Where next for TV advertising?

29 Nov 2016

TV advertising is changing as much as the programming and platforms themselves. It's becoming more targeted and relevant to those consuming the content and there's a large amount of potential for growth in the future.

Ahead of his participation on a panel discussion at the Future TV Advertising Forum in London, we asked Xavier Denis, Director of Television Advertising Solutions at ARRIS what he’ll be discussing.

Xavier Denis, Director of Television Advertising Solutions, ARRIS

Xavier Denis, Director of Television Advertising Solutions, ARRIS

The TV business is going through rapid and significant changes. Some see a real benefit to consumers. But what is the impact on TV advertising models?

In my mind, there are a couple of things going on. Firstly, we're seeing large investments from both the traditional service providers as well as new entrants, the more OTT-centric providers, who are working to make content available on any device, as well as improve the overall customer experience. That's good for addressable television because addressability - the ability to target specific audiences based on demographic attributes - is a by-product of those investments.

Secondly, the content providers themselves recognize that the future is in cross platform reach to cater to new consumer habits. The challenge to TV providers in general is to enable those cross-platform experiences.

If you look at the way spending in general has trended, you'll see TV ad spend has held steady, which means that it's still a compelling inventory for marketers and brands to tap into. So, on balance, I think the future of TV advertising is very promising.

Addressable TV: what are the bright spots, and what are the challenges?

Addressable TV is the ability to target specific audiences, as opposed to targeting general geographies. Although it’s still a small portion of the total ad spend, it’s growing. In the US, it’s set to double this year and grow to above $2bn in 2018, according to eMarketer.

There’s another interesting element to add to this by looking at reaching customers across platforms, which is also becoming more targeted. comScore did a study and showed the incremental power of TV networks’ digital properties, which represent nearly a third of unduplicated reach. The situation is good because more of the infrastructure is addressable, so addressable advertising is growing.

The main challenge is that there's still some work to do in terms of automating and harmonizing how inventory is presented to buyers. More importantly, there's an intense debate over the issues of attribution and measurement and there's still a lot of work to find metrics that apply to the various ad formats.

What opportunities do you see in the next 2-3 years?

I think you will see a gradual shift towards more dynamic models. Some of the inventory outside of the top networks and primetime is currently undervalued. It doesn't mean that the traditional models will go away - on the contrary. The live ad on the Super Bowl will still be sold the way it has been traditionally sold. But where addressable TV drives additional value is in the inventory where targeted audiences across a variety of channels is more valuable than inserting a spot on one specific channel for a general audience. With the new measurement and inventory management tools in place, there will be opportunities to create audience-based products to generate more value for inventory owners and marketers alike.

I also expect that the harmonization of measurement metrics across platforms and ad formats will accelerate collaboration between inventory owners to offer more options to the buy-side, with a greater ability to bridge across channels and devices to offer more reach and minimize the effects of audience fragmentation.

In general, the outlook for television advertising is very good. We know that television provides a brand-safe, highly engaging medium. In the end, it is about working to continue to drive addressability in service providers' networks and to improve integration between the sell and buy sides.

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