Earlier this summer, I had the honor of speaking at the TV of Tomorrow Show in San Francisco, where I participated in a panel discussion about the future of TV. Last month, I published What is TV? the first installment of my takeaways from the event. Today, I take a deeper dive into the intersection of advertising, digital video, and linear television.
Television, Digital, and the Role of Advertising: One Currency to Bridge TV and Digital
One of the hot topics at the conference was the issue of digital versus TV. Specifically, are ad buyers more interested in cross-platform buys today, and if so – which metrics should these buyers be looking at? Is ROI for a particular cross-platform buy even possible to measure? And are there digital metrics that are comparable or complementary to TV metrics, and if so, what are they and how can they be combined in an accurate and meaningful way?
Nielsen established the currency for advertising and media measurement in TV, but now that we’ve entered a cross-platform video world, the industry needs a new currency to bridge across both TV and digital. Digital consumer behavior is moving quickly, and a future-proofed currency for advertising measurement and measurement of media consumption will require the right market standards and high-quality data sources. Verto has already been developing market-tested standard services for audience insights, journey models, and audience validation – now, we need an additional currency for advertising targeting.
A relevant follow-up consideration: do these metrics lead to decisions around ad allocation and load? Platforms like Google, Facebook, and Snap are the very same ones behind some of the most advanced ad targeting and measurement solutions on the market. Most of the press coverage that I’ve read regarding the metrics from these platforms indicates that there has been some degree of inflation in the numbers they publish. As a result, these tech giants have probably benefited from an artificially inflated ad load, instead of a market with a clean media mix, where overlap and incremental reach analyses could be conducted.
However, there is also the other side of the coin: if you, as an advertiser, choose to spend most of your money on one platform and take advantage of its native ad targeting tools and measurement solutions (which can cover both web and app across many screens), you could better optimize ad allocation, by working solely with YouTube or Facebook, for example. There are economies of scale; The more platforms you work with, the more overhead you have, and the more complexity in taking advantage of all the possible advertising solutions.
Television and Digital Are Not the Same Beast – Yet
It’s important to note that TV and digital are still different things. While virtually every adult in the U.S. consumes both digital and TV content, Verto data shows that between 10-20% of all TV viewing time occurs simultaneously with second screen usage. That means that mobile devices (for example) provide interesting second screen advertising opportunities. However, at the same time, a bulk of TV usage does not include online usage – yet.
TV therefore continues to provide an opportunity to reach engaged target viewers who are not necessarily doing anything else at the same time. Mobile and desktop can easily provide a twofold effect on incremental reach per hour, boosting the reachable audience compared to just TV alone. There are different benefits to each channel, but ultimately they can play together or, depending on the target audience, advertisers can survive with just one. Consider two separate campaigns: a Pepsi brand advertising campaign on TV and a game publisher trying to boost downloads of their new game. Each of these campaigns has different motivations and targets.
And of course, there are obviously plenty of questions about privacy and how far we can go with advanced targeting models:
- Will better targeting lead to more or less ad spending in the future?
- How much data is too much – are there any fundamental limits?
- When does targeting get creepy?
- How can advertisers can find the sweet spot between finding the right target segments and over-saturating them?
- Will there be consumer backlash if targeting gets too personal?
Building a Measurement Ecosystem in a Walled Garden
At Verto, we realize that consumers are savvy enough to understand the general ad ecosystem – today’s advertising is, at best, hyper-personal and contextual. Advertisers and platforms are also increasingly mindful of when targeting provides a negative incremental ROI, and are subsequently hungry for more data to improve the ad experience without being overly intrusive. Many of the advertisers and agencies we work with are shifting to models where reach/frequency/engagement is not enough, and ROI and attribution are the new key metrics.
With the emergence of digital-only platforms and the content they produce, we have a measurement challenge even though (or perhaps because) there is no commonly accepted currency for digital measurement. An added challenge is the fact that all these purely digital platforms are proprietary and in many cases, walled gardens when it comes to applying any form of outside measurement. At Verto, we have worked on projects to build comparable metrics and a holistic approach to measuring video consumption on platforms like Facebook, Snapchat, Amazon, and Netflix. While we can capture total video playback time (and a holistic view of total video usage), the challenge is that we are not yet ready to track of actual content, which would ultimately allow us to identify which platforms are optimized for specific types of content, which index high for certain demographic segments, and understand how context influences consumption (eg., consumption in living rooms versus on public transportation).
Television Advertising Is Still Thriving
Last year, digital advertising surpassed TV ad revenue. But those numbers can be deceiving: in this context, “digital” includes revenue from things like search and banner ads (and digital video still only accounts for about 20% of TV advertising). Do these forms of advertising compete with TV advertising for dollars? Some advertisers could even consider these non-video forms as complementary to video ads on TV or online.
While advertising has been the cornerstone of TV’s success to date, a significant drop in ad loads on live TV drop could lead to viewers becoming increasingly indifferent to the differences between on-demand and linear streaming. I think that is certainly a threat, especially with the rise of on-demand and “convenience” viewing. At the end of the day, somebody has to pay for the content, whether it’s subsidized by advertisers, or user-supported through a subscription model. In most cases, it is a spectrum: some consumers tolerate ads on live TV, while others are willing to pay for an ad-free subscription model. In fact, advertising can play a role as an added revenue opportunity in some subscription models: advertising-supported models often see smaller ad loads and provide a gateway to upgrading to a subscription. Certainly, these new subscription business models have posed challenges for traditional advertising-supported TV. Consider the Spotify model, which offers both an ad-supported free option as well as an ad-free subscription, giving the consumer full control over their ad experience.
In my opinion, most digital advertising still is not competitive with TV advertising, despite its huge rate of growth over the past few years. While display advertising, search advertising, app install ads, and video advertising is certainly significant, it’s still not yet comparable to TV advertising in minutes, size, or amount of money spent – but that delta is rapidly shrinking. At Verto, our work typically focuses on the two domains, but very few companies do measurement on both. We have clients who want to identify the overlap and incrementality of digital on top of TV advertising – but these clients are typically the ad platforms themselves, as opposed to advertisers or agencies. But this is not only about moving from TV to digital; traditional mobile advertisers are also moving to TV. For example, major game publishers have significant budget dedicated to mobile app install ads, but they’re also spending on TV advertising in order to get incrementality. As a result, it’s more accurate to say that TV and digital can be complementary – at least for the time being. The real question is, how do you attract consumer attention in the right context, via the right user experience?