Jason is the co-founder and CEO of tvScientific, the first performance marketing platform for ConnectedTV (CTV).
getty
Television has always been the most important and powerful screen in the American home. And even with the continued trend of cord-cutting, we know consumers are still tuned in—now, on connected television (CTV).
As of 2020, more than 63% of all U.S. TV viewing time was on streaming services. As more consumers become tech-savvy, they are logging in more hours online and are constantly plugged into content through smart TVs, game consoles or set-top boxes. And, to go even further, 94% of users have a smartphone on-hand while watching TV. These changes in viewing habits mean that marketers can no longer be reliant on the marketing strategies of yesteryear to drive outcomes.
Marketers have always understood TV’s unique ability to influence a huge audience, even though, historically, the ability to directly influence sales via television has been virtually unmeasurable. The dilemma that the majority of marketers have faced since the advent of television is they’ve been sidelined due to the medium’s high point of entry. As a result, the $75-billion television advertising industry has traditionally been an exclusive arena reserved for a handful of national, “awareness-oriented” advertisers. They have budgets that can support high-friction sales processes and high-cost TV ad buys despite a clear lack of ROI measurability.
According to research by Stephens Inc., it’s estimated that only around 500 advertisers drive 85% of total television ad spend. The majority of marketers have invested their advertising and marketing dollars in performance-based digital media. Specifically, there are now more than 9 million advertisers investing in search and social platforms, spending more than $200 billion per year, all driven by the ability to conduct ROI analysis on every dollar invested.
MORE FOR YOU
So how can we, as an industry, level the playing field so digital-first marketers can participate in the most influential medium in history? How can we do so in a way that is as accountable and measurable as digital channels? The solution to the age-old television advertising quandary, surprisingly, requires a look back at the history of performance marketing.
What The History Of Performance Marketing Teaches Us
Since 1998, consumers have flocked to the internet to research and buy goods and services, driving massive growth for online commerce. One of the main drivers of this is the introduction of the revolutionary paid search model 25 years ago. And like many revolutionary concepts before, the far-reaching impact (in this case, how products and services would be sold in the future) wasn’t obvious at the time. In fact, the idea of paid search was derided and dismissed by many.
The foundation of the paid search model seems fairly straightforward, at least from today’s vantage point. Instead of trying to convince people they have the need for a product or service—marketing’s M.O. for a century or more—what if you could identify consumers who are actively searching for a product or service? What if you could place a targeted ad in front of them at the very moment they are expressing their intent to buy? This is the simple idea that led to the revolutionary, disruptive paid search advertising model.
The second innovation of paid search disrupted the ways in which goods and services were historically marketed—in stores and via newspapers, radio, direct mail and outdoors (and TV, but we’ll get to that in a minute). All were derivatives of the “town market” that had been around for most of human history. The internet irreversibly changed this by enabling the connection of global versus local communities, opening up massive audiences for marketers.
Like most revolutionary ideas, this one is simple in retrospect. What if an advertiser could reach a worldwide audience with their product or service, powered by a digital marketplace with unrestricted, global reach?
This simple “digital global marketplace” idea led to a total and complete reinvention of how most products and services are sold, from advertising to home rental, to food delivery, to ride-hailing. And soon, it will disrupt TV.
The marketplace model redefined marketing across industries, but television has remained an exclusive holdout, anchored in outdated sales processes and poor measurement and attribution. These factors resulted in the roughly $70 billion TV market being dominated by the estimated 500 advertisers driving 85% of television ad spend. Because of that, the market has stagnated. Meanwhile, performance-based digital media, with its sophisticated approaches to precision ROI and marketplace models that democratized access, has continued to flourish due to a steady stream of innovation.
So, Where Does TV Advertising Go From Here?
From everything we know today, there are a few certainties:
- The vast majority of television consumption will be streamed atop connected televisions (“smart TVs”).
- Enabled by digital-like marketplace tools, over the next few years, more than 1 million of the 9 million search and social advertisers will migrate to CTV.
- More than 1 million new advertisers will have a dramatic impact on TV economics and the entire television ecosystem.
- Television will prove to drive higher ROI than any other medium, as new datasets will prove it to be the highest-performing, outcome-driven media.
- Propelled by ROI and massive advertiser adoption, average television costs per mile (CPMs) will hit $100-plus within the next five years.
To Advance, We Need A Bit Of The Old With The New
Leveraging paid search-like, self-serve buying and measurement platforms will enable advertisers to drive measurable ROI from TV advertising. More importantly, because TV can create intent whereas paid search reacts to existing intent, I predict TV will grow to be bigger than the $200-billion paid search market.
We Are On The Brink Of A TV Advertising Renaissance
The vast consumer migration from linear to CTV is the catalyst for the total reinvention of the vast TV media ecosystem. I predict millions of new advertisers will migrate from search to TV, bringing with them $100 billion in new spending. This will fund improved content development, creating more and better content choices for consumers, which will drive even more users to CTV.
Forbes Agency Council is an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies. Do I qualify?
Go to Source
Author: Jason Fairchild, Forbes Councils Member
