Rob Hodgkinson, COO of TVPlayer, outlines six factors that are changing the nature of TV services.
TV attracts more than a third of global ad spend because it is an efficient way to deliver mass reach. But this rule is being tugged at from several directions, and we are now entering a new age of television advertising.
Changes are now afoot which promise accelerated reform of this relationship between advertising and TV content:
1. Middleweight content is hollowing out
You don’t have to hit the gym to feel the “dumbbell effect”. New, wealthy online platforms are investing heavily in super-premium productions to great effect. At the other end of the scale are super-niche shows that are also now emerging. You don’t want to be in the middle. Middle-of-the-road content, like day-time quiz shows, is struggling – neither popular nor niche enough to deliver substantial audiences.
2. From prime-time to prime-target
Top content remains popular – on viewers’ own terms. Broadcast TV corralled the best shows, and the highest ad rates, into a nightly viewing window. But the more that viewers opt out of live and choose to catch up at a time of their own choosing, the more the value of prime-time placement is being eroded. This won’t necessarily hurt broadcasters – what they lose in linear sales can be made back many times over in highly-personalised online TV ads, custom-targeted for individual audiences. But channel operators are going to have to reorganise the house to meet the shift.
3. Dynamic ads
Ad-tech vendors have already brought this precision-guided programmatic ad targeting to online video. And it will increasingly become the way in which ads are traded in TV viewed over internet devices. When brands can target individual in-market viewers based on their internet browsing history and other signals, they will be seduced by efficiency. The whole strategy of settling for ads broadcast to a mass audience of consumers outside your intended cohort will come under serious scrutiny, along with the historic need for the mass-appeal content that supports it.
4. The new narrow
We are about to see the traditional model get turned upside-down. From producing mass-appeal content for broadcast, operators’ next challenge will be producing enough niche content, across multiple verticals and in sufficient depth, to satisfy the new-scale minority audiences.
We are particularly excited about the revival of broadcasters’ huge libraries of old content into new targeted channels. TV4 Entertainment, for example, is creating rich vertical channels for specific audiences, such as Motorland (motoring), Gone TV (fishing), and All Guitar Network (guitar enthusiasts).
5. New economics beget new approaches
The uplifting thing about the new narrowing of TV advertising is that it will be cost-effective. New OTT channels can be spun up at virtually no cost. No wonder new upstarts like online news network Cheddar are gaining a place on the menus of new-look so-called “skinny bundles”. These new channels can reach profitability easily with relatively small audiences.
6. Pay TV doesn’t depend on sport
Likewise, where matches and games were once the price platform operators had to pay to attract subscribers, in the new world, there are alternatives. Today, pay TV companies don’t have to invest in nationwide mass-market ad campaigns that sell sports as the jewel in their crown – they can go after consumers known, by digital targeting profiles, to be keen on certain kinds of underlying interests, buying online ads that are paid for only when they work. No more scattergun customer acquisition – targeting passionate niche consumers with effective campaigns will reduce the need for splashy spending, and change the skew of content seen on screens.