Despite what prognosticators may tell you, traditional television is still the most popular video medium and the best way for brands to achieve reach.
That’s the conclusion of NCSolutions SVP of TV and Programmatic Solutions Tom Eaton, a 7 1/2 year Nielsen veteran.
By Tom Eaton
To hear the experts tell it, linear TV is dead. Dead. Kaput. An entire industry obliterated.
Yet, TV is still around, and in a much bigger and more meaningful way than these prognosticators say, perhaps even realize. It doesn’t fit the salacious narrative about the Death of TV, but the reality is that TV remains the single best advertising channel for achieving reach and building brands— and that is unlikely to change anytime over the next 10 years.
There’s no denying that the emergence of Netflix, Hulu and HBO’s over-the-top offerings have eaten into the linear TV industry. The majority of U.S. homes now have a streaming device, and the time consumers spend watching traditional TV has decreased in recent years.
But when it comes to video consumption, TV is still king. The average U.S. adult watches nearly four and a half hours of traditional television per day, counting both live and time-shifted TV — more than three times greater than the amount of time spent watching video on OTT devices (54 minutes per day), smartphones (13 minutes), tablets (7 minutes) or a laptop (5 minutes) combined. TV also reaches a greater share of the population (86 percent) than mobile (53 percent) and OTT (42 percent).
Even more importantly, marketers still love TV. Critics will surely say this is because the advertising industry is slow to adapt to changes in the market, and that brands continue buying TV only because they are comfortable with it, not because it’s a better option.
Even with all the targeting and attribution tools afforded by digital, brand marketers still desire reach for many of their campaigns, and the data makes it clear: TV is, by far, the most effective channel in that respect. A marketer would need to run two months of online video ads to achieve the same amount of reach it can get with a TV commercial. No wonder TV CPMs are increasing and that TV upfront dollar volume has grown over the past 4 years and this year most networks enjoyed double-digit CPMs with increased media budgets.
Meanwhile, TV advertising is catching up with digital in terms of targeting. TV ad targeting used to be limited to age and gender, but advances in data collection and statistical analysis have enabled us to build look-alike audiences and target with greater precision. Now, cat food brands can target people who actually buy cat food, which is more precise than buying based only on demographics (like middle-aged women).
With Addressable TV, brands can target individual households just like with online video, and we are nearing a day when they will be able to do so to the entire broadcast, providing the much-sought scale.
The idea that streaming has destroyed TV’s business model is overblown and just plain false. Sure, cord-cutting has grown significantly in past years, the number of households receiving TV over the air growing 48% in the past 8 years, but there’s evidence cord-cutting rates are slowing.
In fact, cable TV bundles look increasingly attractive to consumers in light of the proliferation of paid streaming services (Apple, AT&T, Disney and NBCUniversal are all expected to release their own owned and operated streaming services over the next two years). Cord-cutting only became popular because it was a more cost-effective alternative to traditional TV. That’s not necessarily the case when you’re paying for six different streaming services. Even with prices ranging from $4.99 to $13, it adds up quickly.
I’m not going to make a grand, contrarian pronouncement that I can’t prove and say TV is making a comeback. But, I do know this: TV is still a great advertising channel.
It’s not going anywhere anytime soon.
The views expressed by Media Information Bureau columnists are those of the writer only and not of the editorial board of the Radio + Television Business Report or its parent, Streamline Publishing.