When live sports disappeared before our eyes in mid-March, many of us in the industry saw the pandemic in a dramatically new way. The virus became real. Aside from wondering how it would affect us and our families, there was real worry as to what advertisers and broadcasters would do in the absence of sports.
Golf returned to tournament action with the Charles Schwab Challenge in Fort Worth, Texas, earlier this month, which was a watershed moment for live sports in the wake of the pandemic.
The following video provides an overview of traditional TV systems and workflows, job functions in TV buying and selling, and ruminations on the future of TV advertising. It’s the fourth in a series of educational videos Furious has produced in collaboration with Beet.TV. To explore Furious’ TV101 Dictionary, which is a companion piece to this series, please click here. Here’s a sampling of Part 4:
Similar to investors, sellers of TV advertising should be actively managing their individual “assets” (i.e., their ad products) to ensure they’re optimizing the value of their portfolio, as described in a previous blog post. This calls for continuously assessing the relative contribution of each ad product category to total revenue and rebalancing available inventory allocation to ensure that clients are well-served and the greatest total revenue is achieved.
Changing audience behaviors and the infusion of data on both sides of the value chain are forcing programmers and distributors to evolve from pure content creators and infrastructure owners into technology companies, like it or not.
These companies are making tech investments that would have been unheard of a decade ago. Take NBCUniversal, which is betting big on its own streaming service instead of letting Netflix own the audience for beloved shows like “Friends” and “The Office” indefinitely. Or Dish and Sling, which launched their own vMVPDs to distribute live and on-demand linear TV over the internet.
Though advertisers still tend to view TV as a medium for mass reach, investment in systems that can target specific households is growing, with addressable TV ad spend projected to reach $3.37 billion in 2020, according to eMarketer. That’s a drop in the bucket when you consider how much is spent annually on TV advertising, but a stunning amount given addressable started from zero not long ago.
Scale is still limited, but the growth curve for data-driven TV ad products is unmistakable. It’s now possible to deliver household-specific ads to 64 million U.S. homes, though only for a small percentage of linear inventory.
A decade ago, if you wanted to watch TV at home, your options for getting it onto your screen were limited. Annoyingly, you had to rely on your local cable or satellite provider to come to your home and install a set-top box. Streaming options were starting to come onto the scene, but most of the programming people cared about wasn’t available there.
When you examine how television advertising is bought and sold, it’s striking how many of the systems — and players — first became relevant when TV emerged as a dominant medium in the 1950s yet persist today.
Take the Gross Rating Point (GRP), which is still the prevailing metric for traditional TV advertising impact even though advertisers gripe about its limitations — specifically, the fact that it’s a calculation of reach, not performance. Or Nielsen, which has been the dominant provider of TV measurement for more than six decades and is now competing against Comscore, a company rooted in digital, to establish viable metrics for cross-platform viewing.
As more premium streaming services hit the market, potentially cannibalizing each other’s audiences, it’s important that companies making this sizable investment design their offerings in a way that supports their overall business.
The Business of TV & Video Advertising, Explained
TV advertising once represented a world unto itself, distinct from other media channels. Audiences sat in front of their TV sets and watched programming at scheduled times. Commercials were sold by national broadcasters, local affiliates, cable networks, and distributors, usually on a GRP basis. Advertisers were content to leverage TV for reach — without drilling down into who exactly they were reaching. The vocabulary of TV advertising was insular and consistent.
As you know, that train has left the station.