Want to Shift Ad Dollars Out of TV Into Web Video? Good Luck With That
With the upfront looming, and increasing pressure to be innovative, many advertisers and agencies today are in a headlong race to shift and diversify their TV ad budgets, taking greater advantage of multiplatform-platform "video." And why not? TV advertising is expensive and campaign reach is declining thanks to audience fragmentation.
However noble and well-intentioned, however, the expectations of many of these advertisers and agencies are unrealistic, particularly those calling for 10% to 20% budget shifts out of TV into digital video. That's because, you see, 97% of all video viewing in the U.S. still occurs on TV. Yes. Whether the data is from Nielsen, Pew or eMarketer, all agree that only a small fraction of video viewing in the U.S. today occurs on devices other than the TV.
Clients can say that they want to spend 10% to 20% of their "video" budgets on platforms other than TV -- but saying it doesn't make it so, or even possible, particularly if audience reach matters and you want to demonstrate any sense of cost-effectiveness. Here is why:
The problem with web video
While much talked about as a media channel, web video still has its share of challenges, especially around scale, content quality, ad load, usage concentration and price. Web video today represents only 2% to 3% of all video viewed in the US, and more than one-half of that is on Google's YouTube. Most of the video content here, 80% or more, isn't the kind of studio-produced "quality" programming that brand advertisers demand for their media placements (and forget about how much of it occurs in day-parts that many shun).
Ad loads are also only 10% to 20% of conventional TV, meaning it's very hard to accumulate significant media weight fast. And a small portion of web audiences consumes most web video -- 20% of Americans consume 80% or more of all web video viewed -- and, ironically, that 20% are heavy TV viewers too. On average, they watch six times more TV than web video each day, meaning they are already being reached with a lot of frequency by most TV advertisers.
Finally, web video ad prices are pretty high relative to TV, particularly when it comes to "quality" placements, which is why TV sellers like NBC Universal frequently sell their web video separately, where it can command prices far in excess of the $5 to $7 cost-per-thousand-viewer rates for mid-tier national cable.
Reaching 20% out of 2% -- the amount of quality digital video media relative to TV -- less 80% (accounting for the ad-load differential) for twice the price makes redeploying10% to 20% of TV ad budgets equals not a greater business.
How about tablets and smart phones?
There is no question that many folks are now watching video on their tablets and smart phones. Unfortunately, mobile video has many of the same challenges confronting web video generally -- scale, quality, concentration and ad load -- with the added problem of fragmented measurement (virtually none outside server logs) and extraordinarily high pricing relative to TV (three to five times greater). Moreover, as carriers move away from unlimited data plans, folks will probably react by cutting back their bandwidth-hogging video playing. Some day much of this will change, but certainly not in 2013 (and probably 2014 or 2015).
Maybe one of the paths to pursuing an expanded and diversified "video" strategy is to expand and diversify within TV rather than moving to web and mobile video. Here's a place to start:
Dark (unrated) TV networks.
The proliferation of new and more TV programs, channels and modes of video viewing on the digital cable/satellite/teleco platforms introduced over the past ten years has brought accelerating audience fragmentation to the world of television, and has resulted in a significant amount television viewing occurring on networks and network day-parts which do not have Nielsen ratings (hash-marks on ratings reports, aka "dark networks"). Set-top box based viewing research (when combined with Nielsen national panel data) reveals that this "dark network" inventory represents more than 15% of all US television viewing today, and maybe higher than 20% in some regions and in many households. Outside of endemic advertising (i.e., tennis gear on Tennis Channel, international travel on BBC Americas), much of the inventory is typically relegated to in-house promotion, direct response ads or no ads (reduced ad loads). For example, many operators don't even enable local ad insertion on many dark networks, believing that their relatively small audiences and poor direct response monetization don't' justify the local head-end hardware investment.
This massive, untapped pool of "digital video" is many, many times larger than YouTube and all other web video combined, chock-full of quality content, carrying normal ad loads, and all standardized to carry normal 15 and 30 second spots. Of course, it's available because it's not been measured with the rest of TV inventory. If Nielsen doesn't measure it, how can you possibly buy it? Thankfully, that is being solved. Today, companies like Rentrak, Kantar and TiVo all offer services to deliver impression level and GRP equivalent measurements for TV's "long-tail," and comScore recently announced a multi-platform offering that will include set-top box TV viewing data.
Trying to find enough quality digital video to re-deploy 10-20% of your TV budgets, maybe there's no place like home, TV. What do you think?
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