The Unraveling Tapestry: Navigating the Future of TV Advertising

Perspectives from the Future Of TV Advertising Event —- London 5-6th December 2023

Television, once the undisputed monarch of advertising, now stands at a crossroads as traditional TV groups grapple with the seismic shifts brought about by the rise of streaming and digital platforms. The two-day summit on the future of TV advertising revealed palpable anxiety among industry leaders as they confront the decline of linear TV consumption and the ascendance of streaming. This blog post will delve into key insights from the summit, shedding light on the challenges and opportunities that lie ahead for TV advertising.

The Rise of Online Video: TV’s Ad Shifting Landscape

Traditional TV groups are facing mounting pressure to adapt their business models as linear TV loses ground to the burgeoning realm of streaming. Digital video is emerging as the dominant force in advertising, eclipsing traditional TV channels. As streaming services gain prominence, the need for TV players to transition to ad-serving models becomes more urgent.

TV’s Strong Linkage to Brand is Both its Strength and its Weakness

TV’s advertising ability to deliver attention, amplify right-brain advertising impact, and build trust for brands, positions it as a powerful medium for long-term brand growth. TV players are now leveraging attention as a defense mechanism against digital platforms, emphasizing the unique benefits of TV advertising in a landscape dominated by short-term performance metrics.

Digital Dominance: The Branding Predicament

However, despite TV’s enduring strengths, it faces a branding crisis. According to Kantar’s 2023 MediaReaction study, TV has plummeted from 3rd to 12th place in the ranking of preferred media channels. Only 6% of marketers plan to increase spending on TV in 2024.

Digital platforms, armed with real-time performance metrics, are siphoning ad market share away from TV. The inability of TV to be perceived as a performance driver is a critical challenge, leading advertisers to invest more in platforms that can demonstrate immediate results. The introduction of Amazon Prime’s ad offering in early 2024 further intensifies this competition, potentially bridging the gap where top streaming services fell short — with Amazon Prime’s target cost per thousand (CPM) of about $36, which is slightly lower than that of Netflix, Disney+ and Peacock

CTV and Addressable TV: The Best of Both TV and Digital

Connected TV (CTV) and addressable TV are at the forefront of TV advertising’s transformation, delivering on branding objectives with a data-led approach. Promising the best of both worlds, they offer new ad experiences aligned with changing consumer behavior, data-led approaches, and personalized creatives. The interplay between TV and mobile, the complementarity of devices and channels, and the potential synergies of a cross-screen strategy present an array of new opportunities for video advertising.

CTV advertising spend is expected to reach over $30 billion in the US next year, as per eMarketer, making CTV ads one of the fastest-growing ad formats. 

This is driven by major ad-supported CTV apps, like The Roku Channel, Tubi, and Pluto TV and Amazon-owned Freevee, which, according to eMarketer’s predictions, are likely to burgeon by 2027.

Measurement Challenges: The Quest for a Universal Standard

The lack of a universal measurement standard for video advertising is a significant hurdle that still needs to be tackled. Technical limitations and the battle between traditional TV groups and digital platforms contribute to the slow progress toward a combined approach. The industry is inching towards a solution using deterministic datasets for digital players and panels for calibration. This lack of clarity opens an opportunity for us at Teads as we actively explore solutions that provide incremental reach and improved attention across the omnichannel experience of CTV and digital.

Conclusion:

The future of TV advertising is both challenging and rife with opportunities. Traditional TV groups must embrace the digital shift, explore innovative ad formats, and address measurement challenges to remain relevant. 

CTV advertising brings Teads a unique opportunity; the fusion of TV and digital, coupled with a commitment to measurement, we believe holds the key to success in the ever-evolving tapestry of effective advertising.

Written by Caroline Hugonenc, SVP, Research & Insights