- NBC, Turner and others aim to compete with Google and Facebook
- TV ad spending seen dropping 3.5% in 2015 as digital grows 17%
A phone company’s ad reaches a consumer looking for a new wireless plan. A car commercial is seen by a driver whose auto lease is about to expire. A bank gets its message in front of a small business owner who needs a loan.
Such surgical marketing messages are taken for granted on the Internet. Yet, they are just now finding their way onto television, where the audience is big though harder to target. As brands shift more of their spending to the Web where ads are more precise, the TV industry is pushing back.
Using data from cable set-top boxes that track TV viewing, credit cards and other sources, media companies including Comcast Corp.’s NBCUniversal, Time Warner Inc.’s Turner and Viacom Inc. are trying to compete with Web giants like Google Inc. and Facebook Inc. and help marketers target their messages to the right audience.
“TV has to move in this direction,” said Brad Adgate, head of research for the media-buying firm Horizon Media. “There’s a lot of concern about dollars migrating to digital from television. This is a way for TV to keep pace.”
Whether TV’s newfound embrace of data is working will be a topic discussed this week as media and marketing executives gather in New York for a series of panels and parties during Advertising Week.
Targeted advertising is a big change for the TV industry, which for many years has sold commercial time based on broad demographics provided by Nielsen such as "18 to 49 year-old women." The Internet, meanwhile, can track Web users’ every move online and sell that data to marketers so they can get their messages in front of more narrowly defined audiences.
Ad Spending Shift
As a result, advertisers have been shifting their spending to the Web. In the U.S., television ad revenue is estimated to drop 3.5 percent to $63.3 billion this year, while digital ad revenue will grow 17 percent to $57.7 billion, according to Magna Global. Advertisers will spend more on digital advertising than on TV advertising by 2017, the firm said.
It’s taken TV this long to catch up to the Web partly because the technical capabilities just became available. In some ways, there may be no better time for traditional media companies to win back advertisers as online marketing becomes rife with concerns about fraud and new software that lets people block ads on mobile devices.
Yet so far, the TV networks’ data-focused sales pitch has been slow to catch on. Advertisers committed 10 percent less money to broadcast networks and 5 percent less to cable networks in this year’s “upfront” market -- the time each spring when marketers buy commercial time in advance of the fall TV season -- compared with last year, according to estimates by Magna Global.
TV’s massive audience, long its main argument for wooing advertisers, has been shrinking, and showed “disappointing results across the board” last week as the new fall season began, Doug Mitchelson, a media analyst at UBS AG, wrote in a note to clients Friday.
While TV viewership is often huge, especially for live sporting events, some advertising experts say digital advertising has the upper-hand.
“Because of digital’s ability to state just how much of a video someone is actually watching, it is more accountable” than TV, said Ian Schafer, chairman and founder of Deep Focus, a New York-based ad agency.
This week, Facebook introduced a new feature that attempts to further encroach on the television ad market by letting marketers buy online video ads similar to how they purchase commercials on TV.
Still, NBCUniversal Chief Executive Officer Steve Burke said this month that he’s seeing “tremendous strength across the board” in the so-called scatter market -- where advertisers buy commercial time that’s left on the network after the “upfront” season ends.
Burke attributed that strength partly to a new advertising product that NBCUniversal introduced this year. NBC is using cable set-top box data from parent company Comcast Corp., along with credit card data, automobile data and other sources, to tell advertisers which network, and even which program on that network, is more likely to include their target audience.
NBC is giving advertisers “very targeted and unique capabilities that are much more like what advertisers get when they go to Facebook,” Burke said Sept. 9 at a media conference.
Time Warner’s Turner networks which include TNT, TBS and CNN, began offering targeted ads to a small number of advertisers last year and expanded the number of customers this year. Its ad sales team now can sell commercial time that guarantees brands will reach a specific audience rather than those defined just by age and gender, said Michael Strober, Turner’s senior vice president for client insights and innovation.
If your company sells dog food, "why advertise to cat owners when now you can only advertise to dog owners?” Strober said in an interview.