What is the future for broadcast advertising?
Forecasts suggest that the annual spend on advertising, worldwide, is set to grow again in 2023. This is good news for broadcasters, particularly in the traditionally quiet year of the four-year cycle, with no Olympics or football championship.
Magna Global suggests that advertising growth in the US will be 5.8% in 2023. The Dentsu Ad Spend Report is a little more pessimistic, but growth at 3.8% is still positive. IAB forecasts 3.8% in EMEA and 4% in APAC.
Since the beginning of the commercial television era, 75 years ago, the idea has remained much the same. Programmes are broken up by commercial breaks, and advertisers choose the most appropriate programmes to associate with their products or services, ensuring their brand values are reinforced by the content around the commercials.
As part of its forecast work, Magna saw that traditional media companies – which includes television as well as publishing and out of home – grew revenues by 2.5% in 2022. This, the researchers say, “signals that editorial media brands remain attractive and relevant as they now combine brand safety with cross-platform reach”.
Selling by spot placement calls for a lot of resources on the part of the broadcaster (or its sales house), but it does deliver a premium. The advertiser is not only sure it will not be surprised by placements, it can also be confident it will be largely protected from competing or conflicting commercials in the same break. It would be a poor campaign planner that had Ford and Toyota commercials following each other.
That means advertisers have always understood that television advertising is a premium service, and therefore it commands a premium price. A lot of research and mathematical modelling suggests that television advertising directly increases the consumer’s marginal willingness to pay for a brand: put simply, audiences value products they have seen on television more highly.
But now streaming has come along. With so many outlets, not only digital-first companies but broadcasters for their streamed outputs have largely handed their ad sales and fulfilment over to programmatic services. Often very large corporations providing services for many (and competing) streaming outputs, these largely automated services ensure that the promised number of views are delivered, but with random placements.
Automating the campaign planning saves costs, of course, which is reflected in the rate charged. But it also eliminates the broadcast premium of curated placements, avoidance of conflicts, low repetition rates and all the other problems that turn audiences off the commercial break.
So traditional linear television advertising is still more than holding its own against digital services. The 2023 broadcast advertising trends are that linear revenues will still far exceeding digital. The various research and forecasting organisations worldwide suggest that, by 2030, the balance may have moved to 50/50.
But even that equilibrium will happen only because the total addressable market will grow. Linear television revenues will remain flat or experience small growth, while income from digital services will grow at pace. That will reflect the continuing trend away from broadcast platforms to the any time, anywhere, any device convenience of digital services.
And if consumers are moving from linear television towards streaming delivery, broadcasters are going to have to firm up digital prices. The same content going to the same audience should receive the same income, whatever platform it is delivered on.
That, in turn, means incorporating the broadcast premium into the digital offering. So broadcasters have to bring streaming advertising into their campaign planning tools.
It is not quite as simple as charging the same for a 30 second spot in a break, whatever the platform. Linear advertising delivery is general: the same spot goes to every viewer, or at best to limited regional variants.
But streamed delivery is always a one-to-one, so commercials can be inserted at the moment of delivery, allowing for dynamic ad insertion. You can target the commercials at specific users, or at least more tightly defined demographics.
More important, you can make continual campaign adjustments to hit viewing targets most efficiently. You need the option to sell advertising inventory simply by the number of impressions, or by specific spot placements, or by some combination of advertising in particular breaks with the balance of the guaranteed viewership made up as required.
In practical terms, this means that broadcasters need a platform which can rapidly apply changes in commercial breaks, dynamically insert ads in individual streams, while continuing to provide the seamless output that audiences expect from broadcast television.
Finally, the system also needs to support, in a common platform, catch-up services and video on demand. Current content should have the same value to an advertiser whether it is watched at a fixed time or later in the day or week.
This is, today, proven technology. PlayBox provides everything you need, on standard computer systems on your premises or, increasingly, as cloud applications. The great advantage of the cloud is that it is continually flexible so can adapt to changes in demand.
You can also create configurations which allow you to deliver these new converged services – the convergence between traditional linear channels and OTT and streaming – in a way which matches your business. Most important, it provides complete automation of much of the process, while still allowing for operator intervention to ensure that the premium services are still delivered where demanded.