As the upfront and new front seasons begin, Videology Chairman & CEO Scott Ferber revisits his exploration of how the converging TV and digital video landscape will impact planning this year and in the years ahead. While we’re not completely there yet, Scott argues in Re/Code, we’re slowly headed toward a “full frontal” approach.
Is advertising finally full-frontal? Last year on Re/code, I predicted the convergence of the long-hyped television upfronts and the relatively newer digital content “new fronts,” suggesting that while it may not take place tomorrow, it won’t take forever, either.
I called the convergence “full-frontal” advertising.
One year later, as we approach the upfront season again, the question remains: How much closer are we to seeing full-frontal, and how many layers need to be peeled back before we get there?
Consumers leading the charge
This year, audiences are full-on with full-frontal, as consumers’ TV viewing increasingly shifts to online and on-demand platforms (PCs, mobile, set-top boxes, game consoles). In fact, online TV viewing increased by 388 percent, and video views via over-the-top devices and gaming consoles increased 194 percent in the last year.
To meet that demand, we’ve seen big names introduce OTT packages, with the likes of Dish TV announcing Sling TV to provide cable-free access to live news and sports, and CBS with its $5.99 monthly streaming service that lets viewers watch the majority of its network programming.
On the content front, Amazon won a Golden Globe this year, marking the first time a streaming provider took home the prestigious award for the best TV series. Now that’s convergence: The same company that delivers all of life’s basic necessities is now delivering great entertainment, as well.
Clearly, the definition of TV has changed dramatically. But from an advertising perspective, full-frontal won’t be a dramatic shift, but more of a slow dance. Here’s what we’re seeing and expecting in 2015.
More ad dollars going full-frontal
The current view: TV ad dollars still represent the huge majority of budget spent by brands. To put this in perspective, digital video ad spending is expected to increase 41.9 percent this year to reach $5.96 billion, while TV advertising in the U.S. is expected to grow 3.3 percent to hit $68.54 billion. The percentage growth we’re seeing in spend is being echoed by a shift in advertising attitudes.
In October, media agency holding company Omnicom publicly advised marketers to shift between 10 percent and 25 percent of television ad dollars to online video. And in private conversations, we’ve seen growing interest across the board in tools to determine the optimal reallocation of TV dollars to cross-screen campaigns.
The next reveal: As much as 50 percent of online video budgets comes from reallocated “TV” advertising budgets, and this percentage is expected to grow. But in five to 10 years, we may no longer be talking about reallocation between buckets. In the future, where TV is video, we won’t be talking about the $70 billion TV market, or the $7 billion digital market. We’ll be talking about the converged, nearly $80 billion video market.
Full-frontal measurement continues to evolve
The current view: Measurement is arguably the biggest challenge as we move toward full-frontal advertising. Despite activation of Nielsen’s Online Campaign Ratings, and increased efforts by other players such as comScore and Rentrak to deliver cross-screen viewing metrics, unified cross-device measurement still lags consumers’ new viewing behavior.
Currently, some technologies can provide planning insights and campaign analysis to measure unduplicated reach and frequency across devices, and even determine a cross-screen campaign’s impact on sales. But gaps still exist in the specificity of the available data between digital video and linear television. One of the biggest obstacles preventing TV and digital budgets from becoming one big melting pot of converged ad budgets is the availability of audience data for traditional TV media buyers.
The next reveal: With the increasing variety of IPTV products and services and the uptick in their adoption, we’re beginning to see more granularity in available information about TV viewers and their viewing habits. As a result, data similar to that being used in online advertising to target specific demographics is now available, allowing capabilities in cross-screen measurement to evolve more rapidly.
While last year’s upfront season focused on education, this year’s will be marked by more action. We’ll see advertisers begin to assess at least portions of their campaigns using one or more of the growing body of cross-screen measurement providers.
Also, with the holy grail of a unified, accurate cross-screen metric still up for grabs, look for all major measurement providers to pour innovation and resources into solving the challenge, and for new collaborations between traditional media, data and technology companies that will reveal new light at the end of the cross-platform tunnel.
Full-frontal plans are getting full-on results
The current view: So why are advertisers so eager to begin to measure and validate cross-screen ROI? Quite simply, those engaging in it are getting tremendous results. Offline sales can be significantly higher for those exposed to both the TV and digital video aspects of a campaign, compared to those exposed to only the digital channel.
The next reveal: By now, many advertisers have tested the ROI of cross-screen campaigns, particularly in retail, CPG and auto, where offline sales data is most readily available. As these results become more ubiquitous, and if ROI continues to show marked improvement when planned holistically, full-frontal advertising will escalate. Beginning this year, look for a progressive shift to full-frontal planning and measurement, and a migration to a common ROI metric tied to actual sales results.
The final hurdle to full-frontal
The current view: Full-frontal planning and buying in the full sense of the phrase means tying together audiences across devices using common data that can be optimized to achieve a given set of results.
Programmatic advertising is at the heart of full-frontal strategies. The technical requirements for bringing programmatic capabilities to the linear feeds used in TV, however, are complex because of the many and varied distribution channels that bring video into the home.
Additionally, some broadcasters and premium content providers have been reluctant to make their content available via programmatic for fear it may commoditize their inventory and distance them from the agency/advertiser demand sources. The top priority to move programmatic TV forward is the systems aggregation needed to drive standardization among distribution participants.
The next reveal: Standardization is incredibly important if we’re going to provide a singular solution for brands, advertisers and media companies alike — and recognize the full potential of cross-device full-frontal advertising. Progress is being made. Early forecasts suggest that programmatic television spending could approach one billion this year, primarily delivered in local inventory, and as much as $3 billion in 2016.
More skin in the game to achieve full-frontal
It’s clear that the transition to full-frontal advertising will be an evolution, not a revolution. We’ll move toward a full-frontal world one reveal at a time, while the television world and the digital world are courting one another. Over the next year, we’ll see real opportunities for advertisers and agencies interested in full-frontal advertising to take advantage of the technology, data and inventory currently available.
Full-on full-frontal may still be a few years away, but the opportunity to put a bit more skin in the game is clearly here.