TV ads are about to get personal
For many years, the TV industry has relied on its large audience base to entice advertisers. Commercial time was sold based on broad demographics about who is watching at certain times. Lately, however, advertisers are becoming less and less likely to accept these broad TV demographics, when online advertisements allow them to be much more precise. With online companies like Google and Facebook drawing on Internet data to help marketers target specific audiences, the TV industry is starting to lose valuable business.
TV ad revenue falling, and fast
The TV business is facing a serious problem. According to Magna Global, the TV industry expects to see a 3.5% drop in ad revenue just this year, while online companies can expect a 17% increase in their sales. And by 2017, digital ads will completely surpass TV commercials, with advertisers spending more overall on digital advertisements.
Data mining for gold
Despite these ominous projections, many TV networks aren’t willing to go down without a fight. NBC Universal and Turner have recently introduced new advertising capabilities that rely on data from cable set-top boxes. The cable boxes allow networks to track TV viewing, credit card data, automobile data, and a variety of other sources. The TV industry has used this data to determine exactly who is watching certain networks and programs, and offer more targeted advertisements to marketers.
Hitting the target
Last year, TNT, TBS, and CNN offered these targeted ads to a handful of advertisers. They were successful in increasing their customer base in 2015, and their sales team felt confident enough to guarantee that brands would reach a specific audience. The additional data that TV networks can now offer makes a huge difference in bringing advertisers closer to their target. While brands previously had to pick commercial times based primarily on just age and gender, commercials are now much more likely to hit their mark.
Will it work? Stay tuned
TV networks remain positive about their new data driven capabilities despite an unfavorable reaction from advertisers in 2015’s “upfront” market. Each year in the upfront market, advertisers purchase commercial time prior to the fall TV season. Revenue continued to decline in the market this spring, when advertisers spent 10% less on broadcast networks and 5% less on cable networks than in 2014.
The TV industry may yet regain its strong advertising base, but it’s hard to predict an outcome when competitors like Google and Facebook are also working hard to keep their advertisers buying.