Why Digital is So Important to TV Broadcasters

A lot of people ask me why local broadcast TV stations are investing so heavily in digital.  In a recent article on BusinessWeek.com - Aereo's Day in Court Won't End TV as We Know It - I found the following two charts. 

Note that the number of hours that the Average User watches broadcast TV continues to decline - from close to 700 hours per user per year in 2004 to a little more than 600 hours in 2012.

While the revenue from retransmission fees continues to increase - from next to nothing in 2006 to 10% of revenue in 2012.  Almost $4 billion dollars.

In 2013, time spent with digital media among US adults surpassed time spent with TV for the first time—with mobile driving the shift.

So what we see...

• Consumers are watching less TV.
• Broadcast stations are compensating for this loss in ratings (revenue) by raising retransmission fees. 
• Consumers are spending more time with digital today than they do watching TV.

As some point, the rising price of retransmission fees will level off as the dwindling audience becomes less valuable to cable systems and other retransmission subscribers.  Broadcasters are looking for new revenue opportunities. 

Consider that Broadcast TV is actually in the content business.  We produce content and hopefully the viewing public watches it.  And consumers are telling us through their behavior that they prefer to consume content online.  (The very best marketing comes from observing consumer behavior and inserting your message into their behavior.) 

So we invest in digital because we are simply following consumer behavior .  Our job is to develop great content and let the consumer watch it any way they prefer! 

Fellow Marketers

In case you missed it, eMarketer.com posted a great story this week.  I have included it below.

As you know, I am a fervent believer in digital marketing.  But I also know that the power of TV is still undeniable.  While the gap is closing (TV will represent 38% of media spending in 2014 versus 28% for digital), TV still makes up a large portion of the average consumers media consumption every day.  And “the very best marketing comes from observing consumer behavior and inserting your message into their behavior.” 

This means that the very best advertising should look at the broad spectrum of consumer behavior and match your advertising plans across as much of the behavior as you can afford. The most successful campaigns don’t use digital.  They don’t use TV, or radio or print.  They use a combination of media to match the consumer’s behavior.  Synergy.  Convergence.  The sum of the parts....  This is why there is growing research that shows the best way to reach your target consumer is to run the same message across TV and digital, same message at the same time. 

Before you read the article below, here is a link to a great, free online tool.  StatsCrop.com.  Simply type in the url of the web site you are researching and StatsCrop will return a wealth of information about the web site.  Pages of information.

Advertisers Blend Digital and TV for Well-Rounded Campaigns

TV’s vast reach is part of appeal for digital advertisers

TV ad spending will grow at a fairly steady single-digit pace over the next several years. The growth rates are not exciting, but they are impressive given the sheer size of the market, according to a new eMarketer report, “US TV Ad Spending: Factors Shaping Today’s Television Market.”

TV will remain the dominant advertising channel, making up 38.1% of total media spending in 2014, and spending on the medium will continue to outweigh that of the nearest competitor—digital—through 2017, albeit with an increasingly narrower gap, until the balance tips to digital in 2018.

Numerous factors point to TV’s continued value to brand advertisers. These include TV’s sheer reach, the power and impact of big-screen advertising, and the predictability of TV’s audience.

Perhaps the clearest sign that digital and TV ad spending are not significantly cannibalizing each other is attitudinal: More and more marketers see the different channels as supplementing each other for a well-rounded campaign. For example, a September 2013 study from Forrester Consulting and Videology found that 52% of media companies, 68% of advertisers and 69% of ad agencies expected agencies to plan video ad campaigns holistically across all viewing platforms.

A September 2013 survey from Advertiser Perceptions suggested one reason for this approach. While 56% of TV ad buyers liked the idea of digital video ad convergence because it would give them a missing piece—digital’s better targeting and more robust metrics—54% of digital ad buyers looked to holistic advertising to gain more of TV’s core strength—vast reach.

TV scales for brand advertisers in ways that digital cannot (yet) match, giving them predictable results for their investments. Consistency on television can help it outstrip other media for gaining ad dollars.

Finally, TV ads tend to influence audiences more than ads in other media, providing impact along with reach and scale. The basic way to define such impact is the capacity to create a consumer or change consumer behavior.

Most audience members concur. In an August 2013 survey from AYTM Market Research, 83.7% of US internet users said TV commercials were the most effective form of advertising.

Read more at http://www.emarketer.com/Article/Advertisers-Blend-Digital-TV-Well-Rounded-Campaigns/1010670#PsyiMTtAbQlv7Uxg.99

Is TV Still King?

Is TV Still King? 

This question, in various forms, gets asked of me a lot.  Perhaps because I work for a TV station.  In the Digital Sales Department.  The answer..
Yes.
No.
It depends.  If TV advertising works for you, then it is king.  If not... 

"The very best marketing comes from observing consumer behavior and inserting your message into their behavior."

There is no doubt that TV advertising allows tremendous reach in a market.  If broad reach (geographically and compositionally) is a primary concern, then TV can work for you.  Few mediums allow for the reach of TV at such a low CPM. 

However one of the downsides of TV advertising is that frequently an advertiser is paying for reach that is of little importance to them.  For example:  If you sell a product that is 100% consumed by women, then many of the programs reached by television have an element of waste - men watching the programming you are buying.

TV spots can be targeted. Research exists that show the make up of the individuals who watch the show.  However, most TV is priced based on ratings points at the Household (HH) level.  So if the news is priced at $100 per point and the show is 50%/50% M/F, what is your CPP (Cost Per Point) for the female portion of the audience? 

$200.  Just because you only sell to the female audience, you still incur the cost of reaching the male portion of the overall audience.  You reach half the population for the same price that a business is charged that sells to both males and females.

Want to get a better Cost Per Point?  Make sure your sales rep runs a ranker report that shows you the very best shows for hitting your target audience.

If your target audience is a very narrow, focused consumer sub-set (left handed, coffee drinker within two miles of your shop), there are other alternatives.  Alternatives will be explored in a future post.

Digital Set to Surpass TV in Time Spent withUS Media

Average time spent with digital media per day will surpass TV viewing time for the first time this year…
Read more at http://www.emarketer.com/Article/Digital-Set-Surpass-TV-Time-Spent-with-US-Media/1010096#LfxMXHwZ90PeyI2y.99