TV Ad Spending Slows — Should Your Brand Change the Channel?

The press painted a glum picture of television 2014 ad sales. Sales slipped 6 percent during the upfronts — when broadcasters try to sell inventory for the upcoming TV season. Although experts projected total ad dollars would ultimately increase in 2014, they lowered their predictions as the year went on.

Who was responsible for these ominous figures? Some insiders blamed digital media channels for capturing bigger and bigger shares of advertisers’ budgets.

Should brands throw all their marketing dollars at digital? Should broadcasters prepare for the worst in 2015? Things aren’t quite as bad as commentators make them out to be — yet.  However, the media landscape continues to evolve. Networks need to reboot the way they think about content, data and sales, or the situation will become grimmer.

Broadcasters Must Provide Quality Content Across All Screens
Consumers’ insatiable appetite for quality content hasn’t changed. What has changed is when, where and how they’re consuming that content. Viewers watch the shows they want, when they want to watch them and on whatever device happens to be most convenient at the time.

Netflix, Amazon and Hulu cater to all three of these needs, and in most cases, broadcasters have scrambled to catch up. These services create and distribute quality content that is popular with viewers and critics alike (think Netflix’s Orange Is the New Black and Amazon’s Transparent). They also give consumers the flexibility to watch their programming anytime, anywhere.

Furthermore, these newer companies operate on a different business model than their counterparts. They collect fees from only the folks who choose to subscribe to and consume their content. Broadcasters fill their coffers with subscription fees from multiple system operators for distributing their content to customers who may never consume their content, as well as advertising revenue that pales in comparison to the streaming services.

Traditional broadcasters must compete technologically, creatively and operationally. They must think beyond the television screen and surround audiences with compelling content that’s available via a variety of devices whenever the consumer wants to consume it.

Data Is the Fuel
Television has always been about audiences, but broadcasters need to think more like their digital counterparts and sell based on audiences. They need to start looking beyond the typical demographics (age and gender) and move to data-driven guarantees. The days of selling programs and dayparts will soon become a distant memory; marketers are interested in reaching audiences wherever they consume content.

NBCUniversal (NBCU) is starting down this road with its Audience Targeting Platform. Based on brands’ marketing plans and audience targets, NBCU will use third-party data to identify matches and allocate spots accordingly.

While this is exciting, it’s just one step in the right direction. Networks need to start transacting all media in this manner, not simply offering it to a few advertisers across select inventory. Audience buying is a momentous shift the industry must quickly embrace.

The Industry Needs New Sales Method & Pricing Structure
To go along with this new multichannel approach to content, both broadcasters and media agencies need to reorganize their staff according to the way consumers view media. They must organize around the type of content, video for example, not how and where it is consumed. This will require a single point of contact to sell and purchase video, based on where the audience is across a broadcaster’s entire portfolio of video assets. This shift will certainly disrupt the present business model and dramatically change the sales process.

Value pricing models based on audience delivery and the ability to drive business results must replace the current pricing models. Broadcasters are accustomed to collecting annual increases. However, marketers are weary of paying the higher fees, and they will continue to shift their money from TV to other vehicles if the industry doesn’t undergo a much-needed overhaul.

Broadcasters are adapting to this new reality — albeit slowly in most cases. We’re eager to see if they pick up speed in 2015 and make the changes necessary to survive in the ever-evolving media landscape.


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