TV Ad Spending Continues Unabated; About Those Offline Ratings Online

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August 15, 2011 – 12:03 am

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TV Ad Spend’s Safe

Any honest attempt to predict where the economy is going these days is futile. Every day last week, the stock market’s fluctuations truly resembled a yo-yo: startling lows one day, rapid rises the next and so on. But one thing is safe to say: TV ad spending is not going to feel shocks any time soon.

There are a number of reasons for this, starting with the most obvious: TV ad budgets are planned and negotiated months in advance. The spending for this year for broadcast and cable are pretty much locked in. That’s one area where television has a distinct advantage over digital – if you’re a publisher, at least – since money flows into and out of online with increasing rapidity.

It’s not just the longer-term that looks good for the continuing flow of TV ad dollars. Current ad spending through the scatter market have held steady. In reporting Viacom’s Q2 earnings, CEO Philippe Dauman said scatter pricing rose more than 10 percent for the three months ending in June, driving a 12 percent gain in domestic ad sales in the spring — and a prediction for double-digit growth this summer, too, reports the NYT’s Brian Stelter and Tanzina Vega.

Unemployment in the U.S. has been and remains painfully high. And consumer confidence has been fairly low as well. Neither of these conditions have escaped advertisers’ and media companies’ sight and that has factored into their ad budgeting throughout. Therefore, with TV still at historically high spending, there’s been nothing so far – barring the collapse of the European banking system or some devastating natural disaster – to expect much of a change in the habits of marketers and their desire for more TV ad spending.

TV Style Ratings

One day, there won’t be any distinction between “online media” and “offline” – it’ll just be “media.” The new Nielsen internet Campaign Ratings -- the online version of its industry-standard TV measurements, aka gross ratings points – that are being rolled out starting today represents a big leap in creating this “one media universe.”

But don’t expect any miracles in terms of making measuring online audiences with the same kind of apples-to-apples comparisons that makes ad spending on TV so simple and easy, writes AdAge’s Michael Learmonth.

Even if web metrics become more TV-like, that doesn’t necessarily mean the spending will follow the same way. "We find most of our CMOs are less and less concerned with audience buys and more concerned about the performance of that investment," said Wes Nichols, CEO of Marketshare, tells AdAge.

Furthermore, just like a little more knowledge can be a dangerous thing, the more detailed Nielsen online ratings could heighten display advertising’s poor job as branding medium in comparison to TV. It could also expose some of the bigger ills of online advertising such as lousy creative, cluttered pages, sneaky ad units and ill-considered placements. So for online media companies who have been waiting for the internet to be more like TV, be careful what you wish for.

Cord-Swapping, Not Cutting

Cord-cutting has served as a small reason for cable providers’ successive quarterly video subscriber losses. But most people aren’t abandoning MSOs in favor of over-the-top streaming services like Roku or Netflix. No, consumers are cutting the cable cord because so many more are reining in their spending in the face of economic hardship. And in some cases, like the disappearance of 23,000 Cablevision subscribers in Q2, can be explained by “cord swapping.”

In other words, the Long Island carrier has had its customers aggressively picked off by offers from Verizon FiOS, who has been able to convince Cablevision subs to drop their existing connection in favor of Verizon’s fiberoptic wires.

Telcos like Verizon and AT&T represent a greater threat than OTT services. The two are swiftly snapping up subscribers at the expense of traditional pay TV providers, with both Verizon and AT&T saw subs rise 30 percent in Q2, according to Bernstein Research. But fear not, MSOs, since Q2 tends to be the weakest time of year for subscriber growth, so it would not be wise to read too much into the most recent quarterly sub losses. But looked at over time, this does appear to part of a wider, albeit slow-moving trend. Read a WSJ overview of Bernstein analyst Craig Moffett’s findings.

ITV In The UK

The UK is often thought to be just slightly behind the U.S. when it comes to adopting new technology. But lately, the British have been rushing to catch up in the area of interactive TV. The BBC has been particularly aggressive in pushing its iPlayer into the living room, The Telegraph reports. The BBC has released an updated version of the iPlayer designed for TV, in a move that it hopes will broaden access to its digital service beyond the early adopter crowd.

While iPlayer is already available across a number of formats, the BBC is releasing a version of the streaming tool for Sony’s PlayStation 3 games console. It is also being adapted for an array of set-top boxes and connected TV sets.

The natural rise of connected-TV viewing in the UK is reflected in a recent deal between Britain’s Channel 4 and Twentieth Century Fox. The two media outlets are the first to participate in video ad network Rovi’s Smart TV ad field trials to measure how consumers engage with ads across connected TVs and Blu-ray players, according to New Media Age.

The Magic Number

Sure, everyone talks about engagement as the big idea that tells us whether interactive advertising works. But this business thrives on hard numbers, not vague precepts. And at the moment, all we have are nebulous notions, not formulas. Michael Collette, CEO of consultancy MediaTech Strategies, writing in ITVT, wants a concrete answer to the question, “What is right number times an ad must reach its intended target to be effective?” Some say that number is “three.” Others argue it could be four.

As Collette explains it, “Effective Reach is the percentage of the target audience that can be reached with Effective Frequency. So, if I reach 55 percent of the target audience 3+ times, my effective reach is 55 percent. Got it?”

Considering how strained marketing budgets are these days, media planners are apt to sacrifice reach in order to concentrate on effective frequency any day of the week. And that could end up costing them more in other ways. There’s sure to be a great reward for anyone who can promise to solve the mystery behind what’s effective reach for interactive TV.

But Wait! There’s More.

 


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August 15, 2011 – 12:03 am

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