Television Advertisers Must Adapt to Digital Media

Credit: Netflix

Advertisers who are unwilling to adapt in our digital age will find an increasingly large portion of their market disappear as consumers pivot elsewhere. This is most pronounced across television and radio. In decades past both media forms commanded large audiences with little direct competition from other media types. TV and radio generate revenue by playing ads to their audiences in between regularly scheduled programming. Agencies pay to have these ads placed in different time slots that theoretically would ensure an optimal audience. The radio or television station made money, the agency ad got views, and the consumers…well, consumed their media of choice.

TV and radio liked this marketing arrangement – it generated a lot of revenue. Naturally the rise of the internet and streaming media encroaching on their territory, resulting in decrying these mediums for “killing radio” or “killing television.” In reality what’s occurred is a decentralization of power and disruption of a monopoly. TV and radio can still be effective methods of marketing and advertising, but now they have competition and consumers have options.

Television is challenged by online streaming video. Traditional radio is challenged by digital radio services and to a lesser extent podcasts. Consumers do not tune in on a set schedule in the same quantities because they can use on-demand services like Netflix, YouTube, Apple Music, or Spotify. Each of these either inherently possesses or offers the paid option to forego advertisements for a seamless experience.

Netflix video streaming by its very nature is always online, and this gives Netflix a big data inside perspective of their subscribers. They know what titles are popular, how often they’re watched, what country consumes which media, and can even identify when viewers stop watching a particular show. For Netflix original content this is important because it tells them exactly when they lost the interest of their viewer and subscriber. They use business intelligence to their advantage so they can advertise smarter, rather than frustrating and spamming their customers.

The vast proliferation of AdBlocker is proof enough that people are tired of invasive and annoying advertisements. When ads are created without forethought for user experience, the results can be devastating to your bottom line – as both Apple and Amazon have discovered. If Coca Cola’s Super Bowl advertisement approach is any indication, advertisers are appealing to the humanity of their audience while refocusing on the needs and concerns of their customers. Not every potential customer tunes into events like this, however. That’s why many companies turn to other forms of visual communication, like the myriad of billboards and digital screens you see adorning skyscrapers and hotels on the Las Vegas Strip. These are typically part of tandem marketing campaigns intended to cast the net as wide as possible.

Traditional advertisements can still be effective but the approach has changed out of necessity. By the same token, the metrics we use to identify their effectiveness have also changed. Many companies rely on customer engagement with particular videos or songs and things like shares, likes, and views to determine how effective it has been. The result is a much more robust data set than relying on, say, Nielsen ratings alone.

Netflix is the largest paid subscription streaming service for TV and film. Their largest expenditure is the acquisition of content – namely the licensing for films and television to host on their service. Since these are all offered ad-free, the rights owners are paid with Netflix’s revenue itself – featuring their products is one version of advertisement on platforms like it. According to RBC Capital and The Wall Street Journal, Netflix spent $3.3 billion on content acquisition in 2015.

The game is still the same: get the most eyes on your product or service as possible. It becomes a question of whether advertisers are willing to make it worthwhile for content platforms, and vice versa. Consumers are embracing the freedom that comes with on-demand content, especially if it features an ad-free premium service. Will advertisers embrace the change and find new ways to reach consumers?

About The Author

David Kirby
Staff Writer, News

David Kirby writes about pop culture and tech and can be found at Bardist. He grew up adventuring in the great outdoors with Snake Eyes, Optimus Prime, and Boba Fett.