Kate Bulkley, Media Analyst.

What next for TV advertising?

By Kate Bulkley

Broadcast News

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For Broadcast July 12, 2019

Kate Bulkley moderated a panel of industry experts gathered in Cannes June 2019 to discuss how television can rise to the challenges of the digital, on-demand world

TV broadcast advertising has held up rather well compared with steep declines in local print advertising, but the power of Facebook and Google in digital advertising and the shift to online, on-demand and subscription video services such as Netflix is putting even more pressure on linear TV advertising.

A panel at the recent Cannes Lions advertising festival in France brought together five senior advertising and agency executives to discuss what steps need to be taken for television advertising to remain relevant and compete with other players moving aggressively into the market.

Collaboration and common standards were called out as the key to the next phase, but there are ongoing concerns about the speed of change and what television risks losing as it adapts to new audience and advertising realities.

IS AUTOMATION AND TECHNOLOGY ALLOWING THE TV INDUSTRY TO ADAPT QUICKLY ENOUGH TO CHANGING CONTENT CONSUMPTION MODELS?

BRIAN WIESER Technology is always getting better and while there has always been an incremental move towards more data and more ability to identify audiences, what we are experiencing now is fear of what Facebook and Google are doing. The fear is about the perception that the money that TV should be getting is going instead to Facebook and Google.

KIRK MCDONALD The biggest motivator for the adoption of new consumption models is recognising that the relationship with the consumer has completely changed.

Kirk McDonald - chief marketing officer, Xandr

Kirk McDonald - chief marketing officer, Xandr

Consumers have more choice about what they watch and when they watch, and there is more high-quality content available than ever before. Itís no longer just about user-generated content on YouTube; now itís high-quality videos on YouTube.

Netflix is big and established, while Hulu has changed to match the new audience demands too. If you are in the TV business and you rely on advertising to support your business, then the fear is that Facebook and Google will come and do in premium TV what they have done in digital.

JAKOB NIELSEN We see the same trends everywhere: in the UK in the past two years. some 23% of commercial impacts have moved away from linear TV into the on-demand world for 16 to 24 year-olds. This is the same around the world and itís not just this age group that is moving to on-demand, itís also much older people.

The problem for us at GroupM is that we need to find these audiences where they are now and the challenge is to build systems as easy to use as those of Google and Facebook. The easier we make it, the more money will flow in.

GIVEN THE CHANGES IN CONSUMPTION, WHAT ADVANTAGES DOES TELEVISION HAVE?

NICOLLE PANGIS One superpower that distributors like broadcasters or pay-TV platforms have is they donít just have the linear TV feed. They also have broadband IP connections and addressability.

Nicolle Pangis - chief executive, NCC Media

Nicolle Pangis - chief executive, NCC Media

That is something that is going to be very powerful moving forward because the digital platforms do not have this connective tissue into the television part of the household.

This unique view into consumers across both TV and digital allows us to find households across devices and across screens so we can take one budget and allocate it across both and then start frequency capping ads across screens by households. Itís the start of de-fragmenting the fragmented.

WHY HAS THIS TAKEN SO LONG? DOESNíT THE TELEVISION INDUSTRY RISK LOSING OUT TO THE BETTER ANALYTICS AND TARGETING OF GOOGLE AND FACEBOOK?

NP Itís not easy to pull together this data Ė itís hard to do with just the digital side alone and itís exponentially harder to do with television data. Itís messier, and thereís more of it.

Itís hard to harmonise that data properly across providers in a privacy-compliant way and in an aggregated way, so we donít have the privacy issues that crept up in digital. We are also our own worst enemy.

Jakob Nielsen - chief executive, Finecast

Jakob Nielsen - chief executive, Finecast

These are hard problems to solve and we do ourselves a disservice by making proclamations about changing the world. Revolution sometimes is the over-promise of things that fall flat. Incremental evolution every year will get us to where we need to go faster.

IT MAY BE THAT EVOLUTION IS BEST BUT GOOGLE AND FACEBOOK ARE BIG COMPANIES AND THIS IS ACTUALLY A BATTLE FOR THE FUTURE OF COMMERCIAL TV FUNDING, ISNíT IT?

DAVE CLARK We have learned a lot from the digital players Google and Facebook.

They have brought scale solutions to the market that are easy-to-use, and there is the perception that they work. But these are closed ecosystems and that is a cautionary tale for TV. Marketers want a simple solution so they can buy across all platforms Ė TV, online and devices Ė and optimise and report across all of it.

JN The problem is that for the past 20 to 30 years, TV companies have been competing against each other and now they have to be best friends.

BW Itís also a matter of under-investment and short-term thinking. While Facebook, Apple and Google parent Alphabet has $200bn (£160bn) in cash on its balance sheets, between 2012 and 2016, Comcast, Disney, the former Time Warner and Fox, Discovery, CBS and Scripps taken together returned to shareholders more than 100% of their cash from operations.

Brian Wieser - global president business intelligence, Group

Brian Wieser - global president business intelligence, Group

KM The players in the TV business were encouraged by investors and analysts to return the value they created to shareholders, while the digital competitors like Netflix and Amazon have been able to reinvest aggressively to accelerate their business goals.

Traditional TV players need to get to this next phase quickly and we need to get it done with the best technology. But this idea of getting a marketplace together has to happen faster and we have to stop fighting or debating whose platforms or data segments are best. The requirements of getting it all to work at scale are challenging, but it has to get solved very quickly.

BUT XANDR PULLED OUT OF A JOINT PLATFORM WITH A GROUP OF OTHER PLAYERS CALLED OPENAP Ė A CONSORTIUM GROUP IN WHICH AT&T-OWNED WARNERMEDIA WAS A FOUNDING PARTNER Ė IN ORDER TO SET UP YOUR OWN XANDR COMMUNITY PLATFORM. THAT SEEMS TO SPEAK AGAINST WHAT YOU JUST SAID ABOUT WORKING TOGETHER

KM I donít speak on behalf of Warner Media but what I will say is at the macro level, weíre very supportive of the concept of OpenAP, though it is well understood there have been some challenges around the tech infrastructure. I donít believe it has actually run a deal transaction yet.

We bought AppNexus and launched Community because it is already a marketplace that is up and running and we are doing transactions today. We are responding to that urgency and we are inviting others to come and use our platform as we co-operate to become more successful.

NP Weíve just announced that we at NCC are partnering with OpenAP. There was a marketplace before AT&T bought AppNexus, so that was a very prescriptive, obviously strategic decision for AT&T to create another marketplace in television.

We are creating noise strategically ourselves because of individual corporate aspirations and that is just the world we live in.

WE ARE SEEING THE LAUNCH OF MANY NEW SVOD SERVICES, FROM DISNEY, WARNER MEDIA AND OTHERS, HOW MUCH OF AN EXISTENTIAL THREAT IS THE ADOPTION OF SUBSCRIPTION SERVICES TO TV ADVERTISING?

Dave Clark - general manager and executive VP, Freewheel

Dave Clark - general manager and executive VP, Freewheel

DC What Disney is doing is really bold. Who knows what will happen, but pulling its content off Netflix and creating a DTC proposition is an interesting move. Like Netflix, Disneyís platform wonít be ad-supported and we donít know fully about Warner Media, but there is no question you are going to see lighter ad loads than you do in television and also see new ad formats.

Players in the industry will need to figure out how best to find audiences.

JN There will be hybrid models, subscription and ad-supported, but the overall thing to say is that TV has never been as good as it is today.

People who say TV is dying donít know what they are talking about; it is changing, absolutely, but there are billions of dollars being spent on content. Overall, there will be more inventory Ė some will be subscription-based and some will be advertising Ė and we will need better yield management for advertisers.

HOW IMPORTANT IS IT FOR TV TO GET A STANDARD MEASUREMENT SYSTEM IN PLACE THAT ALL AGENCIES AND ADVERTISERS CAN BUY AGAINST?

NP TV has always been data driven, but itís been panel-based data. Weíre in a world now where it can be much more census level Ė and that is good and powerful.

At a measurement and attribution level, my belief is that there will start to be shadow currencies so the players that have the ability to create this census-level view into data through audiences will start popping up next to the Nielsens and the Barbs of the world, and over time there will be a new standard that is adopted.

The question is how you marry these two worlds because you need both scale and data to create the new data-driven television.

HOW FAST WILL TV ADVERTISING ADAPT TO THE MULTISCREEN, DATA-DRIVEN WORLD?

DC We are right at the beginning of it happening. The technology is there; itís more about the operational piece and the standards.

On the measurement piece, itís helpful to make a distinction between measurement and currency. The existing measurement systems in the market have limitations, including whether they are accurate or not and who operates them, but currency is about trust.

JN We need to not be laissez-faire about this because some other players like Google and Facebook are pushing it very hard. If we donít push it hard, we will not get to where we want to be.

FREEWHEELíS PARENT COMCAST NOW OWNS SKY, WHICH HAS BEEN A PIONEER IN TV TECHNOLOGY. HOW FAST IS CHANGE HAPPENING IN EUROPE?

DC Sky is probably three or four years ahead of anybody in the US and in a great position because it is both a content producer and distributor and represents other broadcasters and channels in the UK through its Sky Media ad sales business.

Initially, we think Sky sought to differentiate itself in the market, and now it is trying to bring what it has learned to the industry - as you can see with AdSmart. We think this is Comcastís idea as well. The opportunity is that you have to give the marketers something more compelling.

NP Partnerships between broadcasters are the only thing that are going to move the needle. It is going to take collaboration and putting egos aside to figure out how to move the industry forward.

SHOULD WE BE OPTIMISTIC ABOUT TV ADVERTISING?

DC Yes, as an industry we need to continue to illustrate the incredible value of television Ė in all its forms. After all, only TV delivers incredible reach and scale in a brand-safe environment and continues to deliver results at all stages of the marketing funnel.

The Panel The Panel

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