Advertisers haven't given up on broadcast TV, despite stories of cord-cutting, OTT and millennials' mobile video consumption habits. Disregarding ongoing warnings of the impending death of television, advertisers continue to spend on broadcast TV just as they have for decades, according to a story from The New York Times.
Even as younger audiences drift away from traditional television and look to OTT players like Netflix Inc. (Nasdaq: NFLX), or social media platforms such as
Facebook and Snapchat for their video entertainment, the broadcast upfront season continues to attract advertisers. This year, annual "upfront" advertising sales will likely net close to $9 billion in advance commitments for broadcast networks. (See Subscribers Down at ESPN as Cord-Cutting, Skinny Bundles Bite and No Linear Please, We're Millennial.)
Advertiser enthusiasm is considerably cooler than last year, but there is no expectation of some kind of precipitous drop. That's because broadcast advertising still delivers, and in ways online cannot.
TV still reaches more people than any digital outlet, and broadcast does a better job of aggregating audiences than any other medium. It's also proven and reliable: people will see the ad, at high quality and interspersed with premium content rather than something objectionable -- all issues online media sites are still getting to grips with.
News stories on cord-cutting and social media viewing also ignore the fact that most television viewing is still on the TV, even for younger viewers. And while youth will drive the future direction of the industry, there are still 96.5 million homes in the US that subscribe to pay-TV.
While it is older audiences driving broadcast viewership -- according to the story, the median viewer age for top shows on TV such as The Voice and The Big Bang Theory is 55 -- they are still of interest to advertisers.
Plus, broadcasters' TV Everywhere services (in conjunction with pay-TV providers or offered on their own) deliver additional viewership beyond the TV set.
Still, the pressure exerted on broadcasters is only growing. According to media house Group M, TV accounted for 42% of total spend in 2016, compared with 31% for digital. That's not a huge gap, and it's likely to close over time -- probably at the expense of broadcast spending.
The greatest challenge for broadcast advertising is its ability to match the targeting, measurement and interactive qualities offered by online rivals. These are attributes long desired by advertisers, while broadcast networks are still struggling to accurately aggregate and measure viewing across devices.
That's where new platforms and technologies from pay-TV providers can help. As broadcasters experiment with direct-to-consumer packages, too much fragmentation in the video universe likely will create its own problems. Instead, broadcasters may be better off focusing their efforts in partnership with pay-TV providers.
An aggregated programming bundle has its appeal for consumers, and working with pay-TV providers to create better measurement across platforms and new targeted advertising formats that allow interactivity could help broadcasters better position themselves against OTT competition in the long run.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation