TV commercials channel their online counterparts
In just a few short years, companies are expected to spend more money advertising online than on TV. But if you think TV is going down without a fight, think again.
TV is fighting back with a timeless strategy – stealing a page from the Internet’s playbook. Online advertisers have been successful largely because they can target ads to user preferences – they know what you shop for, what sites you like, and who your friends are – something that TV has never been able to nail down. Until now.
“Basically advertisers can look in a very sliced and diced way at the audience composition of a given show,” said Yahoo Finance Senior Columnist Michael Santoli. According to the Wall Street Journal, TV can also do this thanks to new tools from companies like Nielsen (NLSN) and TiVo (TIVO) that use, in a loose sense, big data to breakdown who’s watching what.
“It’s essentially trying to localize and nail down who is watching at a given moment in time, which of course has always been the Holy Grail – you don’t want to waste money advertising to people who wouldn’t be good candidates for your products,” said Santoli.
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So what does that mean in real life terms? It means Choice Hotels (CHH) can reach the same type of customer advertising with the Animal Planet show “Big Cat Diary” for several hundred dollars as with ABC’s (DIS) “Good Morning America” for tens of thousands of dollars, according to the Journal.
“If you’re kind of approximating that component of the GMA audience in another place that is cheaper, it allows you to basically get more for your money, and return on investment is everything in advertising,” Santoli said.
It also means that Kellogg (K) now knows that “Grey’s Anatomy” viewers are more likely to buy Special K than Rice Krispies.
But all of the specificity in the world may not address the main problem facing broadcasters hoping to net ad dollars: TV viewership is declining. “The TV audience in real time is in decline in a pretty steep way,” said Santoli. “This is going to enable advertisers to find people that they want to find still in the TV audience that remains. But that doesn’t mean this is a big solution for the long-term future.”
Which isn’t to say TV ads will disappear. We still have radio ads, after all. But it does mean that TV ads may begin to look different than the ads we know now – and it’s unclear whether this new strategy will work. So far, advertisers aren’t changing their spending allocations based on this data – just using it to be more specific about picking shows and products.
And there’s one key demo that seems to be loyally hanging on to television: older Americans. “You’re starting to see advertisers and programmers cater more specifically to an older audience,” said Santoli.
As for whether TV pushes further into, and bets bigger on, the world of big data beyond this initial phase? For that – we’ll have to stay tuned.
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