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Summary

The impact of Facebook, Amazon, Apple, Netflix, and Google (collectively "FAANG") loomed in the shadows of this year’s Future TV Advertising Forum. Many TV players hope to face this threat with addressable TV advertising, which theoretically brings TV closer to digital by enabling dynamic and personalized ad targeting. But debates at the event suggest that addressable TV advertising might not be, or even need to be, the savior many are hoping for.

Addressable TV might not work for big-brand advertisers, but that’s OK

During panel sessions, large-scale advertisers, including those in the consumer packaged goods industry, maintained that the current price of addressable TV advertising is simply too high to make it a viable option. But this is not disastrous for TV players. Such advertisers remain heavily reliant on traditional linear TV advertising, which still offers the simultaneous, mass audiences required to drive the success and return on investment of brand awareness campaigns.

Plus, many stakeholders believe that the real value of addressable and programmatic TV advertising will be in bringing new advertisers, and revenue, into the TV ecosystem and away from social and digital platforms. This includes small-to-medium-sized businesses that only need to, or can only afford to, target smaller, localized audiences. But the targeting capabilities of addressable linear TV, which are mainly household-based, will remain less compelling than those found on the likes of YouTube and Facebook. More granular targeting opportunities exist on broadcasters’ ad-supported video on-demand platforms, which are viewed across multiple devices and platforms. However, the continued disconnect between TV and digital video – in price, distribution, formats, and measurement – means that marrying the two remains difficult.

Whether TV actively needs to move toward digital is also worthy of debate. For all the doom and gloom in the press, the TV ad market remains healthy on a global basis. Ovum forecasts that global annual net TV ad revenue will grow by almost $20bn between 2017 and 2022, continuing to dwarf digital video ad revenue, much of which will come in addition to spending on TV.

There are areas – such as reducing ad loads and lengths – where TV players should take cues from online incumbents, but advertiser trust in online platforms still lags due to concerns over measurement transparency and brand safety. As Google, Facebook, and other FAANG members step up their efforts to poach TV ad dollars, maybe the burden of bridging the gap between TV and digital should be theirs instead.

Appendix

Further reading

Addressable TV Advertising, ME0003-000790 (February 2017)

Global TV Advertising Forecasts, 2005–22, ME0003-000868 (September 2017)

AVOD Forecast Report: 2017–22, CES003-000012 (November 2017)

YouTube Video Advertising Revenue Forecast Report, 2017–22, CES003-000024 (November 2017)

Online Video Advertising Forecast: AVOD, YouTube, and Facebook, 2017–22, ME0002-000808 (October 2017)

“Combining TV advertising and digital AVOD: Stakeholders still have a long way to go,” ME0002-000812 (October 2017)

“Rise of a duopoly: Why YouTube and Facebook will take one in two AVOD dollars through 2022,” CES003-000008 (October 2017)

Author

Matthew Bailey, Analyst, Media and Entertainment

matthew.bailey@ovum.com

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