With the everchanging digital age, and the recent trend of TV viewers cutting cords and switching to platforms like Netflix, Hulu, and Vudu, it’s natural to assume that the traditional TV advertising space would be in a state of decline. However, there is significant evidence that suggests that although digital advertising is becoming a popular method of gaining ad views, it still does not match up to the volume and effectiveness of traditional methods of advertising. According to a recent study by Dataxu (recently acquired by Roku), approximately 70% of big-screen advertising still lies in the traditional TV space as opposed to the 30% coming from the digital ad space. Based on these results, traditional TV advertising still reigns, as exemplified by the $10 billion spent on television in 2019 by the biggest advertisers. The higher rates of active ad viewership, ability of advertisers to target their audience through programmatic TV capabilities, and the proven effectiveness of TV ad media are just some of the many reasons the largest advertisers in the industry love television.
Major Advertising Companies Continue to Turn to TV for Majority of Their Ads
With the increasing use of data to improve the TV advertisement space, the outlook is better than ever in terms of building an effective advertising campaign, increasing brand image, and targeting the right viewer. In fact, Geico, one of the most well-known brands in the country, claims that TV advertisements are most effective in building their brand. Geico still spends about 4 times more on traditional TV advertisements per month than they do on digital. According to Statista, GEICO spent $23.46M on TV advertisements in a 7-day time period. Companies like these make the overall outlook for the television advertising industry look promising for the future.
Even digitally native brands have touted the power of TV advertisement. Touch of Modern, for example, has found success in their TV advertising initiatives. According to Touch of Modern Founder, Jerry Hum, TV advertising began as an experiment for their company in their search to find the best advertising strategy, and resulted in TV having the biggest chunk of their marketing spend. View the video here:
Why TV is so effective and appealing to Advertisers:
Engaged, Active Viewers:
Research states that although digital forms of advertising are becoming more popular, TV advertising maintains its place at the top in the advertising industry. According to research conducted by the University of Adelaide, eye-tracking was used to show that TV ads are more effective in terms of connecting to the viewer emotionally, and for commanding twice the number of active viewers as YouTube and 15x that for Facebook. Active viewership is defined as the level of engagement tracked through active eye-contact, active listening, and personal connection to the ad that is collected by the device the consumer is using. Studies showed that during a TV advertisement, a larger percentage of viewers were actively viewing the ad based on eye movements than during a digital advertisement. With digital advertising, users are able to bypass advertisements entirely by controlling their advertisement viewing experience, clicking out of ads entirely, and remaining idle when an advertisement plays in the background. This, however, is less of a problem in the traditional TV space since its more likely for the consumer to view the ad directly as they are not able to click out of the ad, or indirectly through passive listening or viewership while they wait for their TV program to resume.
Mass Reach with Improved Targeting Capability Through Programmatic TV
In order to combat non-active TV viewership, TV advertisement companies have begun to implement addressable TV ad placements in order to tailor ads to specific viewers and households. Addressable TV leverages data collected from cable subscribers in order to target specific households and tailor the viewers’ ad experience through segmentation at a geographical, demographical, and behavioral level. Addressable TV is seen as an add-on to traditional TV strategy that helps make planning more efficient and, today, in the United States, there are approximately 64 million addressable households, with the spend expected to rise to $3.37 billion next year.
As evident, the TV advertising industry has evolved with the digital shift to demand better tracking and targeting capabilities, data-enablement, and better attribution through programmatic TV. In order to stay competitive, the industry is shifting to include these digital capabilities. For example, Marketingcharts.com states that 57% of the industry uses first-party data, 49% uses third-party behavioral data, and 64% uses third-party demographic data in order to target their audience with a tailored advertisement experience and to keep viewers engaged. Major advertisers utilize programmatic capabilities in order to pinpoint the exact customer they are looking to serve in order to maximize their media dollars and minimize wasted impressions.
With the everchanging world, its easy to see that although much of the advertisement space is turning to digital to differentiate their media reach, traditional TV advertising maintains its hold over the advertising industry overall. With analytics and data-driven results that are being implemented into the industry, it will become more important to tailor the advertising experience to viewers, thereby making the traditional TV advertisement even more powerful and effective. Only time will tell how the online streaming TV platforms will play into this shift, but until then, Traditional TV advertising isn’t going anywhere.