers can ensure they get the best of both worlds is to view TV and online as complementary rather than exclusive strategies. Too few advertisers are seeing the full benefit of their TV investments because they are failing to invest in or appropriately design online campaigns that fully amplify the power of TV.

Consider what Matt Whelan, a digital strategy director at a boutique media agency wrote in the current issue of Admap.  After pointing out that 60% of TV’s response impact comes through digital media channels, he urged advertisers to do more than just push out online ads reiterating the TV messaging.  Instead, marketers should get strategic by using data and technology to time and target online ads in ways that not only boost recall, but provide just-in-time opportunities to take action or engage the consumer.

“We have seen uplifts in performance when you utilize time-syncing around ads, alongside a well-segmented audience selection,” he wrote in the article.

Ultimately, according to Hulu’s Freer, success in today’s market is less about simply getting in front of a customer and more about drawing them in.  As such, the onus is on networks and advertisers to identify the strategies and technologies that will enable tighter, two-way connections. “It’s all about getting to the consumer in a way that creates a relationship; the winners will be the companies and brands that create trust and experiences.”