SALESmanago Live Product Demo

Wednesday, 10:00 am CEST

SALESmanago Live Product Demo

Wednesday, 10:00 am CEST

REGISTER

The fall of TV advertising

How long have you watched TV this week? And how many hours a week you dedicated to this activity in, let’s say, 2005? And in 1995? If this number has decreased over the years, you are not the only one. In general, similar to other traditional media, the TV industry nowadays is seeing some trends that threaten its existence – the decline in viewership or less revenue coming from advertising, in comparison to the rise of digital advertising. For many marketers, it’s a serious challenge and a sign of the times, and for others – focused on digital – a great example of a marketing revolution that means the shift from traditional marketing to the new strategies brought by technological advances.

 

 

From the advertising king to struggling with crisis

The falling number of advertisers and fewer dollars coming from this source is a growing problem for the whole industry. And the future doesn’t seem bright: “Advertisers may be leaving TV for good”, warns Bloomberg, before continuing with devastating statistics showing the decreasing TV viewership and TV-advertising sales.

Let’s take a look at some numbers that reflect the changing landscape:

  • 60% of Americans choose online video to live TV.
  • In 2011, a statistical 18-24-year-olds were watching TV 25 hours a week, and in 2018 it was just 16 hours.
  • Millennials watch nearly 50% less TV than adults over the age 35.
  • 55% of US households subscribe to paid streaming video services, up from 10% in 2009.
  • In 2017, 93.8 million people in the US paid for TV, down 4% from the year before.

 

When it comes to advertising, it’s not a mystery that TV ads spending decreases as well. The whole digital ad market in 2018 was $30 billion larger than the TV advertising market. In 2019, TV advertising in the US is expected to drop 4,3%, similar to other traditional media (newspapers or radio), while the digital advertising will grow a whopping 18,3% (source).

 

Digital and online are the winners

Looking at the composition of long-term U.S. ad growth, it becomes evident that the rise of internet and digital has come at the expense of traditional media.

MoffettNathanson Research

Digital and online advertising is the obvious winner in this situation, benefiting from the crisis in the TV industry, thanks to its wide possibilities and use of modern technology. Online ads mean a shift from the “spray and pray” strategy, e.g. TV spots, and the beginning of the era of Big Data in marketing: precisely targeted campaigns, programmatic advertising, 360-degree customer view, marketing automation, and data-driven analytics where you can measure and optimize absolutely everything in real time. TV ads with its huge budgets and complicated attribution look like an advertising relic that stays behind the modern technological advances that have brought new ways of marketing and advertising.

Digital channels win their competition with TV thanks to its targeting options and the adoption of breakthrough technologies such as Machine Learning, Artificial Intelligence or automation. And when it comes to ads, social media is the cheapest form of advertising. The biggest challenges in the case of TV advertising are undoubtedly expensive and scarce slots. It’s basically not for everyone. SME can’t afford to advertise on national TV, but they don’t have this problem with online ads. And the ROI from, let’s say, Google Ads can be very satisfying for this kind of businesses. Moreover, small-size advertisers get tons of metrics and analytics and can clearly see where their money went and what results it brought. Why bother with the traditional media, then?

 

The decline of the TV audience in the Netflix era

One of the major concerns of the TV industry is that the audience doesn’t seem no more as hooked on the TV content as it used to be.There are simply fewer viewers. And where are them? Binge-watching Netflix, of course.

TV has gained some strong competitors in the battle for viewers’ attention because of the triumphant surge of online streaming services such as Netflix, Hulu, HBO GO or Amazon Prime. The advantage of these platforms is obvious – viewers can browse through lots of available content and view the chosen film whenever they wish. What is more, Netflix recommendation engine makes it even easier for the viewers to get the content adapted to their interests – it delivers users exactly what they want (even if they themselves don’t really know what they want – Netflix knows their taste perfectly).

Those problems may mean that TV enters a vicious circle. As less revenue from advertising comes to the TV industry, the producers would have smaller budgets and would be forced to produce cheaper content that could result to be low quality and less engaging for viewers, in comparison with the diverse content available on streaming platforms. In consequence, the number of viewers may continue falling, TV may keep becoming less attractive to advertisers, which could mean less revenue, and so on, and so on.

 

Is there still hope for the TV?

Media giants are not waiting for a miracle: they are taking matters into their own hands. For instance, Disney and WarnerMedia are starting their own online streaming platforms in order to share their library of movies and shows and confront Netflix in its own ground.

And we shouldn’t forget that when it comes to efficiency, TV ads are still considered the most effective form of advertising that brings the highest ROI: it accounts for 71% of advertising generated profits when in the case of online display ads it’s only… 1% (source).

 

It seems that the TV is not considering to give up and will fight for survival. Will it endure the loss of advertisers to digital media, the society’s changing entertainment habits and the rise of online streaming? It’s very probable that we will find out in the coming years.

 

Julia Paduszyńska
Content Manager

@jpaduszyńska

SALESmanago is a Customer Engagement Platform for impact-hungry eCommerce marketing teams who want to be lean yet powerful, trusted revenue growth partners for CEOs. Our AI-driven solutions have already been adopted by 2000+ mid-size businesses in 50 countries, as well as many well-known global brands such as Starbucks, Vodafone, Lacoste, KFC, New Balance and Victoria’s Secret.

SALESmanago delivers on its promise of maximizing revenue growth and improving eCommerce KPIs by leveraging three principles: (1) Customer Intimacy to create authentic customer relationships based on Zero and First Party Data; (2) Precision Execution to provide superior Omnichannel customer experience thanks to Hyperpersonalization; and (3) Growth Intelligence merging human and AI-based guidance enabling pragmatic and faster decision making for maximum impact.

More information: www.salesmanago.com

The Essential Role of Product Catalogs in Marketing Evolution
The Essential Role of Product Catalogs in Marketing Evolution

    In the dynamic realm of digital marketing, Product Catalogs act as the vital link between your eCommerce platform and SALESmanago. They aren’t just useful but essential for maximizing your marketing potential.    You might be wondering, ‘I’ve already integrated XML Product Feeds, why consider another integration to Product Catalogs?’ While XML Product Feeds […]

Getting in Bed with AI? Remember, Safety First!
Getting in Bed with AI? Remember, Safety First!

    In the dance between technology and commerce, eCommerce companies find themselves at a crossroads as they consider cuddling up with the tempting world of generative AI. A recent Gartner report, titled “4 Ways Generative AI Will Impact CISOs and Their Teams,” provides a backstage pass to the glitzy show that is the future […]

Marketers lose the right to choose their tools. Do you have to let it go?
Marketers lose the right to choose their tools. Do you have to let it go?

    by Aleksander Skałka, Director of Solutions Consulting & Sales Enablement   Observing trends among the greatest eCommerce players, marketers from small and medium companies must wonder, how did this happen, that their daily challenges differ so much from the problems that bother the biggest industry’s players? Latest observation: marketers lose the influence to […]

Reimagining Doorways to Success: PORTA’s Story
Reimagining Doorways to Success: PORTA’s Story

    Unattainable results? Not in our book. The synergy between PORTA KMI POLAND and SALESmanago is a living testament to that.   PORTA has been opening doors across Europe for three decades, not just literally, but also via innovation and design. PORTA’s path as a leading Polish brand in door manufacture and distribution reflects […]